Study – Building the wrong kind of plug-ins
Will it need government subsidies forever?
Plug-in tax credits actually counter-productive?
Essentially every single study on hybrid and plug-in vehicles achieves the same conclusion: Make them cost-effective and buyers will come. Unfortunately, the battery science overwhelmingly demonstrates that battery powered vehicles have a tough slog ahead on the path to cost-effectiveness.
Nevertheless, a recent study by Carnegie Melon demonstrates plug-ins have potential – if science is followed – and that might mean throwing out today’s plug-in tax credits.
According to the Carnegie Melon study, “Current incentives for PHEVs, such as those outlined in the ARRA, provide subsidies based on battery size, rather than usable battery capacity, all-electric range, or effective GHG reduction. This encourages more PHEVs with larger battery packs but results in increased social costs and could produce unintended incentives for battery swing selection.”
“Minimum life cycle cost,” CMU states, “is achieved by assigning low-range (~15–25 miles) PHEVs to the ~75% of drivers who travel less than ~50 miles/day and hybrid electric vehicles (HEVs) to drivers who travel further.”
So, today’s plug-in tax credits not only justify an inefficient utilization of resources, they are also incentivizing automakers to develop plug-in technologies that have little chance of achieving cost-effectiveness until next generation battery solutions are developed? Does that mean today’s plug-in subsidies necessitate the need for ever-more subsidies?
[...] a number of studies, most recently Carnegie Melon, current US plug-in tax credits are in danger of incentivizing the least cost-effective plug-in technologies. Wouldn’t it be better to incentivize the most cost-effective plug-in technologies if the [...]
CaTiC-
I think the current incentives were also politically motivated, at least partially. But isn’t that the normal calling card of Congress?
Anyway, I also agree that a big focus should be put on city gas consumption and truck fleets should be a big focus. Thus, I would ask what incentives offer the quickest, biggest bang for the buck. To me its seems that’ll be a key to changing consumers psychology. And now seems a perfect time, since the Y generation is already showing very different consumerism regarding autos.
Additionally, I think there are many novel ways to approach this. For instance, I’d like to see some weight limits on some roads, particularly in very urban areas. Thus, only very small cars, or at least very lightweight larger vehicles, and scooters, etc. could use them. I know it sounds a little crazy, but at some point we’re going to have to venture far outside the box.
Of course, maybe I’m way off base. Ultimately, I believe the future will demand more of a transportation pod kind of vehicle. I know it sounds a bit silly today, but with new safety features, new materials like carbon fiber and even auto-drive software an entirely new transportation paradigm can be envisioned, at least in my opinion.
And, as Larry points out, most driving is solo-driving. If cheap and safe pod transportation could be achieved i think city commuters would accept it with the right packaging.
Larry-
I do own a hybrid, but it rarely gets used. Truthfully, I should have never bought it. I didn’t really need it as I only put on a few thousand miles ever year when I take some long distance trips and it would have been cheaper to rent. I figure one day I’ll convert it into a plug-in anyway.
Also, I totally agree that there are many things people can do to save gasoline.
just a point here. The largest consumption of fuel in this country comes from weekday solo commuting from home-to-work-to-home easily confirmed by looking at the rush hours in the urban areas.
There are things that are already within the realm of things people can do to save gasoline – simply get into a carpool, vanpool or bus for MOST of the days that they are doing their NORMAL commute.
to a certain extent the push to more fuel-efficient cars is driven by the continuing habits of many trying to continue to solo-drive their commutes – just with a more fuel-efficient car – to save money for fuel.
Dach is the odd man out.. if I recall.. does not have a car and commutes on public transit…
but just look around at our urban areas and the congestion at rush hour – mostly solo vehicles.
Even a pickup truck could effectively double it’s gas mileage by carrying two instead on one.
@dahcredyns: interesting ideas…
As a general statement, incentives must be carefully chosen to match the goal being sought. Based on that, I suspect that the current incentives were politically motivated, and aimed at both consumers and car makers.
I’ve studied my own driving profile and concluded that I don’t achieve significant gas savings until my gas-free driving range is above 50 miles, whereas a range of 90 miles would eliminate nearly all my day-to-day gas consumption. In this scenario where I recharge only at home, I would consume gas only on out-of-town trips, reducing my yearly gas consumption by about 80% – because I would still drive my big minivan in out-of-town trips, occasionally pulling a tent-trailer.
Given this, I believe incentives should be aimed at eliminating gas consumption in the cities. There should also be incentives to reduce diesel consumption in truck fleets.
More importantly, it made me realize that current battery technology is nearly capable to meet my goal of a gas-free city driving. 2012 should be a banner year for PHEV’s and BEV’s and I am hopeful that the 2015 model year will provide a number of vehicles having a gas-free range exceeding 100 miles.
Good points.
I’m not sure the studies were available when the government was finalizing these tax credits, but there was dissent in the auto and plug-in community when these subsidies were suggested and when put into place. So, I think some people had an idea that the current tax credits were more politically motivated than scientifically motivated.
But the past is the past, the more important question today seems to be, will such studies matter?
For instance, knowing what we know now, a pure lithium credit might have been better. Forget the plug, just focus on a combination of lithium + mpgs.
For instance, the Volt is rated 60 mpg combined, which isn’t necessarily a fair estimate, but a Prius is already at 50 mpg. Might lithium have pushed the Prius closer to 60 mpg combined, at much less cost?
If not the Prius, perhaps a Ford Fiesta hybrid based off the Fusion hybrid + lithium?
The point being, would a combination of lithium + 60 mpg be a better tax credit formula? Maybe a plug is needed, maybe it isn’t. Then scale the credit 10 or 20 mpgs every 5 years.
Getting lithium off the ground is a good thing, although I’m still doubtful the US can compete if we only focus on cell assembly into battery packs and not cell production itself, but that’s another issue.
Anyway, before I go off on several more tangents, my biggest question is, will we even utilize this data?
I loved it when Congress grilled the Big 3, on national TV, before bankruptcy.
Let’s do it again, but this time let’s grill every automaker that sells in the US and ask them what it would take to achieve foreign oil dependence by such and such a date, or at least a 50 percent reduction by such and such a date.
awesome study. Finally, the studies are starting to get us clear answers on PHEV vs HEV vs grid energy emissions vs… Very comprehensive and surprising insights.
Small battery PHEV’s plus HEV’s sounds good to me.
I’m still happy with the big battery tax credit as industrial policy to jumpstart the supply chain. If the studies are FINALLY available that show how to optimally tweak the government subsidies going forward, let’s make the changes.