Breaking: Senate passes PHEV legislation
by Jeremy Korzeniewski on Sep 23rd 2008 at 8:25PM 
Jeep EV
The Senate has approved a sweeping energy bill that includes a provision for a rather substantial tax credit for plug-in hybrids. Of course, the bill still needs to make it through the House, so there's no reason for PHEV proponents to get too excited just yet. The tax credits have a range of $2,500 to $7,500 and the actual dollar amount depends on the available capacity of the vehicle's battery. We are still waiting for all the details, as these things tend to be hugely complicated, but early indications are that the Volt from GM would be the only vehicle currently announced that would qualify for the maximum credit. Toyota voiced some dissent regarding that point, and we don't yet know if any changes were made. Of course, if Chrysler is able to get some of its new concepts into production, it may also qualify.
Current hybrid tax credits expire for a manufacturer after it has sold 60,000 vehicles. The new legislation allows for 250,000 qualifying PHEVs to be sold before it expires, but we are not yet clear on whether it would be phased out on a manufactuer-by-manufacturer basis or just end alltogether. Expect these issues to be made clearer in the near future.
Gallery: 2011 Chrysler EVs
[Source: Automotive News - sub. req'd]
Reader Comments (Page 1 of 2)
kentavos 8:37PM (9/23/2008)
Why wouldn't this apply to the Tesla?
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Brent 9:21PM (9/23/2008)
Don't know but I don't think it should. Someone buying a $100,000 car doesn't need a tax break on it! Plus, the waiting list is so long there isn't really a benefit. But with the Volt, they actually need a lower price to sell it.
Dave 10:07PM (9/23/2008)
Geez, yet another way to spend our tax dollars. I guess the $700Billion bailout for the greedy jerks on wall street, and the money we pour into Iraq every month aren't enough.
I guess this is a better cause and may lead to something more productive though.
This comes to $4-5Billion if you do the math...oh, and what is the latest price tag for Detroits "bail-out" to change their infrastructure? $25Billion? Gee, when I mis-manage my business and ignore the realities of life, will Uncle Sam come in and pay for my company too? Ethanol subisdies??? ROFL What a joke. The money we spent in Iraq to try to protect our interest in the oil bearing middle east? Have we passed the $TRILLION mark yet? I think so.
I wonder what we could do with even a few $Billion put against Bio-Fuels, especially algae-biodiesel/butanol?
If batteries are a good idea, they'll pay for themselves. If not, this is another waste. The sad part is that I'd like to see batteries and electric cars succeed. I'm just so fed up with the gov't trying to spend money to "help" and just wasting it with stupid decisions. This is another artificial bump that won't work.
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TopaZ 2:34AM (9/24/2008)
Whoa,
Tax credits don't "cost" taxpayers, because the money is never collected in the first place. It's far different from a subsidy, which is the mismanagement of funds after they've been forcibly removed from everyone's wages.
If only we'd eliminate the military industrial complex, there could be 100% tax credits for alternative fuel vehicles.
meme 11:13PM (9/23/2008)
I seriously hope this wasn't passed in the manner presented. It would have ruled out credits for things like the Aptera and the VentureOne. Why couldn't they just let it die and introduce a stronger bill next year?
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Andy 3:44AM (9/24/2008)
Looks like the house bill passed last week was pretty close to the same, so it should be passed soon.
http://www.autobloggreen.com/2007/08/05/house-passes-energy-bill-that-favors-cleaner-fuels-utilities-d/
Pretty blatant pork for Michigan. There's no incremental advantage for driving an all electric car no matter how low the price is, and existing hybrids get very little credit.
Why reward the company that produces the product at the wrong price point?
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Andy 3:56AM (9/24/2008)
I echo that Andy
More policy that favours the incumbents. Power of the lobby system.
S Baker 10:40AM (9/24/2008)
Toyota STFU, who cares what you think. You are a foreign company and should get nothing when it comes to US tax dollars! As for a "bailout" of Detroit, too bad, you will pay one way or the other. If the Dumbocrats get in this fall your bailout tax bill is going to get much much higher. Who do you think is going to pay for universal health care, Toyota?
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Chris M 2:07AM (9/27/2008)
Excuse me, but that tax deduction is for the Buyer, not the Seller, so it doesn't directly benefit the auto makers, foreign or domestic. Of course, it would improve sales a bit, but not necessarily the profit margin on those sales.
johnc 11:23PM (9/26/2008)
Why can't this incentive be applied to cars built from plans at home? You can buy plans for, and build your own PHEV for far less than a "factory" PHEV.
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Dave 12:09PM (9/24/2008)
Andy is right, this is pure pork for Detroit...or even worse pork for Toyota with my tax dollars.
Why do I care? Look I benefit from this. I'm a founder of a new company that is trying desperately to produce a hybrid electric car and we'll get all the benefits from this as well. (No, I'm not going to say which one because we're trying to keep a low profile until we actually have a viable car for sale. Don't need the hype to raise money so we're trying not to contribute to the hysteria around all this that hurts ALL of our credibility.) So I'm not picking on them, just being realistic.
I'm dealing with these battery companies every day and trying to get a better price on them and put together a sustainable business model that will succeed without taking money from the gov't to stay alive.
Face it, the Volt is a great idea, but it's being executed poorly. I'm not picking on GM here, they're busting their butts. The point is that you'd be better off to use their exact same design with only a 5 mile all electric range....at least with today's batteries and prices. You would still get much better mileage, especially in the city where the regen braking could make a huge difference.
The GM thinks they'll get about 50mpg when running in "extended range mode". Those numbers are realistic folks, we're getting about 57 right now in our testing.
So the math looks like this:
An EV cost about 4 cents per mile to operate. (just going by average electricity costs around the US and the real world 3.5 miles an EV gets/kWh with your average Joe and the way they REALLY drive everyday)
If the Volt gets 50mpg in ER mode, then you're talking about 8 cents per mile to operate.
So, the savings is 4 cents a mile in pure EV mode.
That means you have to drive for 7500/.04 = 187,500miles to make that $7500 pay for itself.
uhhhh, how long is that battery going to last again??? Oops.
Now let's look at the REAL costs of that battery system. The best price we've been able to get, even with high volume commitments was just shy of $8,000 for a 15kWh pack. And only HALF of that is usable unless you want to destroy the battery life folks. So you're talking an all electric, REAL WORLD EV range of less than 25miles. Oh, by the way, our mean old CFO is making us set aside at least 30% of the battery costs for warranties. So the cost for us as a manufacturer is really $10,400. More like $15,000+ if you really want a 40 mile all electric range.
Guys, I WANT this to work. I wish very badly that these numbers made economic sense. But they don't.
So, we're all Green here right? I, personally, get a tax break for my company for this right? So why should I complain??? Because it's not sustainable. It's a temporary fix and it costs the tax payers too much money for very little payback. It's no different than subsidies for corn ethanol. If I'm against them because they are not right, then I can't, in good faith, be for something that just benefits me today and screws the rest of the public. People are lying to you when they say this fixes things. It just lets a few car makers get an artificial helping hand to do something that is not sustainable yet. Don't let me, or anyone else tell you that this step is "critical to getting to all electric vehicles". BS. We can make a "Volt" with really good gas mileage today with only 1kWh and drop in the extra batteries in next years model whenever the prices make sense and the grid is really green. Hey, if you live in some place with a bunch of solar panels and you have the extra $10,000 to pay for the batteries, I'll be glad to add them for you. Ever seen anyone make a choice between a standard or automatic? Same thing. What are you willing to pay for? How long do you want your all electric range to be Sir? Sure....just bump that price tag up :-)
I'm not trying to be negative, so I also have a suggestion. Put this money/tax break/tax incentive/investment/whatever in biodiesel from Algae. Use it to make the grid cleaner...put it into solar or wind.
When the batteries are ready to really make sense in 4-6 years, then the grid will be cleaner by then. In the mean time, we can work on making the bio- diesel/gas/butanol/ethanol that we are using cleaner, greener and home grown. Ok, forget the ethanol...to stupid an idea to even talk about...but the rest make sense.
http://www.technologyreview.com/Energy/21395/
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Chris M 2:19AM (9/27/2008)
GM is using 16 Kwh battery packs, and using just 8 Kwh to achieve a 40 mile EV range.
Yet Dave can only achieve 25 miles with 7.5 Kwh? Makes me wonder just how heavy and un-aerodynamic his hybrid design is! Maybe it's a monster SUV? Or maybe he just designed it that way specifically to discourage plug-in sales and promote other fuels instead.
Raj 10:23PM (10/11/2008)
Dave -
Here's my question, since you're apparently in the industry - how can we factor in decreasing costs of batteries and (especially) increased R&D that comes with the fund injection in your scenario? It seems like sustainability requires looking at things in terms of early adopters as well as down-the-road.
The tech sector has shown us that costs come down dramatically as tech development increases and production increases... I know batteries haven't fallen like, say, Flash RAM or something, but battery life has increased with the standardization of Lithium Ion batteries, and prices have come down.
So I guess my question is - is Chevy doing a bad thing by taking a $10k loss per Volt early on (banking on the creation of a new marketplace, and a reason for increased battery production, etc etc... that makes everything cheaper), or do you really believe that given the changing/developing marketplace, battery powered autos are just out of the question, period.
Seems to me that it would make better sense to sell the volt at cost (not take a loss), let early adopters get in on it, and hope that costs of production come down either way... especially since that's what they're pinning hopes on regardless.
Finally, we have to remember that this is just a tax *credit* - not a tax-based direct fund to car makers. That means that it serves as an incentive to *buyers* to purchase these cars, that is all. What you're talking about - tax injections into certain markets like biodiesel - is a different method that requires a redistribution of tax dollars already collected.
These things may not seem very different, but they have significant political ring in Washington. Tax credits influence the market but let it run its course, tax injections are *presumably* less effective because the amount of dollars Washington would put into the developing tech would have to be HUGE to compare to the buying power of consumers in a popularizing (emerging) marketplace.
Tim 12:13PM (9/24/2008)
These bills are often 90% pork for special interests to lubricate the 10% that is good for the rest of us peon taxpayers who are ALWAYS forced to pay the WHOLE tab.
Tax credits... OK, we pay too much anyway.
Direct payments... HELL NO! NO TAX MONEY TO FOR PROFIT COMPANIES UNLESS THE GOV'T IS BUYING GOODS OR SERVICES... PERIOD.
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Raj 10:24PM (10/11/2008)
Dude, do you have any idea how much money state AND federal government will lose if GM, Ford, and/or Chrysler go belly-up? Trust me, that'll hurt you more, because given our spending record these last 8 years, guess who will get to make up the losses from these huge companies?
That's right. You. The pittance you pay in income tax compared to corp tax payments will change, and for you, not for the better.
So you're damn right this is a tax credit to support emerging technologies from AMERICAN companies. It's not the most efficient, perhaps, when it comes to snapping up the most efficient hybrid, but policy makers have *much* more to worry about than just your car's MPG.
They are constantly factoring in total potential economic costs/benefits in terms of overall tax revenue, among other things.
The result? Their choices often seem pretty bizarre and less efficient. But we're talking green tech vs tax revenue here. Either you make the choice to let these corps (GM, Ford, etc) die and hope others rise to take their place, or you go with the "safer" option, and support already huge and developed corps.
Seems like in this case, they're going with the latter.
Dave 12:34PM (9/24/2008)
Sorry, meant to add these links too before I hit the "send" button:
http://www.technologyreview.com/Biztech/21405/
http://www.treehugger.com/files/2008/09/bill-gates-invests-in-algae-biofuels-sapphire-energy.php
There are lots more of these links and most of us have read them. My point is that there ARE sustainable, economically viable paths forward. Why do we let some idiot politicians make these choices guided by a few lobbyists? Because that's the way our system works unfortunately. And I don't care if they are Republicans or Democrats. That only changes the amount of money they waste and what pork they choose to waste it on.
I'm trying to figure out how to educate the public so there might be enough people to call "BS" so that they can't keep doing these things. Ok, I can only dream.
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Bill 8:39PM (9/24/2008)
I hate to say it, but I bet we'd get more results targeting tax credits towards commercial vehicles instead of subsidizing those well-off enough to buy a Tesla or Volt.
Paying to upgrade long-haul trucks with something like the Firefly battery or a diesel-fired APU/battery in order to avoid idling the main engine overnight would likely lead to larger overall fuel savings than subsidizing light passenger vehicles.
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Dave 4:47PM (9/27/2008)
@Chris M....You have to look at real data. I'm not trying to stop you, my company, GM, Ford, Joe's garage and all night dining emporium, or anyone else from producing efficient, clean electric cars. Go for it! Everyone. Someone produce this car that meets all the goals we want to see, and get rich! Save the World! All of the above!!! Please!!!!
I'm including data, with sources, below. Go find out what is really possible and what we're all trying to do. If there is a way to make the car get 40 miles on some cheap battery pack...then please show me the source and I'll gladly buy it and put it in a car for sale. What? You think I don't want to make money???
From Argonne real world road testing and real world data below:
http://www.greencarcongress.com/2008/09/argonne-study-h.html#more
GM is not getting 40 miles from 8kWh. Those were some early goals and not very realistic ones. From one of their own people earlier this year (and the article above):
During a presentation of the GM study earlier this year at the 2008 SAE Hybrid Vehicle Technology Symposium in San Diego (13-14 February), Pete Savagian from GM noted that GM designed the Volt with the intention of delivering 40 all-electric miles on the urban schedule. Driven under the more aggressive US06 scenario, he said, the Volt would deliver about 32 all-electric miles.
What they are really doing is using about 10kWh of that pack and hoping to get 40miles...but actually getting about 32 miles.
So do the simple math. 3.2*7.5kWh=24mile range. I'm talking about what GM...and everyone else can get. Not what I'm doing. I don't want to stop anything. This is NOT a slam on GM. They are getting the same results as everyone else I've talked with that is making a car. It's a simple measurement of what we're all seeing in the real world.
I spoke at great length and in depth with the guys at The Southern Company who tried to promote EV fleets and cars in Ga for 15 years. They even set up charging stations all over the place to charge them in Atlanta. The best they ever saw was real world numbers of a little less than 6miles/kWh from an EV1. yes, just like we all knew....that was an awesome little car!!! The next best they ever got, in real world conditions, was the RAV4 which came in just under 4 miles/kWh.
Do the math yourself. The RAV4 got 4miles/kWh so 8kWh would give you a 32 mile range.
I hope we can get a real world car that gets 5 miles/kWh with an average person driving it. I hope we can get an affordable battery that doesn't cost more than the rest of the Bill of Materials for the rest of the car put together! It has not happened yet.
if you can do it, then please tell us how. The billions that big car companies and everyone is spending trying to survive and do this? The millions my company is spending? I'm sure we're all incompetent or part of some grand conspiracy. I'm putting my money, my time and my career at risk trying to make it work. What are you doing besides dragging others down?
Go make this wonderful car and sell it to the rest of us if you know how. We'll all be glad to buy one.
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Chris M 4:10AM (9/29/2008)
"Do the math yourself. The RAV4 got 4miles/kWh so 8kWh would give you a 32 mile range."
Yes, and the RAV4 EV was a converted SUV, less than optimum for EV performance. The Volt is both lighter and considerably more aerodynamic than the RAV4EV, so it would be expected to get better fuel economy.
Of course, as the old saying goes "Your mileage may vary". Driven aggressively at high speeds, the EV range could be considerably reduced, and modest speeds might do much better.
Dave 3:49PM (9/29/2008)
@Chris M...First, sorry for the rant. I'm just frustrated because we're trying really hard to make this work and sell exactly the car you're describing. It's hard to make the numbers work and the car affordable. I used to laugh at GM and the rest and assumed they were stupid until we tried it ourselves. It's hard.
Right now I'm frustrated with the battery makers and it would be easy to blame them for not giving us better prices. But I've been in their plants, talking to their people and watched their faces and know how hard they are trying too.
The Rav4 weighed about 3400lbs. Not as much as you'd think. The Volt comes in around 3500lbs right now. It's not the small, svelt thing everyone is imagining. It may drop some weight by the time they hit production, but it's hard to cut 10% off a car's weight.
The aerodynamics will clearly be much better for the Volt, but for a mixed driving measure (city/hwy) that is not as big a difference as you would think. We're finding that you have to get up to over 60-70mph on sustained hwy driving to even be able to measure a difference due to the aerodynamics.
The typical driving to get that 30-40 miles all electric range (as you said, results will vary) is not weighted towards sustained hwy driving.
So the bottom line is that weight and aerodynamics won't make the difference you think in this case.
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