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CBO deals blow to EV purchase incentives

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The Congressional Budget Office has estimated costs associated with federal policies promoting electric vehicles and other fuel efficient vehicles and states they will have little to no impact on gasoline use or on greenhouse gas emissions.

The nonpartisan U.S. Congressional Budget Office (CBO) estimates that current federal policies to promote the manufacture and purchase of electric vehicles, and some other types of fuel efficient vehicles, will have a total budgetary cost of $7.5 billion through 2019, but will have little or no discernible impact on greenhouse gas emissions or gasoline usage.

About one quarter of the current incentive policy's cost is in the form of tax credits for the plug-in market, which the CBO says will have the greatest effect of all the policies on electric vehicle sales, but those sales will have little impact on the stated goals of the policies - reducing GHGs and lowering gasoline usage and dependence on foreign oil. They do say that if future revisions of Corporate Average Fuel Economy (CAFE) standards are made more strict, then EV sales could show impact.

The focus of the CBO's study was on electric vehicles of the plug-in hybrid and battery-electric varieties (e.g. the Chevrolet Volt and Nissan Leaf respectively).

Costs to Consumers Still High
The CBO found that at current vehicle and energy prices, the lifetime costs to consumers for electrics are generally higher than they are for conventional vehicles, especially traditional (non-plug-in) hybrids of similar size and performance. Even after tax credits, which are as much as $7,500 for plug-ins. Using a hypothetical vehicle example, the report finds that a car with a 16kWh battery (required for the $7,500 credit) would require a $12,000 credit to remain even in lifetime costs to a conventional gasoline vehicle of the same type. In fact, the larger the vehicle's battery gets, the more this cost disparity increases, which jibes with other, similar studies done by private groups.

No Emissions Improvements
In judging greenhouse gas emissions, the CBO study found that while the purchased electric vehicles do have lower emissions at the tailpipe and over their lifetimes, but indirectly they allow automakers to use CAFE credits from those sales to sell more inefficient vehicles to the marketplace. This would result in a net averaging of the greenhouse emissions output, which would mean no GHGs were removed by the sale of EVs. This coincides with other studies that show that increases in CAFE requirements do not lead to lower gasoline consumption or fewer miles driven, but actually increase those things, which offset the gains had by the standards to begin with.



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The CBO report on federal tax credits and electric vehicles is incomplete and relies on poor assumptions. They use no actual statistic from the 40,000 PHEV and BEV's (AEV) that are mentioned in the report. - It assume that the average range of an all-electric is 55 miles (pg. 32) - It assumes that EV's are only be charged once per day (pg. 7) - It assumes that EV's are driven fewer miles than an ICE would be by the same driver The report was obviously written by people who are only academically familiar with electric vehicles. Who chose not to use available real-world data and instead chose "CBO assumptions."
Which, if true, are like most CBO reports. Interestingly, I've noticed that automakers, EV enthusiasts, environmentalists, "drill, baby, drill" pundits, and others have no problem pointing to favorable CBO reports to make their case. This is especially fun when "climate impacts" and "budget impacts" are cited in favor of promoting this or that ideal (usually either incentives or grants). The CBO was the main authority cited for discussions in favor of CAFE increases, for example.