Three Plug-in Vehicle Incentives Expired with New Year

By Brad Berman · January 02, 2012

Nissan LEAFs at Port

Three plug-in vehicle incentives expired at the end of 2011. The growth of the electric vehicle market in 2012 will depend on incentives that remain.

The new year's parties are over, and we begin the second full year of a growing electric car market. Unfortunately, we start 2012 minus three plug-in vehicle incentives that expired at the stoke of midnight on Dec. 31. Here's what vanished:

  • $1,000 federal tax credit to offset the cost of purchasing and installing a home charging station
  • Up to $2,500 as a credit to purchase of two- or three-wheeled electric vehicles with batteries that exceed 2.5 kWh
  • $4,000 incentive for converting a conventional hybrid to one that plugs in or a combustion engine vehicle to an electric automobile.

You might say, "Big deal." After all, there are regional credits to offset home charging installation—and the markets for two- or three-wheel electric vehicles and conversions are not a make-or-break for the EV movement. In addition, the more critical $7,500 credit for purchasing a big battery plug-in vehicle will stick around for 2012 and beyond. This larger incentive phases out as each individual automaker hits the 200,000-unit limit set by the federal government. By the time that arrives, the EV market will be more mature and better ready to stand on its feet.

The more pressing question is how the remaining consumer incentives will fare in a heated political climate—in which government incentives of any kind are coming under close scrutiny. The common complaint is that electric vehicles are toys for the rich, and don't deserve taxpayer support. Of course, those who make this argument usually fail to acknowledge the public good derived from petroleum-free no-tailpipe vehicles, or the long-term massive government support to maintain the flow of cheap oil for gas-burning cars.

The quick rise and fall of incentives for conversions and three-wheelers underscores the tenuous nature of most "alternative energy" incentive programs. Tax credits and other incentives are key for kickstarting the market, especially in 2012 as the number of EVs for sale expands. While incentives are in place, the race is on: to quickly educate the public about the benefits of EV; to increase the scale of the market; and to bring down the cost of electric cars and the batteries that make them run.

About the author

Bradley Berman is the editor of PluginCars.com. Brad writes about alternative energy cars for The New York Times, Detroit Free Press, Reuters and other publications. He is quoted in national media outlets, such as CBS News, ABC News, CNBC, CBC, and MarketWatch. Mr. Berman is a tireless researcher of the green car market. He is the transportation editor at Home Power magazine.

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Comments

· Jose G · 19 weeks ago

The best possible incentive would be eliminating "massive government support to maintain the flow of cheap oil."

· jim1961 (climate change alarmist) (not verified) · 19 weeks ago

If or when I buy an EV (or PHEV) I do not plan to install the level 2 charging station. Instead I'll use level 1 charging for the following reasons. My present car sits in my garage all night long 99% of the time. If I decide to purchase an EV instead of a PHEV I will rarely drive it to the edge of its range and it will not take that long to top off. Also, I'll be keeping my HEV for longer trips and as a back up vehicle. If I purchase a PHEV the vehicle has its own back up generator for the RARE times I'll drive more than 20 miles per day. Many EV owners and especially PHEV owners don't really need level 2 charging.

· abasile · 19 weeks ago

The tax credit for installing home charging stations is no longer needed, as it is now possible to buy a commodity charging dock from a major retailer for an affordable price. Or, if you buy a LEAF, you can have your Nissan-supplied EVSE "upgraded" to accept 240 V. This is a success story.

The real battle is to preserve the $7500 federal tax credit, which while conceived during the Bush years, is under attack from elements on the right. Particularly as long as our military has to be actively involved to help keep the price of oil from skyrocketing, it is more than reasonable for our government to encourage alternatives. I do not want our precious troops to have to remain in harm's way any longer than necessary in the Persian Gulf. (On the other hand, irrespective of protecting Mideast oil supplies, I am concerned about a nuclear armed Iran with a fanatical government.)

· tterbo · 19 weeks ago

The charger news sounds bad, but didn't the 3rd party chargers drop about $1,000 this year? I'm missing the link now, hehe, but wasn't it on Amazon? Granted it would've been nice to move the $1,000 credit over to the existing $7500 credit for buying the car. Then for people that go with 110v charging, which is probably easier on the battery anyway, can save money on the car.

Plus, there's the new perk of the $7500 being received at the time of purchase instead of on April 14th. That way the buyer doesn't pay a year of interest on $7500 on January 2nd. :)

· Felix Kramer · 19 weeks ago

Today few people will notice the loss of the conversions credit. But in the long run, for exactly the reason Brad mentions -- the enormous global environmental and economic benefits of displacing petroleum with electricity -- we will need them. For the brief time the credit was in effect, it was a placeholder for a future strategy that has been slow to arrive. We're still waiting for high-volume conversions of gas-guzzlers into safe, warrantied, affordable plug-in electric vehicles and plug-in hybrids.

We need this because new plug-in vehicles won't arrive quickly enough to have much impact as a percentage of the world's total "fleet" of a billion vehicles for decades. (This fact still hasn't dawned on most people even as we celebrate the successful commercialization of plug-ins.) Meanwhile, we need to get off oil for transportation ASAP.

At some point, we as a nation, and other countries as well, will become serious about this, perhaps because of supply disruptions or a realization of the urgency of the climate crisis. Then, instead of crushing workable cars that are 5-15 years old, we'll make conversions that stay on the road for a decade or longer eligible for the same $7,500 credits as new plug-ins, because they will provide the same benefits to society.

CalCars.org, along with cheerleaders including Andy Grove, and "Gadget" (Greg Abbott, seen in "The Revenge of the Electric Car,") have been championing what we call "The Big Fix." But most audiences have never heard of the idea, Or if they have, they mistakenly think the technologies isn't here yet, and there can be no business model for conversions.

We've been cheering on companies and we've tracked the news on the topic at http://www.calcars.org/ice-conversions.html . Some of the promising ones include Via Motors and ALTe Powertrain Technologies (pickup trucks) and AMP and Electric Motor Werks (SUVs and BMWs). What we expect to happen is that they'll focus first on fleet buyers and follow the Tesla model, starting on the high end. They'll bring prices down as batteries improve and EV components become commodities. And once "in-wheel" or "hub" motors become viable, the conversions will be feasible for even the smallest cars.

We hope plug-in vehicle owners and advocates will pick up on this concept. If they start to include it in their explanations of the future paths for vehicle electrification, energy security, greenhouse gas reduction -- and in their portfolio of policies -- we can lay the groundwork for a substantial program to retrofit vehicles just like we retrofit buildings.

· JRP3 · 19 weeks ago

Felix,
Without cheap, mass produced EV components, motors, batteries, chargers, etc, the conversions will have a hard time being cost competitive. We need OEM's building components in huge volumes to drive component pricing down. Shops trying to make a profit first have to partially disassemble a vehicle, then figure out how to install and interface the EV components, and they don't have the purchasing power of OEMs or their history and established consumer confidence. As a converter myself I don't see conversions being a large part of the market.

· Chris T. (not verified) · 19 weeks ago

@tterbo (or anyone): tell me more about this "new perk"...

· Ron Gremban · 19 weeks ago

JRP3, you speak of the very same problem that the $7500 new car plug-in incentives helped the auto manufacturers break through. We at CalCars believe a similar conversion incentive will someday do the same for conversion kits. Today's players are smaller, less well known, and have fewer resources; but eventually, with increasing climate awareness, fuel price volatility, and uncertainties in fuel availability, vehicle owners will have a choice between costly and increasingly uncertain fuel supplies, selling their vehicle for less and less (especially larger gas guzzlers), or upgrading with an increasingly cost-effective plug-in kit.

Each kilowatt-hour (kWh) of usable plug-in battery capacity, if used daily, can displace 30-50 gallons of gasoline each year. At say $4/gallon vs. $1/gallon equivalent for electricity, that is $90-150 of yearly savings, even before any gasoline price spikes. If the rapidly falling price of a conversion's battery -- around $500/kWh today -- were considered as a fuel prepayment, it would even now pay for itself in 3-6 years, after which fuel would remain nearly free. And the economics will keep getting better and better.

We just have to get over two hurdles: the high price of low-volume conversions, and the unrealistic expectation of the driving public that for fuel pricing and availability, 2008 and earlier disruptions will remain exceptions instead of a new norm driven by peak conventional oil, exploding third-world market, and, one way or another, major climate challenges.

· JRP3 · 19 weeks ago

Unless there are serious fuel price hikes, which certainly could happen, conversions are only going to be a niche market, less desirable to most than an OEM product, and probably more expensive for the reasons I listed above. With the cost of batteries today what is needed is radical vehicle redesign to get the most from those batteries, light weight materials and good aerodynamic design, and investment into improved battery design and chemistry. Conversions can't really address those issues. I think incentives should be tied in some way to watt hours per mile of efficiency to encourage such designs.
Of course my personal choice would be to subsidize all EV's because I think it's a more worthwhile investment than almost anything else, but the reality is there are too many people who are tired of seeing tax dollars thrown at failing ventures, and they are not completely wrong.

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