Sales of electric cars and batteries will climb steadily over the next five years, but what happens if government subsidies disappear?
That could be another matter, says a study from Lux Research. The study (cited in yesterday's story) paints an optimistic picture of the lithium-ion battery market over the next five years, but predicts a precipitous drop if tax credits are removed. And the study’s author believes that could happen as soon as 2019.
Indeed, the study shows that sales of plug-in hybrids (PHEVs) and pure electric cars would plunge during the two years after subsidy removal, essentially dropping by a half.
To be sure, no one knows with certainty when the subsidies might disappear. But in the US, each automaker’s tax credits are scheduled to end in the second calendar quarter after it reaches 200,000 qualifying vehicles. Whether the subsidies could be lengthened, or shortened by budget constraints, is still unknown. As the market grows, however, it could be more difficult for the federal government to continue.
”As more models become available and keep getting better in range and performance, it’s going to drive sales,” Laslau told us. “But that will place a bigger and bigger financial burden on the federal government in terms of subsidies.”
Today, electric car sales are picking up, in part because of a federal tax credit worth as much as $7,500. Some states -- such as California, Georgia, and Colorado -- are also offering substantial state credits.
Lux’s study breaks the EV market into three distinct categories, only two of which would be substantially harmed. The mass market -- those who buy mid-level cars such as the Nissan Leaf or Ford Focus EV -- would feel the loss of subsidies. Similarly, the fleet market -- taxis and rental cars -- would be hurt. The specialty market, which includes early adopters and luxury car buyers, wouldn’t see as big a drop in EV sales, however.
”For someone who’s buying a Nissan Leaf, the $7,500 tax credit makes a big difference,” Laslau told us. “It can bring the price down from the high twenties to the low twenties.”
Laslau added that the European market would not be as negatively affected as the US market. The fact that European countries give breaks on registration fees and road taxes would make the situation less volatile, he said.
The loss of subsidies would also be less dire for companies such as Tesla Motors, which makes luxury EVs. “Tesla will make it through this just fine,” Laslau said. “If you’re a customer spending $80,000 on an EV, then the loss of $7,500 won’t sway you much.”
Interesting, CNG has the two of the same fundamental issues as pure electric-energy density and refueling locations. Even though it has several advantages over pure EV-lower cost (typically I assume), relatively easy conversion from conventional and faster reueling time, it is still uncompetitive.
Excellent points, Dave Palmer. CNG still has issues that cab drivers don't like. As you point out, the main one is refueling. Cab drivers were feeling nervous about running out of gas and not being able to find a station. Another is lower energy density, which means more gas stations visits, unless you have huge CNG tanks on board. Huge tanks also means less space for luggage.
Uncreative, your logic is exceptionally well thought out--hybrids were never going to be the "be all, end all" transportation. They filled the gap for a couple of years until EVs could really catch up. As you said regarding rising consumerism for cars around the world, petro fuels are never going to be cheap again. I'll miss my Dodge Hemi (sigh).
@Charles: The hybrid taxis in Chicago got a big boost from subsidies -- the city reimbursed fleet owners for buying hybrids. But once they were available, they quickly became a hit with taxi drivers, who realized that higher lease rates were more than balanced by the lower fuel costs. Taxi drivers have to pay for gas out of their own pockets, so lower fuel costs mean more take-home pay.
On the other hand, the city's attempt to promote CNG taxis has been a big loser. Allowing CNG taxis to skip the front of the line at the airports, where drivers can get higher fares, wound up resulting in CNG cab drivers picking up airport passengers, then high-tailing it back to the airport with an empty cab. In other words, half the time they were driving without a passenger, hardly the greenest outcome. When the skip-to-the-front-of-the-line incentive was discontinued, hardly any drivers wanted a CNG cab anymore. It wasn't worth the hastle of trying to find a CNG refueling station.
The moral of the story is that incentives can help encourage people to try new things, but people will only stick with it if the underlying economics make sense.
With due respect, the whole HYBRID concept is fallacy, are mediocre at best, and a not a "real" indicator of fuel efficiency trends. I mean, you really have to question the HYBRID concept altogether from day one... Why would anyone buy a HYBRID rated at 40-45 MPG's when you could buy a standard true and tried off the shelf Corolla at about 35+ MPG's? No $5K battery to replace and higher maintenance costs to absorb. In other words, the HYBRID concept never made any sense to begin with. Simply put, HYBRIDs were and are simply an interim step to what truly makes does make economic sense - ALL electric vehicles.
I am in the oil and gas related business and although there are some new explorations, most notably in the South America region, the era of cheap oil has most likely passed. Even if conventional gas vehicles were to accomplish 75-100 MPG's would this be enough to accommodate 1-2 billion new cars as 3-4 billion people from emerging economies have more "wants" including cars. Think about that for ONE second, there are currently over 1 Billion cars worldwide (http://wardsauto.com/ar/world_vehicle_population_110815), very conservatively adding an additional billion cars would require that oil output almost double. Do you foresee this as the least bit possible? Not likely no matter what the price. Combustible engine would have to be rated at 300MPGs to even stand a chance.
Yes, there are some wonderful hybrids out there, Rob. But the dual-powertrain is costly. It's worth mentioning, though, taxi fleets seem to be sticking with hybrids. If you're driving your car for 300,000 miles, as those guys do, the higher initial costs are not very important.
Uncreative, don't give up so quickly on combustion engines. They're getting more and more efficient and may actually overtake EVs and hybrids carbon-for-carbon. Plus, new sources of oil and gas will likely make oil and gas energy more affordable in coming years.
A new service lets engineers and orthopedic surgeons design and 3D print highly accurate, patient-specific, orthopedic medical implants made of metal -- without owning a 3D printer. Using free, downloadable software, users can import ASCII and binary .STL files, design the implant, and send an encrypted design file to a third-party manufacturer.
For industrial control applications, or even a simple assembly line, that machine can go almost 24/7 without a break. But what happens when the task is a little more complex? That’s where the “smart” machine would come in. The smart machine is one that has some simple (or complex in some cases) processing capability to be able to adapt to changing conditions. Such machines are suited for a host of applications, including automotive, aerospace, defense, medical, computers and electronics, telecommunications, consumer goods, and so on. This discussion will examine what’s possible with smart machines, and what tradeoffs need to be made to implement such a solution.