$7,500 plug-in hybrid tax credit passes Senate - Too favorable to Volt?
Only about battery capacity, not actual EV range, nor real world fuel economy?The Senate has passed a new tax bill that will provide tax credits for plug-in hybrid vehicles ranging from $2,500 - $7,500, depending on the vehicle's battery capacity. To be eligible for the credit, such plug-in vehicles must store at least 6 kWh's of electricity.
So, battery capacity, not actual EV range nor real world fuel economy, is how Congress judges plug-in quality? Does that really make sense?
Finish: $7,500 plug-in hybrid tax credit passes Senate - Too favorable to Volt?
Labels: Chevy Volt electric vehicle concept, GM, hybrid tax credits, plug-in hybrid vehicles, toyota
posted by Dahcredyns at
6:54 AM
30 Comments:
FULL STORY
The Senate has passed a new tax bill that will provide tax credits for plug-in hybrid vehicles ranging from $2,500 - $7,500, depending on the vehicle's battery capacity. To be eligible for the credit, such plug-in vehicles must store at least 6 kWh's of electricity.
The Chevy Volt, the plug-in many believe this legislation was written for, will store 16 kWh's of electricity to provide 40 miles of electric range and qualify for the full credit.
Toyota has lobbied against this legislation, leading many to believe that its plug-in hybrids won't store that much electricity.
Still, is electric storage really the best criterion for judging plug-in hybrids?
For instance, if you make heavier vehicles, then kWh's won't necessarily equate to extensive electric range. Conversely, ultralight vehicles might not need much battery capacity to achieve even more than 40 miles of EV range. Thus, wouldn't EV range, not battery capacity, be a better way to judge plug-ins?
Also, the Chevy Volt only charges it's lithium battery to 80 percent and depletes it to only 30 percent. This is largely to maintain cell integrity and durability of the battery. Thus, one might argue that 50 percent of the battery isn't needed. Hence, 50 percent of the capacity isn't needed. That would push the Volt down to just 8 kWh's and less of a tax credit.
Yes, that's not a fair argument, but the point is, what if other battery technologies prove this safeguarding technique to be inefficient and needless? What if other battery technologies achieve more electric range with less kWh's? Would we not then be rewarding inefficiency, excessive weights and costs?
Perhaps even more important, is 40 miles of electric range more beneficial than say, 150 mpg fuel economy? Or, more precisely, is 16 kWh's of battery capacity more beneficial than 150 mpg?
In reality, many Volt drivers will have to use gasoline, maybe a lot more gasoline than Congress believes. Some battery experts have already claimed that Volt EV range could easily drop well below 20, even 15, miles with heavy AC use and aggressive driving. If this proves true, is 15 miles of EV range really worth $7500 more than 100 mpg, or more, fuel economy just because of battery capacity?
I certainly don't think so. Reality needs to be part of this equation.
Inevitably, the Volt might be worth a $7500 tax credit - in fact I believe it is worth the credit - but the fact that a 150 mpg plug-in vehicle might not qualify for ANY tax credit demonstrates a real lack of vision and clarity by Congress. Minimally, EV range needs to be part of this equation, as should overall fuel economy.
Flex fuel credits, massive small business tax incentives for gas-guzzlers, battery capacity driven tax credits, regardless of EV range or fuel economy - Congress is again clueless when it comes to real world understanding of issues related to fuel economy and automotive efficiency.
If a US tax credit benefits our pathetic auto makers and not an overseas company, then so what?
Toyota is inexplicably reluctant to make plug ins and give customers a bigger battery, even though they once made a RAV 4 EV with nearly 1000 pounds of NiMH batteries! If they would put 10 kWh's in a Prius, it would be an awesome vehicle.
7500 bucks would definitely make the Volt MSRP more palatable to me. Although, 32K is still a huge monthly payment!
Gee - I'm not the conspiracy theory type, but tying the credit to battery capacity does smell a little funny. A big, heavy, and overall poor performing Detroit behemoth (e.g. a plug-in hybrid Suburban) could easily qualify for the credit while gaining only marginal energy efficiency improvements.
I think that battery capacity is being talked about as the key figure of merit because it is probably the easiest for folks to understand.
What do you think the chances are that another figure of merit such as equivalent miles per gallon, or cost per mile would actually be adopted?
Lobbyist 101 - Grad A+ for GM
EnergyIndependence - At this point, I don't think there is any chance.
Jabroni - I'm not against a vehicle like the Volt qualifying for such a credit, I just think battery capacity isn't a comprehensive or realistic way to judge plug-in worthiness.
The Volt is not the perfect solution for all types of commuters. To make this the standard to judge plug-ins is narrow minded in my opinion.
More important, the data for real world EV range and its correlation to battery capacity, for instance, simply doesn't exist, and different battery technologies might vary greatly in this correlation.
Thus, I just think this field - plug-ins - is too new to pigeon hole already, especially when the vehicles driving the standards are still years from customer validation.
Someone should put a 6kw battery in a Tank, and drive it around. It would go up from 2 gallons per mile to maybe a full mile per gallon, but by damned you'll get yoru tax credit!
And the problem isn't just with large vehicles. Should a plug-in hybrid that uses a big battery to increase performance, rather than to maximize EV range, be rewarded the same as the more efficient vehicle?
I think the final bill will be set at 5 kWh.
I realize that battery capacity is not the best arbiter of the refund amount, but what else can you use? Using kWh's is very objective and using mileage is very subjective. So I think congress got that part right. In other words, we can easily measure the battery pack and we can also easily determine the cost of that pack per kWh. What is not easy to define is "normal driving conditions". How do you quantify that? I guess with some 10 or 20 mile course with both in town and out of town driving? Then see how the PHEV's perform on this course relative their energy consumption?
All in all, I think it is a pretty good start.
Toyota can make a Prius with a 6 kWh battery pack RIGHT NOW. Absolutely nothing stopping them and it would be EASY. The aftermarket peeps can install one in hours....why not Toyota? That is why I do not think Toyota has any reason to complain about the bill. Heck, with the taqx break you get, Toyota could make the 6 kWh Prius and sell it for the same price as the regular model.
Gotta be efficiency. The range leads into efficiency, it should take care of itself. Maybe if I bolted a wheel from my lawnmower to my house somewhere, and stuck a 6kw battery in the garage to make that wheel turn, I could get a tax break on my house under the new bill?
jabroni-
such a bill, in my opinion, could reward automakers for making large SUVs and sports cars that achieve little EV range in the real world and far less fuel economy than other types of plug-in vehicles that achieve either better EV range, far better fuel economy or both - yet don't qualify for any tax credit.
i think the volt is worth the $7,500 tax credit, but I also think a 120 mpg plug-in with only 6 kwh's of electricity also deserves $7,500, especially if it can bring the price tag down to around $20,000. combined with the fuel savings, that's a cost many americans can afford.
moreover, in the real world, the Volt might achieve less than 20 miles of EV range and under 100 mpg for many drivers, yet the Volt is worth $5,000 more in tax credits compared to a vehicle that might always achieve more than 100 mpg?
ultimately, as the last anon jokes, kWh's of battery capacity doesn't necessarily equate to efficiency.
more important, this shouldn't be about the Volt v. the Prius, it should be about rewarding automakers and consumers for making highly efficient automobiles - as efficient as possible automobiles.
Yes, my joking aside (I just upgraded my Grandma's wheelchair with a 6kw battery for Tax rebates), for some reason you are a Commie if you badmouth GM. I have co-worker that about shit's himself if you mention GM's not getting it done so to speak. Every excuse in the book. I live in Nebraska. We disliked what Bill Callahan did to the program (not sure the W's and L's, but the whole mentality). That didn't mean I hated the Cornhuskers! I want the best for them, and if the administration makes bad decisions it is my love the the program (counry) that entices me to want better results!!!!
hey, the cornhuskers are off to a good start this year, i hear, so you'll be able to roll to 'husker games in style in that subsidized wheel chair!
i agree with you. i'm very critical of GM, but I absolutely want them to succeed, and i've been a fairly vocal advocate of the Volt, to the chagrin of many that regularly visit this site. still, i don't believe in free lunches.
I'm a pretty new husker fan, but it would be nice to have a decent college football team, since I come from San Diego (SDSU stinks) and Oregon (Beavers fan, not Ducks). Anyway, I'm sure you've all seen this one, but this was a great article. Even the American Ostriches that don't have a clue what is going on in the world of Alternative Energy/Transporation would have to appreciate the author's points
http://www.evworld.com/article.cfm?storyid=1532
I can't imagine the automakers using this tax credit to increase SUV and big truck sales, but I guess stranger things have happened. I would personally be sickened if the auto makers tried to pull such a stunt!
I have spoke with Bob Lutz, who told me that the Volt may get up to 50 miles per charge, so I am not sure why there are reports of it only getting 20....
8 kWh's of the Lithium battery should get the job done...now if the Volt could use the entire 16 kWh's we would really have something! Imagine a PHEV with 80 mile EV range....that would nearly satisfy EVERYONE's daily commute!
That article reinforces why I disagree with making battery capacity the key criterion to plug-in hybrid value.
jabroni-
those reports came from a battery conference at Argonne. i asked tony posawatz, Volt vehicle line director about this last week, and he could neither confirm nor deny the reports. gm is focusing on hitting 40 miles of EV range on the EPA's city cycle. that cycle is not based upon heavy congestion.
still, i don't disagree that the volt, through hypemiling techniques could achieve 50 mpc. still, I asked Tony if he thought it was possible that some driving conditions could drop Volt EV range to less than 20 miles and he couldn't refute the possibility.
as far as bob lutz, whom i've met a number of times, he is a spin master. i like the guy, even though i think he says many things he shouldn't, but he has a very optimistic view of the Volt - as he should. it's his job.
i hope he's right and he might be, but there are many lithium battery experts that are not nearly as optimistic as lutz.
also, in terms of the volt using only 8 kWh's, that's to maintain cell integrity and lengthen the life of the battery, otherwise, every Volt would probably need to have at least one battery replacement within its 10 year warranty.
if gm didn't need these extra 8 kWh's they wouldn't increase range, because of the law of diminishing returns. it's just not cost effective - see my article Why
40 is the Chevy Volt's magic number
OK, from an economic policy perspective I support the battery kilowatt standard, even if it doesn't make the most sense in terms of cars or even the environment.
What I support is the creation of a battery industry capacity in the US, period. Going beyond cars and the environment, there is an immediate need to start creating new industry and investment opportunities in our economy.
Frankly, if the Volt used revolutionary lugnuts, the production of which could support a whole new industry, but whose costs were too high initially, I would support the vehicle credit being tied to use of that lugnut! :)
I exaggerate, but I think this makes sense as economic policy. Compromise a little on efficient green car policy for the benefit of economic development. It's another question whether Congress really is thinking in those terms, but rumors of GM entering the battery business I think means more than one person has thought about investing in a US battery industry.
to me the goal of plug-in hybrids is much better fuel economy. battery capacity doesn't have a direct correlation to better fuel economy. a plug-in with less capacity could use less oil than a plug-in with more capacity.
likewise, i don't see how this credit develops the US battery industry over the battery industries of other countries.
in my opinion this credit isn't about developing the most efficient plug-in hybrid technology, which is my only concern as far as this legislation is concerned. instead, this legislation is about protectionism.
that's fine, other countries do it, but protectionism has a horrible history of stunting US innovation. if we strive for greatness, we just might achieve it. if we seek to protect lesser technologies, we'll never achieve greatness.
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dahc, I respect your position, truly. I agree that this legislation is not about developing the most efficient plugin hybrid; absolutely true, as far as I'm concerned.
I do disagree a little. Just to spell it out, I'll just say that in my humble opinion govt investment in R&D and economic policies that help develop new industries are not the same as protectionism (tariffs, quotas, trade rules, etc.). And while protectionism may be controversial, I think govt investments to jump start new industries are proven and proper (dod grants, universities, business credits, etc.).
Not to belabor the point too much, I think there is a redeeming quality to this Large Battery Credit. If by giving credits to Large Batteries, which would more quickly jump start investment in battery production capacity, we distort plugin hybrid efficiency in the first generation, I think that is a small price to pay. They weren't going to be perfect in the beginning anyway! Ideally GM would use the larger than needed batteries for extra range, I guess.
alcatholic-
i'm not the authority. i'm giving my opinions just as you are. that's the beauty of a blog is that it creates a discussion.
i don't disagree with you about the government helping to jump start industries in this country, i just don't believe that this legislation jumps starts american battery companies over foreign battery companies. indirectly, it might seem that way because of the way toyota has attacked this legislation.
for instance, if chrysler is just as advanced as gm with their ranged extended EVs, and they are using a foreign battery supplier, then that foreign battery supplier benefits from this legislation just as much as any american battery maker.
ultimately, this legislation protects GM's and Chrsyler's vision of a plug-in, which i find counter-productive.
and, just in response to your last point about gm using the extra capacity to increase range, they would not.
40 miles is the key range to gm. when the extra capacity isn't needed to provide stability, then they'll reduce the size of the battery and make the vehicle cheaper.
that in and off itself demonstrates the ineffectiveness of this legislation in my opinion.
if you believe in the volt, after 40 miles of EV range, adding extra battery power for more range is cost-ineffective because of diminishing returns.
on one of my earlier comments i place a link to 'why 40 is the volt's magic number' check it out for more on that angle.
if that's true than kwh's of capacity, by GM's belief, is not an effective measure of a plug-in. in the future, the volt will probably need no more than a 10 kwh battery to achieve optimum, cost-effective EV range. maybe even less.
this legislation is being distorted by the inefficiencies of today's lithium battery technology.
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I understand GM's 40 mile standard and the future cost savings it will enable. It's an application of our old Moore's Law discussions. So, you're right about that point.
You make a good point about this legislation protecting Chrysler and GM's vision of the plugin. You call it counter productive, but why?
If the legislation promotes series plugin hybrids with their larger battery needs, and doesn't promote parallel plugin hybrids, what is wrong with that? Parallel hybrids are already established and plugin parallel hybrids will simply build upon the same supply chains. Maybe they don't need as much of a credit to be built profitably?
Frankly, Asia dominates the parallel hybrid and NiMH battery industries, and right now Detroit is ahead in series hybrid development. This credit favors series hybrids and will help create an opening for US industry to create a domestic supply chain including large Li batteries.
In terms of making the vehicle cheaper, which I think is your ultimate argument, engineers would have a choice between using a smaller, cheaper battery, or continuing to use a bigger battery with a bigger credit. They would have that choice and do whatever makes sense, even with a parallel hybrid.
And don't forget the credit runs out after the first 250,000. After that the engineering roadmap distortion would stop. In any case, I think the credit gives US industry an opening to enter the large Li battery market and a nice headstart with series plugins.
This may not make for the cheapest plugin hybrid roadmap, but we already know Toyota is likely to win that game.
i call it counter productive because it has nothing to do with a goal. what if other plug-in technologies prove to be far superior, but just as expensive up front? then we are rewarding auto companies to make an inferior product.
even GM seems to believe that series hybrids aren't the absolute solution as GM is also developing dual mode plug-in hybrids.
ultimately, these technologies are just too new for Congress to pick winners based on their battery capacity in my opinion.
likewise, we aren't thinking outside of the box at all. why not reward vehicles like the aptera plug-in hybrid, also a series hybrid? because they are too different? well, i say its time to start thinking far outside of the box.
to me ending foreign oil dependency is the most important goal and i think that such a tax credit should reward technologies that take big, proven in the real world, steps towards achieving that goal, rather than some arbitrary measure that might do little to achieve that goal.
OK, thanks for engaging with me, dahc. It helped me understand your focus on reducing dependence on foreign oil, and you make a strong case that this legislation is not optimal for that goal.
Good food for thought, so I'll pick this up again in a later thread after thinking it over some. The foreign oil dependence vs. conventional investment in economy debate is a big and interesting policy point.
My first thought is that maybe you are right that conventional govt investment in industry (like this battery credit) is just more of the same, when brutally efficient policy on the oil and environmental issues are needed.
Anyway, good show.
thanks alcatholic,
looking forward to your future thoughts.
along that line, i kind of like the idea of MPGe, proposed the Automotive X Prize, where "MPGe is a measure that expresses fuel economy in terms of the energy content of a gallon of gasoline, asking how much energy was delivered to the vehicle, and how far did it go"
Obviously the law could be improved and my first thought was this leaves open the scary possibility of an electric Hummer. But the bottom line is as shocking as it to some on this blog there is a huge chunk of the population that can not or will not drive a Prius. I'm a building contractor and I "get by" with a Honda Ridgeline truck because ther are not many efficient options. If this stimulates technology and production of some larger vehicles for large families, handicapped, contractors, businesses, delivery trucks, etc. then I'm all for it.
that's a fair point. and i don't think most disagree that people with a need for such vehicles shouldn't have access to them.
unfortunately, the far majority of people with such vehicles don't need them.
and while we believe in freedom of choice, freedom to choose gas-guzzlers often leads to the lack of freedom in terms of the economy, soldiers, etc.
I think there is a compromise here - a hybrid proposal if you will. I propose basing the size of the credit upon the relative fuel economy of the vehicle (while running on gasoline) with a bonus for each 10 miles of electric driving range. For example, the fuel economy portion would be a $1000 tax credit for each 50% improvement over current CAFE standards. The electric range bonus would also equal $1000 per 10 miles of driving range. So, if GM can actually make a Volt that gets 50 mpg with a 40 mile electric range, then the Volt would earn a $5,845 tax credit. But if Subaru makes a BEV like they are planning that has an 80 mile range, they would qualify for a $8,000 tax credit. That sounds like a good level for a cap, similar to the current cap under current law. This would both drive innovation towards efficiency improvements and provide market support for an automotive battery industry. It would also create a fair playing field that would encourage other, lower cost efficiency solutions, like clean diesels, diesel hybrids, etc.
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