Should plug-ins be subsidized until cost-effective?
Cruze versus Volt: $25,000 and a plug
What’s the plug-in premium worth?
“The Volt also represents the sum of Washington’s desire for the U.S. auto industry writ large — smaller, greener, more expensive vehicles subsidized by American taxpayers, most of whom probably wouldn’t choose to buy one of them, all things being equal,” recently sounded a DetroitNews article.
Does that man plug-ins will, essentially, disappear without subsidies? Regardless, should plug-ins be subsidized until cost-effective, or at least mainstreamed?
Along those lines, what’s a fair price for a vehicle like the Chevy Volt or the Nissan Leaf? What’s the plug-in premium worth? Does it purely boil down to nuts and bolts cost-effectiveness? Or, does foreign oil independence carry some extra buying leverage?
The other day Dan Carney of MSNBC claimed that the Nissan Leaf saves money compared to a Nissan Versa because fueling costs of the Leaf are just 1/3 that of a similarly-sized Nissan Versa. True, but he didn’t mention that a base Versa starts at $14,000, some $20,000 less than a Leaf.
Certainly, most Leaf buyers are probably not Versa buyers, but as Carney points out, “as for the car itself, the Leaf is an unremarkable economy car.” Thus, despite some fancier bells and whistles, the Leaf is pretty much an electric Versa – at least that is way most mainstream American consumers will see it.
So, what’s the plug-in premium worth?
Unfortunately, the numbers are even a bit scarier for the Chevy Volt. A Chevy Cruze starts out around $16,000, about $25,000 less than a Chevy Volt. Of course, compared to a Leaf, the Volt offers range anxiety-free driving.
Now, amongst plug-in fans, you might able to make a solid argument that an extra $5000 is worth not just range anxiety-free driving, but almost-conventional long-distance driving capabilities as well – at least I’d make that argument.
But, I doubt an extra $25,000 is going to entice many Cruze drivers to plug-in. Maybe if the difference between the Cruze and Volt was also just $5000, mainstreaming potential would be near.
Nevertheless, the US government has already sunk billions into plug-in vehicles and billions more in consumer incentives are available. If after this investment, plug-ins are still far from cost-effective, will the government just walk away? Or, to protect this investment, will an even greater investment be required?
And, finally, what’s a fair value for the plug-in premium?
