Green Update–>Obama Budget Compromises on EVs and Everything Else

Biden

First off, there will never be 1 million EVs on the road by 2015, as any reasonably informed person knows, even our automotive Cassandras like Niedermeyer. Mr. Obama is using the bully pulpit of the presidency to tout the coming EV revolution, but he has so compromised the government’s role in it as to send mixed messages to everybody.

To get to 1 million cars, the administration would have to make some politically hard choices, and that is simply not in their deck of cards. The most obvious is raising the tax on gasoline, and that won’t happen.

So the fallback is to throw bones to the consumer. The $7,500 tax rebate, which you now can get only at tax time, would become an instant rebate in the Obama budget. There are real problems with that, as we detailed here. Dealers aren’t thrilled about having to fork over the cash, then waiting to be reimbursed by the government.

Another bone: The budget proposes some $200 million in federal grants to 30 communities for “fleet purchases, infrastructure investment and streamlined regulations.” This is part of a total $588 million in the budget for clean-car technologies.

A bone taken away: The EPA fiscal 2012 budget for research on clean diesel and hydrogen fuel cells ($500 million) is zeroed out. Putting all the R&D eggs into one basket, and reducing the size of that basket, is just plain dumb.

I think EV technology will improve, and it does need some government help to take off, but you can be sure its development will be spotty, effective only in cities, and highly dependent on gas prices.

Auto writer Jil McIntosh put the obvious point on the price of gas:

As long as gasoline is cheap, people will buy the relatively inexpensive vehicles that use it, rather than the relatively expensive vehicles that don’t. People do the math. If the premium on that electric or hybrid car is more than what it saves in fuel, most won’t buy it.

At some point, our wizards in Washington will have to confront that simple fact if they want to get us off petroleum. Even the Washington Post has Mr. Obama’s number: The president’s budget refuses “to confront the hard choices that Mr. Obama is so fond of saying must be faced.”

Let’s not even reckon with the proposed Republican budget cuts.

Do you think Mr. Obama’s $7,500 instant rebate will stimulate EV sales?

—jgoods

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1 Comment

  1. At this point in the evolution of EVs, cost has always been a factor. Why would someone pay $41,000 for a Volt or somewhat less for a Leaf?? Unless buyers plan on keeping their vehicles for 8-10 years, the cost of such purchases is pretty much a wash. So the answer would intuitively be an issue of altruism. If I use my brother, a physician, as an example there is a good case to be made. He believes it is his duty to help save the environment and to wean us off gasoline. He is eloquent and sincerely believes that if enough of us have his mindset that some good can come from individual efforts to reduce emissions. Unlike the author who does extensive research on all subjects presented here, my brother is a true believer and his reaction comes from his heart and his mind. He cares nothing about cost or “facts” that are presented in the media. He genuinely believes what he believes and no amount of research can sway him.

    So for those folks like my brother the $7500 would probably be a no brainer and they would probably buy these EVs. As to the stimulative effect of that carrot, I believe that it really won’t be much of a factor. Despite media reports, the sales of these vehicles are pitiful.
    Production seems to be a problem and the pre-ordering requirement can’t help as the waiting list now stretches to 4-6 months. Recent reports indicate that charging these vehicles will add an additional $500-$600 to a buyer’s yearly budget. Reports also indicate that extreme heat and cold greatly diminish the efficiency of these vehicles and that the rosy mileage figures appear to be wildly optimistic. If these reports have any merit, the alleged savings would be greatly minimized.

    From an economic perspective, it appears that hybrids would give you more bang to the buck and would extend the driving range by a factor of maybe 2-4 times. So if economics isn’t an issue and one wants to save the earth, it still makes no sense to buy one of these rascals and that buying a true hybrid does, even if you are saving the planet a little less.

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