Congressional report slams electric vehicle incentives

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A CBO report says that a federal incentives program to stimulate the sales of EVs has been ineffective. Others disagree. Image: Tom Raftery/Flickr/CC BY-SA

Many believe that the electric vehicle is the best hope for a future less dependent on fossil fuels. There have been pushes by many to popularize them. But still, even with high gasoline prices, they just don’t seem to be catching on in a significant way with the car buying public. This week, with everything from denounced government incentives to lowered revenue projections, has been an especially rough one for the electric vehicle.

CBO says, put the brakes on electric vehicle breaks

Much of the incentive to buy electric vehicles has come from the government. Since 2009, the federal government has been offering tax credits of as much as $7,500 to consumers who purchase electric vehicles. The Advanced Vehicle Technologies Manufacturing program was initiated by the Obama Administration, but was actually developed by the Bush Administration, beginning in 2007.

The goal of the program is to spur the sales of electric vehicles, and therefore lower fuel consumption. However, Thursday, Sept. 20, the Congressional Budget Office released a report concluding that EV tax incentives are not effective. The report said they 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.”

Other negative charges

Almost as if in sympathy with the CBO, there have been a slew of recent reports indicating a general lack of enthusiasm for electric vehicles.

Tuesday, Consumer reports trashed the spendy extended-range electric Fisker Karma, finding it “plagued with flaws.”

On Wednesday, Tesla Motors lowered its near-term revenue projections. The announcement came immediately on the heels of a report of a secondary stock offering from the luxury electric automaker.

Meanwhile, according to Reuters, Toyota magic is waning as it scuttles plans to add a small EV to its line-up. The automaker cited lack of interest from buyers for the move.

The right and left of it

Conservative politicians have been quick to point finders at the Obama administration over the cost of the Advanced Vehicle Technologies Manufacturing program, forgetting that it was started by the previous administration. However, the CBO report — initiated by Lisa Murkowski, a conservative senator from Alaska — will no doubt be used as fuel for their arguments.

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Green car advocates, however, advise patience. They say the CBO report is inconclusive and that its pronouncements are premature. Brian Wynne, president of the Electric Drive Transportation Association, said:

“The report provides the caveat that ‘as yet, no reliable estimates exist of the share of electric vehicle sales that can be attributed to the tax credits.'”

A patient race?

And perhaps there is justification for that patience. Tesla’s lowering of its revenue projections, cited above, was because the automaker is unable to produce cars fast enough to meet demand.

The Chevy Volt saw its best sales month ever in August. Many believe that sales spike was largely due to generous incentives, much of which came from the federal government.

GM is losing thousands on every Volt it sells, and yet it recently announced even more rebates, some as high as $1,000, for Volt buyers. The automaker is banking on the future and patiently suffering losses, believing that increased demand for EVs is inevitable. And when car buyers do rally, GM hopes to be at the forefront of the game.

Perhaps GM has the right idea in deciding to wait out a market that it sees as stubbornly resisting the inevitable in a time of transition.

One thing is for certain in this election time: there will be much political discourse in the near future concerning the government’s subsidizing of the electric car industry.


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