Chevrolet Volt owners plug-in their vehicles Saturday at Serra Chevrolet in Southfield, Mich. Chevrolet Volt owners celebrated National Plug In Day at nine Chevy dealerships across the country to highlight the environmental, economic and other benefits of plugin electric vehicles. (Photo by Rob Widdis)
A small but enthusiastic group of advocates marked national “Plug In Day,” over the weekend, hoping to draw more attention to fuel-efficient – if slow-selling – battery-based vehicles as the Chevrolet Volt and Nissan Leaf.
But a new study by the nonpartisan Congressional Budget Office raises questions about the cost of plugin power, contending that the nation is spending billions to subsidize sales of both plugin hybrids and even more advanced battery-electric vehicles.
Advocacy group Plug In America sponsored events in 60 cities from coast to coast on Sunday. In El Segundo, a Los Angeles suburb next to the city’s international airport, those interested in battery car technology were given the chance to take a test drive in a number of different electric vehicles at the Automobile Driving Museum. In New York City, battery-powered Coca-Cola and Fed Ex trucks were on display amidst the bright lights of Times Square.
Other cities marked the occasion with parades, celebrations marking the opening of new battery-car charging stations and “tailpipe-free” tailgate parties.
The fact that about 50,000 battery-based vehicles have been sold in the U.S. over the last two years should serve as “proof positive that Americans are ready to move beyond oil,” Sierra Club Executive Director Michael Brune said. “The solution for ending high gas prices, rising oceans and Big Oil’s choke hold on our economy and democracy is using less gas. And we’re doing it. Today almost every automaker offers a car that runs on little or no oil, and Plug In Day 2012 is only the beginning of a new era of oil-free driving.”
Chevrolet Volt owner Luke Downs (right) listens to Capitol Chevrolet's Roger Pillow inside the Volt electric vehicle Saturday at Capitol Chevrolet in Austin, Texas. (Photo by Steven Noreyko)
Indeed, the number of different plug-in hybrid, pure battery-electric vehicle, or BEVs, and even battery scooter and motorcycle models is rapidly increasing. Along with the Chevy Volt plug-in and Nissan Leaf and Mitsubishi i-MiEV BEVs introduced in 2011, Honda and Toyota have each launched two new battery models this year. Ford now has a battery-electric Focus sedan and will have plug-in versions of the Focus and the new C-Max microvan for the 2013 model-year.
“It’s thrilling to see the breadth of plug-in vehicles available on the market today. Unprecedented choices are being offered in showrooms by major manufacturers,” says Ron Freund, Chairman of the Electric Auto Association. “The future is here now, not just around the corner! The National Plug In Day event celebrates this revolution!”
But despite the positive spin of proponents, all forms of battery-based vehicles – including more conventional hybrids such as the Toyota Prius – have barely registered on U.S. sales charts, accounting for less than 3% of total American new vehicle sales for the first eight months of 2012.
And that’s despite a variety of incentives meant to draw shoppers to showrooms. A new study by the nonpartisan Congressional Budget Office threw some cold water on Plug In Day. It forecasts that tax incentives and other government policies meant to spur production and sales of battery vehicles will cost about $7.5 billion over the next seven years.
That includes $7,500 in federal tax breaks for qualifying products, such as the Volt and Leaf. But the government has also invested billions to encourage the development of lithium-ion battery technology and set up U.S. production plants, as well as the vehicles that can use such technology.
And that doesn’t include additional state and local tax benefits or other incentives such as the special access owners may get to faster-moving commuter lanes.
Dealing another blow to the plugin movement, Toyota said that it planned to drastically reduce plans for its eQ battery-powered city car. Initially, Toyota planned to sell thousands of the electric version of its iQ minicar, but has now done an about face, saying it had misread the market and now thinks battery-powered cars will not meet consumer demands.
“The current capabilities of electric vehicles do not meet society’s needs, whether it may be the distance the cars can run, or the costs, or how it takes a long time to charge,” Takeshi Uchiyamada, Toyota’s vice chairman who spearheaded Toyota’s development of the Prius hybrid in the 1990s, told Automotive News.
Meanwhile, manufacturers are heavily subsidizing their battery models. According to TrueCar.com, that means incentives of as much as $10,000 on a new Chevrolet Volt – which reportedly already loses the maker tens of thousands of dollars for every plug-in that rolls off the assembly line. General Motors confirms Volt is a money loser but insists that is not unusual for the first application of new technology. And analysts say most other battery-car programs, such as the Leaf, also run deeply into the red.
The problem, said the CBO report, is that the cost of owning and operating a battery-based vehicle is “generally higher than those of a conventional vehicle or traditional hybrid of similar size and performance.”
Plugins, for example, will add $16,000 to $19,000 to the lifetime cost of owning and operating a comparable, gas-powered vehicle. According to the CBO report, it would “require a tax credit of more than $12,000 to have the same lifetime costs” for battery models.
The agency warned that without cheaper electricity and lower-priced batteries, it will be difficult to make a strong proposition for battery power and “Consequently, “the tax credits will have little or no impact on the total gasoline use and greenhouse-gas emissions of the nation’s vehicle fleet over the next several years.”
Proponents question the CBO’s assessment, though some, like start-up battery carmaker Coda’s CEO Phil Murtaugh, admit that the political tide may have turned a bit against the technology since the early days of the Obama Administration – which had hoped to see more than 1 million battery vehicles on the road by mid-decade.
Nonetheless, advocates insist the economics are more favorable than the CBO claims.
“Here are the three best-kept secrets of plugin vehicles,” says Plug In America President Chad Schwitters: “It costs the equivalent of about 75 cents per gallon gas to fuel an EV with electricity — and you can buy or lease a dozen different EVs right now.”
Proponents also point to data from the U.S. Energy Information Office showing that the nation’s oil consumption has been falling since the middle of the last decade. How much of that is due to alternatively powered vehicles, more fuel-efficient conventional models – or the recession – is uncertain. But sponsors of Plug In Day clearly hope that they can get more American motorists to make the switch and bring down oil consumption even more over the coming years.
Bryan Laviolette contributed to this story.