President Obama, in his 2011 State of the Union address, set a goal of one million electric vehicles on the road by 2015. The aim is to build U.S. leadership in technologies that reduce dependence on oil, enhance environmental stewardship, and promote transportation sustainability, while creating high quality jobs and economic growth. The million EVs would include plug-in hybrids, extended range electric vehicles, and all-electric vehicles.
To reach this goal, President Obama has proposed a new three-part plan to further support EV manufacturing and enhance adoption. This includes revised tax incentives plus greater research and development, investments, and programs to encourage communities to invest in infrastructure for EVs.
The current $7,500 tax credit would be made more attractive by offering it at point-of-sale rather than requiring a wait until the end of the year. Investments in R&D for electric drive, batteries, and energy storage technologies would be increased. Communities investing in infrastructure through competitive grants and the removal of regulatory barriers would be rewarded
An Environmental Protection Agency report, ‘One Million Electric Vehicles by 2015,’ concludes that this goal is within reach in terms of production capacity. However, initial cost, unfamiliarity with the technology, and infrastructure limitations – very real potential barriers to achieving a large-scale market for EVs – are not considered.
According to EPA, there is substantial consumer interest in EVs, as demonstrated by the larger-than-anticipated pre-orders for the Nissan Leaf and the Chevrolet Volt. Whether this interest translates into sales beyond the initial ‘early adopters’ who embrace new and innovative products will depend on initial consumer experience with these early vehicles, and on how experiences are communicated to, and perceived by, the rest of the car buying public. Important unresolved issues include resale value, range, and availability of convenient charging facilities.
In related action, President Obama's proposed federal budget cuts all funding for clean diesel and hydrogen fuel cell vehicle research. The $80 million in funding would probably be shifted to EV-related incentives and R&D.
ANALYSISThe projection of a million EVs by 2015 is based on the ability to build electric cars rather the more difficult job of selling them. What’s eye-opening is that the basis for projected production numbers is information sourced from EV manufacturers and media reports, and media typically get this information from the manufacturers. It is not from any real market analysis showing how many EVs people will actually buy.
While projected Volt and Leaf numbers are likely achievable, estimated sales of 231,000 electric cars from a company that few people have heard about, and has yet to sell its first unit, raises questions. And will 57,000 buyers really opt for a tiny city car – also from a relatively unknown manufacturer – at $34,000 a copy, or even $26,500 after the tax incentive? How about another projected 55,000 unit sales of an electric model that is not yet on sale? All three of these optimistic scenarios, representing more than a third of a million units, are included in the Administration’s projections.
By proposing to cut funding for clean diesel and fuel cells to zero in favor of EVs, President Obama is essentially saying we don't need oil any more now that we have electric cars. By this, the government in reality is picking market winners and losers based on very limited experience.
Cutting fuel cell funding might be prudent in today's austere environment, but cutting diesel funding is not. While electric trucks and buses may be suitable for shorter routes and intracity duty, diesels will probably always be required for long haul trucks and intercity buses. Also, there would be no funding programs for retrofitting buses and trucks with clean diesel technology that is producing results today. And consider: About 50% of the cars sold in Europe and 70% in France are diesels, Do they know something we don't?
