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Jan 5, 2012

Why So Many Critics After 17,000 EV Sales in First Year?


Figures this week showed that the first mass-produced electric cars in the United States, the Nissan Leaf and Chevrolet Volt, had total sales of 17,345 in 2011, the first year in which they were available. Compared with sales of 9,350 gas-electric hybrids in 2000, the first year the Honda Insight and Toyota Prius were offered in the U.S.—where total hybrid sales have now topped 2 million—17,000 might seem like a decent start for EVs.

Instead, they are under fire—even as gas prices jumped because of Iran’s threats to close the Strait of Hormuz, a chokepoint in global oil trade.

The Washington Post on Sunday called for elimination of the $7,500 tax credit for EV purchases, and Mike Kelly, a congressman from Pennsylvania who is a car dealer, has introduced legislation to end the credit.

Rocky Mountain Institute sees EVs as a crucial step in moving the United States away from fossil fuels for reasons of national security, human health, environmental protection and durable economic advantage. EV benefits go beyond fuel economy. Reinventing Fire, RMI’s new, peer-reviewed book backed by 30 years of Institute research, shows that EVs—ultimately made of ultrastrong, ultralight materials that dramatically speed energy savings—can become energy storage vessels that feed electricity back into a revamped, more-secure electrical grid.

A great deal of difficult work on how we generate and distribute electricity stands between today’s reality and that vision, extending far beyond EV sales and incentives. Recognizing that Washington is all but paralyzed by partisan gridlock, Reinventing Fire calls for no new acts of Congress. Business must lead this ambitious transition to a safer, cleaner, stronger America, with rational state-level regulatory changes.

Of course people respond to incentives, and the EV tax credit—written to phase out when a manufacturer’s sales hit 200,000—is a proven way to spur a socially desirable change. Governments have long subsidized transportation, directly and indirectly, from granting rights for oil drilling to building our vast network of roads with tax dollars. Because Congress has approved tougher fuel economy standards, creating an incentive for EV buyers similar to the hybrid incentive that was phased out as sales grew would seem like consistent policy.

These calls to repeal the EV credit show both that the nation can’t necessarily count on Congress to guide its energy future (though, in fairness, Congress is a long way from acting on this) and that the nation’s media are adopting a flawed narrative about EVs. It is becoming pro forma that news stories about EVs say that Volt and Leaf sales disappointed this year and that the Volt is under investigation for battery fires. (General Motors on Thursday announced a fix to strengthen the Volt battery case, a day after niche EV maker Fisker, which has had no fires, recalled 239 cars to study similar issues.) Most EV media pieces—the Post editorial being no exception—lack context about early hybrid sales and the fact that two Volt fires started under extreme conditions in a laboratory, unlike the tens of thousands of real-life fires each year in gas-powered vehicles.

The Post editorial (which incorrectly said the Volt fires occurred in “road tests,”) took this tilted narrative to a new level, saying, “The Obama administration says that the credit helps build a market for EVs, which helps create jobs. Given the price of eligible models, like the $100,000 Fisker Karma, that rationale sounds an awful lot like trickle-down economics. …” The piece cherry-picked the Fisker's price tag as an example of overpriced EVs, but made no mention of the best-selling EV, the Leaf, which lists for about $32,000 before the tax credit.

Despite criticism, experts believe EV sales will grow. LMC Automotive, which doesn’t count the Volt as an EV because it has an onboard generator that kicks in when battery gets low, projects pure EV sales of 95,000 by 2016. (GM plans to produce about 60,000 Volts worldwide next year.) “The Volt fires and the Fisker battery issues may scare some people off, but so far no one has been hurt or injured so I don't think the market will collapse,” said Mike Omotoso, senior manager of Global Powertrain Forecasts for LMC. A survey by Pike Research found that 40 percent of Americans—a very sizeable market but down from 48 percent two years ago—are “extremely” or “very interested” in owning an EV.

Federal policy aside, tax credits can be driven at the state level. For instance, Colorado has had a tax credit that goes up to $6,000, depending on the price differential between the EV and a comparable internal combustion vehicle. RMI’s Project Get Ready, which works with partner cities and private business to help prepare the nation for EVs, has seen growing movement toward incentives at the state and city level.

RMI has long advocated carefully designed, revenue-neutral “feebates” that can be enacted at the state level. (In fact, the California Legislature passed such a program in 1980, but it was pocket-vetoed by Gov. George Deukmejian.)

A feebate system, which is agnostic toward vehicle technology, levies a fee on the least efficient models in each vehicle class to finance a rebate for the most efficient vehicles in the class. The more efficient the auto, the bigger the rebate. In this way, the government doesn’t pick winners or steer consumers away from, say, crossover vehicles that can carry four children, a dog and some sports equipment. Feebates provide a powerful price signal that influences auto-buying decisions the instant they’re made and maintain a continuous incentive for automakers to innovate.

Here, the Post editorial, in its short-sightedness, helps make RMI’s case:

“Electric cars are not likely to form a significant part of the solution to America’s dependence on foreign oil, or to global warming, in the near future,” the Post says.

This is not a near-term battle that can be won by whipsawing manufacturers between tougher fuel economy standards and repealed consumer incentives. If we as a nation view it that way, we will continue to wring our hands when madmen threaten to close the Strait of Hormuz and will continue to tie our security to the stability of Saudi Arabia and its royalty’s ability to manage the oil market.

We can aim high, striving to end America’s fossil fuel dependency by 2050 by engaging our ingenuity and private enterprise engine to claim a $5 trillion prize and lead in the world’s clean energy race. An alternative to that is to bicker over short-term incentives and outcomes and to put innovation in a shooting gallery because it didn’t take over the U.S. vehicle market in its first year.


Showing 1-10 of 23 comments

January 8, 2012

Excellent breakdown of the first year of EV sales. I have read "Reinventing Fire" keep up the great work.

January 16, 2012

"Colorado has had a tax credit that goes up to $6,000, depending on the price differential between the EV and a comparable internal combustion vehicle."

Can anyone actually tell me what "comparable internal combustion vehicle" is in a real, concrete, instance in terms of this confusing Colorado tax credit?

For instance, what is a comparable ICE for a Nissan LEAF? The logical answer would be a Nissan Versa, but something tells me this tax credit is anything but logical ...

January 18, 2012

Why do we still permit all the NOISE,horrid fumes from exhaust and only concentrate on fuel efficiency or power,distance, etc.
Hypbrids will still kill and injure and cost us plenty from our public purse that we have been paying for decades for the uses and abuses of automobiles.
The first thing I hear when I awake at dawn are the seagulls and motors turning over.
What stupid design to make pedestrians share passageways with these contraptions.
We bail out an industry that costs us our health, peace of mind, polluted,filthy environment
while they spend billions each year to convince us how much we need their wares.
Anything else this toxic is eventually removed from the market.
The ignorance persists.
Excuses for driving will persist.
Atleast with electric vehicles we will have a more peaceful existence, let's hope.
Electric conversions are happening, and that is better because it is a form f recycling.
We need role models.

January 18, 2012

The feebates graphic needs work. The text in the charts is very fuzzy. ICE should be explained as Internal Combustion Engine. EIA's meaning is unknown to me, though I've been reading Lovins since 1980.

January 18, 2012

Another variation on Feebates is Energy Rewards. Energy Rewards are zero interest loans that must be invested in new renewable energy or energy saving technologies and systems. You earn Rewards if you consume less energy. This can be measured by the per head consumption of of mains electricity to the home.

The funds to pay the Rewards comes through quantitative easing which can be achieved through issuing interest free loans at any level of government. By ensuring the funds are invested in productive enterprises quantitative easing does not increase inflation - rather it reduces the cost of energy.

January 18, 2012

..as long, as the automotive manufactures globally
will only put an electrical drive into the power train
of century old cars, they will not achieve anything.
We all need added value and a complete new transport system.

Otherwise we will soon lose with 7 bn people on this small world.
The Rocky Mountain Institute was good on this topic one,
but as it looks, it has also lost much of it`s power...

January 18, 2012

The idea of electric cars is great but there are a lot of draw backs . # 1. The price is out of reach for someone making $7o,000 or less. # 2. The size and comfort ability, (Seniors,and large families, big people). #3. Performance in mountainous terrain and long trips. #4. How they handle in snow,ice, heavy rain, high wind. # 5. Availability of charging stations and the costs. #6. The warranties on car and batteries and life expectancy. Just to name a few.
The tax credits and incentavies were a must to get this off the ground but should have a time limit. Extensions could be granted if improvements in technology, servicability and safety are demonstratied. We cannot afford to have perpetual tax credits and incentativies for large corporations. The enviorment needs to be saved.

January 18, 2012

In order to make the EV viable, we need an infrastructure.
In order for people to begin installing an infrastructure we need a standard charging port.
In order to have a future, the charging port must be capable of supplying enough power to recharge an SUV sized car, in 45 minutes (while the driver has lunch) and to run that car for 4 hours on the highway.

Once such a standard becomes "universally applicable to all EV models" and available as an "open source" item, we can begin to build the infrastructure and to operate EVs.

January 18, 2012

Those of us that believe that the energy source for private vehicles must change will have to persevere and do what we can to move forward. I now drive a. 2008 plug-in Prius which is a transition (or bridge) solution. I live in Minnesta so I drive in some pretty challenging temperatures. I bought the used Prius last year and had the 4kwh battery pack installed two months later. Under those conditions my total investment in under $21k. Until more charging infrastructure in installed, hybrids will be the preferred general purpose solution. I hope my next vehicle is an affordable EV.

January 19, 2012

They had to start someplace. Just like the first computers and cell phones the cost starts high yet keeps getting lower and better. The batteries have already improved and will coninue to get better and last longer. EVs also go great with Renewable Energy.

All vehicles are better with less trips and miles, car pooling and driving like you case.

A bicycle can still cover many shorter trips in fair weather. Telecommuting is really efficient.

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