President Obama's call for higher subsidies for electric vehicles is likely to boost sales and help educate the market, but experts question whether it will do much to address the battery dilemma that continues to plague the cars.
Obama's pitch, made at a Daimler truck plant in North Carolina last week as part of a $4.7 billion energy proposal, calls for $2 billion of additional subsidies for EV buyers. The incentives for those purchases would jump from $7,500 per vehicle to $10,000. More importantly, the subsidies would come in the form of point-of-sale rebates, rather than tax credits.
President Obama announced a plan last week that calls for $2 billion in additional subsidies for buyers of electric cars. "We just can't rely on fossil fuels from the last century," he said. (Source: The White House)
"We need to invest in technology that will help us use less oil in our cars and our trucks, in our buildings and our factories," Obama told the autoworkers at the plant. "That's the only solution to the challenge."
The EV aspect of the proposal may be the most important single piece. It was unveiled less than a week after General Motors announced it was temporarily halting production of the Chevy Volt due to flagging sales. Government agencies say higher subsidies are likely to motivate EV buyers, which in turn would enhance economies of scale. A White House press release said economies of scale would make "electric vehicles as affordable and convenient to own and operate as gasoline-powered vehicles by the end of the decade."
Industry experts said the proposed subsidy increase would likely boost sales. The biggest reason for that involves public misconceptions about EVs.
"Our research has shown that, on average, people expect to pay about $24,000 for a plug-in vehicle," Dave Hurst, senior analyst at Pike Research, told us. "Clearly, that's a big difference from what they really cost. So an additional $2,500 incentive is going to help."
Like any good issue, both sides have value. I think the subsidy is a good idea to get the technology started, and isn't a new idea to our government. My only fear is that a subsidy might cause an imperfect technology to be released to the public too soon. Perhaps the same money would be better spent in subsidizing the development rather than the end user.
@JimT: I don't know if there's a typical warranty, but GM offers an eight-year/100,000-mile warranty on the Volt. I don't know exactly what that warranty covers -- especially whether it would cover a dead battery caused by inattention, such as was famously the case recently with the Tesla Roadster. In Tesla's case, the cost was about $40,000 for a replacement battery, according to numerous news reports.
Thanks Charles - That's the confirmation I was thinking but couldn't find it to verify. 8 years/100k makes sense from my simple equation, being: 50 miles roundtrip a day, (my avg daily commute) would mean re-charging the system every 3 days, or about 100x per year. Given the avg. charge/discharge cycle life of a complex battery system is about 600-900 cycles, that fits well into the window of my expectations. It also coincides with 50miles/day = 250/week = 1000/month = 12K/year = 96K/8 years. I'd say the warrantee is right in line with an average gas powered vehicle today.
Charles, conservation of energy matter because we cannot rely on crude oil always: especially from Gulf countries, due to political issues. So it's very important to look for alternate energy sources like electricity, solar etc as the source of energy in vehicles.
I'm generally anti-subsidy, and paying wealthy early-adopters $10K of taxpayer money to buy a car that isn't ready for prime-time seems like a bad idea....even inethical to me. However, I agree with you - if, in the style of DARPA, the money would go directly to specific and focused projects to provide the needed technical breakthroughs - I think that taxpayers would get more bang for their bucks.
Also...as I've written before - we all need to take a deep breath and really ask the bigger questions, such as "what, exactly, were EV's supposed to be solving ? If one knows the issues deeply, it becomes apparent that much of the "hope" of EV's is based on bad assumptions. It is amazing to me that otherwise intelligent people just ASSUME that EV's must be super-green and a great technology - when the facts do not support this.
For example, EV's do NOT save total energy...they just divert it from oil (gasoline) to mainly Coal + Natural Gas (at power plants). Trading one fossil fuel for another. I say, cut out the middle man and if we really need to reduce foreign oil imports quicly - convert some of the USA's coal to liquid gasoline. Actually, there are a number of huge projects to do just this, and the technology is KNOWN and no other changes or trade-offs in cars are needed. Stopgap only, of course, until a RENEWABLE liquid fuel can be substituted.
Also, subsidizing efficient cars (hybrid or even conventional) would make a much bigger dent in the overall oil footprint because of mass-adoption. Sorry...EV's will remain a small niche even WITH a $10K subsidy due to the huge convenience trade-offs. Heck, with my family's lifestyle I could not drive an EV if I wanted to! However, a $3K subsidy for cars with, say, 40+MPG would certainly make CAFE results go down faster than promoting EV's before their time.
Lastly, on a different subject that hit me the other day: I live in San Diego and we had a massive regional power outage last summer. If everyone drove EV's, the entire city would grind to a halt within one day. Can you say "cyber terrorist dream" ? At least fuel-based cars can drive for many days and can manually pump fuel if necessary. There is basically ZERO REDUNDANCY for the power grid, whereas today's fuel-based transportation system has nearly infinite redundancy.
EV's should address a niche market - a second family car for urban trips - and not try to be a "one size fits all" solution. As a second car for school/shopping etc, 50 mile range is sufficient and attainable now.
I actually think subsidies for EV and hybrid buyers is a great idea. Development funding is needed, too, but the priority is to move these slow sellers off dealers' lots. If not, the market will disappear. It's in a more fragile state than the current spate of tech stories and manufacturer hype would have everyone believe. Look at GM, which has had to idle Chevy Volt production for five weeks. Carmakers can't keep building these things forever in the face of slow sales.
I am anti-subsidy. I am pro research. Give the money to research companies, help start new businesses by requesting specific goals through grants obtain royalties or give the technology to a small business so that they can boom. That is the American way. Giving free money so you can have pretty toys sounds like a monarchy to me. No offense but paying for an unrealistic technology is not a worthy cause. The math simply does not add up. Also subsidy is just another excuse for the car manufacturers to charge more for less. I have seen the excuse of "with the government tax credit you will make this money back in X amount of years". Another example of bad tax credit is 30% credit on solar PV packages. Average complete kit now these days costs 2USD a W yet if you get a licensed installer (someone with a EE degree is not capable of installing this as far as local utility companies are concerned) they will charge you 4-6USD a W for that kit installed. Their excuse is overhead and labor. Reality is that roofing company charges you in average of 25% labor and overhead for installing a roof. So if your roofing materials cost 7500 then the roof installed will cost you 10000. Why should solar installers charge you a 70% overhead and labor on the job? It's actually less labor intensive then doing your whole roof. The answer is simply.... "30% federal tax credit"
Sorry for the wall of text. It is a subject I greatly dislike. I love what engineers are doing with the technology, I hate what government regulation and subsidies are doing to the actual market.
I always envisioned quick-change batteries. No one would actually own a battery. You pull up to a "fillup" station and the battery would be changed in minutes.
The charging stations would own the batteries. If you choose to charge your own battery and keep it longer, you would pay a demurage or rent charge. Owning a battery could be just be an option.
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