The point-of-sale concept is also important, Hurst said, especially for Americans who pay low tax rates. Under today's system for electric car tax rebates, Americans who pay little in federal taxes may not get all (or even any) of the rebate. "Because it's a tax credit, you have to be paying that much in taxes in order to get it all back. But if you do it as a point-of-sale rebate, you'll definitely get the full amount back."
A subsidy increase would also help automakers learn more about consumers' needs. Automotive engineers would have an opportunity to find out how EV owners use their cars, how long their batteries last, and how their vehicles perform under varying conditions. "When you go to production, you learn a lot," Sven Beiker, executive director of the Center for Automotive Research at Stanford University, told us. "It will help the industry understand the consumer. And it will help the consumer understand himself or herself."
GM announced last week that it was halting production of the Chevy Volt for five weeks due to poor sales figures. Obama's proposal is expected to motivate EV buyers.
However, experts say increased subsidies would not change the big dilemma facing the EV battery market. Economies of scale would help cut battery costs to some degree, but they would not necessarily bring the costs low enough or the energy density high enough for mass adoption of EVs.
"Even if you had 50 or 60 million electric vehicles on the road, it still wouldn't bring about the revolution in battery technology that all of us hope for," Beiker said.
David Cole, chairman emeritus of the Center for Automotive Research in Ann Arbor, Mich., said the technology must be allowed to mature on its own. "Everybody who's capable of engineering batteries is already working overtime. When it becomes economical, it will take off. But you can't force it to go any faster than it already is."