CalCars: US customers could prepay for plug-in hybrids at $10,000 each
by Sebastian Blanco on Dec 3rd 2008 at 7:58PM 
click above image for a high-res gallery of the Ford Escape PHEV
At the EDTA Expo in DC this week, Felix Kramer of CalCars is circulating a proposal to a.) help the auto industry and b.) bring more plug-in vehicles (PHEVs) to market. The idea is for customers to pre-pay for PHEVs now and take delivery by 2012, at the latest. CalCars says the idea would deliver "the fuel-efficient low-emissions plug-in cars people want, using today's technology and today's infrastructure" (read it in full after the jump). While in some ways the proposal is a loan from the end users (us) to the companies, the idea really hinges on making those bailout billions dependant on the automakers actually getting plug-in hybrids to market. They would be "encouraged" to take $10,000 deposits on the highway-speed PHEVs with at least 4kWh battery packs in them. Loan guarantee bailout money becomes available to the automakers once they "commit by year-end 2008 to have at least one eligible plug-in vehicle for sale by the end of 2010 in volumes greater than 10,000." The amount of the loan guarantee is dependent on the volume of prepayments they collect.
So, what do we get out of the deal? Well, aside from potentially saving the auto companies, the proposal suggests a 100 percent refundable tax credit for the $10,000. There would also be tax credits or grants for fleet purchases. Don't say CalCars isn't ambitious: the groups says that, "We aim to enlist five million pre-purchasers. At an average of $10,000, this will generate $50 billion for carmakers. Buyers will get the money back in less than a year via tax credits."
Read the full details after the jump. Then, tell us, would you - today - give Ford or GM $10,000 for an Escape PHEV or the Volt?
Gallery: ABG First Drive: Ford Escape PHEV
[Source: CalCars / Felix Kramer]
PRESS RELEASE:
Proposal: Prepay for Plug-Ins to Save & Transform the Auto Industry
INTRO: "How Prepaying for Plug-In Cars Can Save and Transform the Auto Industry" is CalCars' proposal for federal actions in December-January to aid the auto industry. We hope that the concept and perhaps the specifics of this proposal can be incorporated into Congress's response to the "sustainable plans" the carmakers will be bringing to Washington DC.
We're continuing to circulate this proposal to non-governmental organizations for possible co-sponsorship, and to people in the auto industry, Congress and in the Presidential transition team. It is followed by notes and background. We're publishing it on CalCars-News and distributing it at the Electric Drive Transportation Association (EDTA) Conference December 2-4 in Washington, DC.
HOW PREPAYING FOR PLUG-IN CARS CAN SAVE AND TRANSFORM THE AUTO INDUSTRY
Congress and the President-Elect have asked Detroit's automakers to come back with a plan. What if that plan, and automakers' credibility, could be based in large part on delivering the fuel-efficient low-emissions plug-in cars people want, using today's technology and today's infrastructure?
We propose a way to give carmakers the cash they need to keep going -- while making sure they devote maximum effort to rapidly transform their companies and their product lines. We build on the breakthrough $7,500+ plug-in tax credits enacted in October -- when the federal government quantified the public benefits of displacing petroleum with cleaner, cheaper, domestic electricity.
Our "end of business as usual" proposal is a multiple win: for car buyers, communities whose plants will stay open, automakers, energy security, and efforts to slow global warming. Here's our plan, followed by some additional explanations:
A FEDERAL "PREPAID PLUG-INS PLAN" FOR A 21ST CENTURY CAR INDUSTRY would give carmakers real targets and quick funds. Here's how it can work:
* CARMAKERS PRE-SELL PLUG-INS. They're encouraged to accept $10,000/vehicle deposits on highway-capable PHEVs and EVs with at least 4kWh battery capacity (the minimum for existing tax credits), to be delivered ASAP and NO LATER THAN YEAR-END 2012. The sooner they issue PRELIMINARY specifications and maximum prices, the sooner they become eligible to collect prepayments. Any carmaker that wants to receive loan guarantees beginning in January 2009 must commit by year-end 2008 to have at least one eligible plug-in vehicle for sale by the end of 2010 in volumes greater than 10,000.
* INDIVIDUAL CAR BUYERS get a 100% refundable federal tax credit on their $10K prepayments.
* FLEET BUYERS get 100% refundable federal tax credits. (Public fleets receive 100% grants.)
* U.S. GOVERNMENT The level of loans guarantees to carmakers is based on the volume of prepayments received by each carmaker. Government also provides bonus payments to automakers for every plug-in vehicle delivered by year-end 2012 -- large incentives in 2010, declining in later years. Deposits with carmakers that don't deliver by 2012 become debt to U.S.
* CONVERSIONS are included in tax incentives to consumers and automakers for safe and reliable plug-in retrofits of existing internal combustion engine vehicles.
THE PROGRAM AND THE MATH: We aim to enlist five million pre-purchasers. At an average of $10,000, this will generate $50 billion for carmakers. Buyers will get the money back in less than a year via tax credits. Credits for deposits made by 4/15/09 can be counted for the 2008 tax year.
OUR IMMEDIATE GOAL: To get buy-in on this concept -- or some variant of it -- so it's on the agenda of automakers, Congress and the incoming administration. This can happen if ANY ONE OF THESE PARTIES steps up in the next few weeks.
NOTES: This is an outgrowth of the "fleet moratorium" idea by Steve Marshall of the Cascadia Institute and Denis Hayes of the Bullitt Foundation plus CalCars (see the second half of "Can Fleets Help Rescue Auto Industry? Four Actions Could Make a Difference" at CalCars-News). It also reflects strategic thinking by Craig Lewis, VP of Government Relations at GreenVolts and formative member of Clean Tech for Obama.
Please consider endorsing it on behalf of your company or organization; convey comments to fkramer@calcars.org (Felix Kramer) or call 650.520.5555, and by all means forward the proposal.
ISSUES TO BE RESOLVED:
* How does this connect to the $7,500 already available to the first 250,000 purchasers?
* We need an adjustment mechanism for buyers of vehicles whose specifications/price change significantly from when they were prepaid to when they become available.
* This program can be oriented to automakers that most need support if the incentives they receive include small levels of government equity.
* A possible parallel program that would expedite the initiative is a federal "feebate." This revenue-neutral measure will incentivize high-MPG vehicles in multiple vehicle classes and disincentivize gas-guzzlers, while having no impact on most mid-range MPG cars.
BACKGROUND:
WHY ARE CAR SALES FALLING? Not just because of the economic crisis. The more Americans hear that better cars are on the way, the more individuals and fleets will be reluctant to commit to inefficient vehicles whose resale value may fall quickly because they run only on price-volatile, polluting fossil fuels. We can harness these impulses.
WHAT ARE TIMING ISSUES FOR CARMAKERS TO SURVIVE LONG ENOUGH TO EVOLVE? The low-carbon, high-MPG plug-in hybrids (PHEVs) and electric vehicles (EVs) they want to sell are two to four long years away from mass production. General Motors says it plans to electrify its whole fleet, beginning with the Volt and the Vue in 2010-2011. Chrysler CEO Robert Nardelli says choices must be made -- so he's focusing on electricity. Chrysler plans to build one of three "production-intent" plug-in prototypes. Ford has PHEV prototypes of its Escape hybrid; Bill Ford has talked with President-Elect Obama about support on electrification. But Ford Motor Company plans no plug-in production until 2015. At this rate, vehicles won't arrive soon enough to save the auto industry -- let alone U.S. industrial leadership or the climate.
WHY NOT ENLIST THE AMERICAN PUBLIC'S BUYING POWER? We're inspired by how Americans rose to past challenges: We raised $17 billion Liberty Bonds in two years in World War I. And 85 million Americans bought $185 billion in War Bonds during World War II. Especially since dollars back then were worth over ten times more than now, our proposal is small in comparison.
WHO WILL PUT DOWN $10K IN ADVANCE? The proposal challenges automakers to explain, market, and promote plug-ins as energetically -- and urgently -- as they have other vehicles. Plug-in advocates will pitch in. It requires having cash on hand, but telling buyers they'll get the prepayment back in a tax credit within months will help. Auto industry supporters are prime candidates.
FLEETS ARE ALREADY CONSIDERING PURCHASES: The November 14, 2008 Wall Street Journal reports, Hey, Auto Industry, Need a Jump? Utilities Consider Buying Electric Cars "to put weight behind development and, perhaps, persuade Congress to give the auto industry the assistance it needs." (Find the story at CalCars-News). Auto rental/car sharing companies are other likely candidates.
HOW DO CONVERSIONS FIT INTO THE PICTURE? Retrofits will speed plug-in market penetration beyond new cars; even "partially electrified" vehicles will significantly reduce fossil fuel use. They will provide revenues to carmakers for vehicles they've already sold. And they will create local green retrofitter/installer jobs. Both independent companies and carmakers partnering with third party QVMs (Qualified Vehicle Modifiers) can participate in conversion businesses.
Reader Comments (Page 1 of 1)
Patrick 9:12PM (12/03/2008)
Two words: unsecured creditor.
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Phil L. 10:11PM (12/03/2008)
Do you have $10K laying around that can be put into something you might get in the future? I don't.
I suppose I could borrow against my 401(k). Oh, wait...
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Peter 10:48PM (12/03/2008)
I have heard this one before, but it involved a prince needed my help to release his money.
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Paul 11:24PM (12/03/2008)
Wow, seriously one of the worst ideas ever. This amounts to saying little more than "I PROMISE to buy an as yet unnamed, unseen American PHEV or EV sometime in the future," since you pay the money and then get it back almost immediately in the form of an equivalent tax credit. Then, you probably can (see issues in the press release) and will back out of this "promise." Plus, no manufacturer is claiming the ability to (or possibly could) produce PHEV's in the quantity needed in the timeframe provided. Do the math. How many years does it take to produce 5,000,000 vehicles at 10,000 x 3 per year? Even at vastly higher production volumes, it would EASILY be 2020 and probably later before they could satisfy the per-orders alone.
This is a funny-money proposal at best.
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flacopower 3:27PM (1/28/2009)
So I give them $10,000 as a pre-payment on the Volt, get it back through tax credits and still have the $10,000 go towards the car? Sounds good, but realistically 5,000,000 is almost 5% of the workforce. Do they really think that 5% of American workers are a) concerned enough about the environment to want to buy a rather impractical electric car that they have no guarentee to actually take delivery on and b) have $10,000 sitting around they don't mind putting towards a car that is optimistically two to three years away? Yeah not likely...
Ben 10:25PM (12/04/2008)
hmm... as if I would trust someone who has had serious denial issues and a addiction of such great consequence as to contribute to our nation's recession. Foolishness indeed. Although were GM to promise me a EV-1 as it was . . .
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Michael Wallis 2:17PM (12/04/2008)
I might consider putting $10k down for a Chrysler Minivan. I have a wife and 4 children so I NEED something practical, not a 2 or 4 seat model. Or better yet, I could put $10k down for a Joule (South African made 6 person EV) and take delivery in 2010. If the IRS would still give me my tax break it's a deal.
Cars? From Detroit? That's so 19th century!
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Gary 2:26AM (12/04/2008)
I like the idea. But 5 million vehicles is A LOT of vehicles. Production capacity would be limited by factories that are tooled to build these types of specialized vehicles. And it would take YEARS to build that many.
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Rich 6:50AM (12/04/2008)
Based on Detroit's history of 'doing what's right' in the past - I would not give them a penny. They have fought tooth and nail against CAFE, safety, the environment and reliability.
Do you think they are just going to turn a new leaf and do things right?
What would you say to get $25billion clams?
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BlackbirdHighway 7:09AM (12/04/2008)
I would expect a better chance of getting a return on that money by investing the $10,000 in lottery tickets.
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Matt 5:11PM (12/04/2008)
Yeah, guys, c'mon... lets give them the money so that they save their ass and return to flying around in their private jets.
All this companies deserve to go down in flames for suplying US with shitty gas guzllers for the past 50 years.
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jake 9:55AM (12/04/2008)
The problem that these companies don't seem to get, is that WE DON'T TRUST THEM ANYMORE.
They have screwed around for many, many decades, simply producing cars at the MINIMUM quality and efficiency Americans will tolerate in order to rake in huge profits for themselves. It could not be more obvious. Now that we cannot afford to buy their crappy cars, they want the government to give them our tax dollars, so they get our money anyway. Now, after first going to the hill to beg for money without a damn plan of how they will spend it and right their wrongs, they think that five million Americans will trust them enough to give them $10,000 right now for a car sometime in the future, that hopefully will not suck? Riiiiight.
I'd like to see the government give some love to the very few vehicle companies in America that are desperately trying to produce electric cars, like Apterra or Green Vehicles. Those small car companies at least deserve it.
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oollyoumn 9:19AM (12/04/2008)
I would pay $10k now for an EV in the near future. Not the volt or Escape, but maybe an Aptera or Mini E (not qualified).
I would pay twice as much (in cash) as I have ever paid for any gas or diesel powered car for one that is total electric as long as it could manage at least 60 miles in any reasonable temperature, carry 4 people in a pinch, meets current safety standards and has at least average reliability. If the government will throw in this tax credit, I will pay in advance.
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Dutch 10:31AM (12/04/2008)
I'd plunk down the cash for a Volt with the tax credit. (Daily commute is 34 miles so most of my driving would be EV if it meets expected performance.) Not much to be lost, really. I don't think 5,000,000 people will do it, but I would. We need a domestic auto industry and we need one that is focused on more energy efficient solutions. This forces the issue. I'm sure there are better ideas out there and better ways to get Americans involved, but kudos to these guys for getting out of the proverbial box with their thinking.
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paulwesterberg 11:21AM (12/04/2008)
I recently bought a prius because my wife needed a car and US manufactured vehicles get crappy mileage. I would like a plug in electric and would be willing to prepay on these conditions:
1. If the company goes bankrupt I get my money back(not some ceo's golden parachute).
2. The money accrues interest(4-5%) until I get my car.
3. If the car is less capable or inferior to foreign models I get my money back.
I would rather have a fully electric car with a decent range(100 miles) than a measly 4kWh battery pack with a range extender. The tesla has a 53kw battery that can do 220 miles so a 4kw battery would only get you about 15-17 miles. Even the volt is slated to have a 16 kWh battery pack. So I would rather see an all-electric with a battery pack of at least 32kwh.
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Tim 11:06AM (12/06/2008)
On a related note: (pun intended)
Icelanders Storm Central Bank
"Tiny Iceland has seen its banks and currency collapse in just a few weeks while prices and unemployment soar — leaving a country regarded as a model of Scandinavian prosperity in a state of shock."
http://www.unitedliberty.org/articles/icelanders-storm-central-bank
How many $TRILLIONS should we print and float in the world market while bailing out company after company, industry after industry knowing that the US $Dollar is ending as the world's reserve currency and once those come notes come HOME payable in equity we will suffer the same fate as the Weimar Republic.
http://en.wikipedia.org/wiki/Weimar_Republic
If you think that can't happen here, think again. (hint, they thought is could not happen there either)
WE CAN CHOOSE TO LEARN FROM THE MISTAKES OF OTHERS OR WE ARE DOONED TO REPEAT THEM.
This is why only gold and silver are Constitutional real money!
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Chris M 3:26AM (12/08/2008)
Um, are you aware that gold and silver prices have plunged? Seems that gold got caught up in a speculative bubble by those thinking it would be a "safe haven" in times of trouble - but like all other speculative bubbles, it burst, and the prices plummeted back to reasonable levels.
Gold really isn't any better than any other non-perishable commodity, and there is nowhere near enough gold to base the US economy on it.
Irene 2:25AM (12/08/2008)
No more big auto companies! I feel bad for the folks(like you n me) who stand a chance of losing their jobs due to all this, but surely if the smaller companies start to need people to build cars, they'd more than likely be the ones hired, wouldn't they? And I think they can probly blame their bosses(not that that helps them now) for them being put out of work!
But by all means, if you dig yourself a hole, don't cry if you fall into it!
Shame on Detroit for taking so very long to get electric cars going, and double shame on them for wanting to produce the BARE minimum.
I truly hope that the smaller auto manufacturers jump in and beat
them; It's about time!
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