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THE PROMISE of electric vehicles was fun while it lasted, but several recent articles in Automotive News are anything but promising. EVs are glued to dealership floors. Government EV subsidies are drying up. Other regulatory injunctions are leaning away from pure electric propulsion in favor of plug-in hybrid options. One EV maker’s principal activity seems to be selling credits, not cars. Even the premise of EV propulsion is being given scrutiny.
I admit to a bit of cherry picking here. However, the articles all appeared in two successive issues of Automotive News, June 1 and June 8, 2015. Also, note it’s BEVs, battery electric vehicles, that are losing their luster. It’s too early to assess FCEVs, fuel-cell electrics that are only recently coming onto the market.
The fall in gasoline prices hasn’t helped in conveying the EV message. Also, some strapped state budgets have lessened their rebates and tax credits for EV purchase or leasing, incentives that have been seen as crucial.
In “Nissan Braces for a Falling Leaf,” Automotive News, June 8, 2015, cites Georgia as an example. Up until July 1, the Georgia EV credit was as large as $5000. This, in addition to the federal tax credit of $7500, both offsetting the Leaf’s base price of $29,890.
Atlanta was the Leaf’s hottest market in the U.S., though Nissan spokesman Fred Diaz is quoted as saying, “We haven’t been selling Leafs because people are environmental. We’ve been selling them because of the state credits.”
Compared with those of May 2014, Leaf sales nationally are down 33 percent, to 2,104 vehicles in May 2015. They’re expected to take a larger hit as state supports continue to erode.
Contrasting details are offered in “Lights Out on EV Incentives in Some States,” in the same Automotive News. In March, for instance, Illinois indefinitely suspended its alternative-fuel rebate of as much as $4000. AN reports that. since 1998, this program has distributed $1.4 million. On the bright side, in May 2015 Connecticut set aside $1 million to establish a rebate of up to $3000 on the purchase or lease of an eligible EV.
A little arithmetic shows the only modest outcomes of these encouragements. Assuming the full pop for rebate, $1.4 million at $4000/car works out to only 350 EVs, hardly a significant addition to the Illinois fleet since 1998. Connecticut’s new funding of $1 million distributed at $3000/vehicle could potentially put another 333 EVs out there, again hardly a groundswell of change.
It’s no wonder the feds have backed away from the goal of 1 million EVs by the end of this year: At $7500 a pop, this works out to $7.5 billion in tax credits. Like Senator Everett Dirksen is attributed with saying, “A billion here, a billion there, and pretty soon you’re talking about real money.”
By the way, researching this quote, I found that the senator had fun with it too. According to the Dirksen Congressional Research Center, he may have said, “A newspaper fella misquoted me once, and I thought it sounded so good that I never bothered to deny it.”
To recall an old Italian expression, “Non è vero, ma è una buona storia,” “It may not be true, but it’s a good story.”
But back to EVs. California has had a ZEV mandate requiring 1.5 million Zero Emissions Vehicles on the road by 2025. Initially, its Air Resources Board split compliance strategies in two, one for large automakers, the other for smaller ones with annual revenue of less than $40 billion (there’s that word again).
“California Bends But Doesn’t Yield on ZEVs,” Automotive News, June 1, 2015, gives details of a decision in May, 2015, to have the five smaller automakers (Jaguar Land Rover, Mazda, Mitsubishi, Subaru and Volvo) subject to the same ZEV rules as the biggies in 2018.
There are complications, concessions and subtleties galore, but briefly now smaller automakers can apply sales of plug-in hybrids (not just BEVs or FCEVs, like the biggies) against their ZEV requirements. As before, any automaker pays for its shortfall with emissions credits bought from other automakers having earned a surplus of them.
There’s an interesting business model in these credits. AN reports that “Tesla banked $51 million in the first quarter from selling ZEV credits to other automakers.” What’s more, a Tesla spokesman is quoted as recognizing a potential oversupply of credits making it cheaper for automakers to buy credits rather than to sell electric cars in California.
Professor Dan Sperling, California ARB member (and a highly respected academic), is quoted as saying, “The goal should be to strengthen the ZEV program. I agree that we can get more vehicles out there, but they might not be the vehicles we thought they would be a few years ago.”
At the other extreme, the same issue of AN contains “No EV Talk No Problem At All,” concerning the lack of EV presentations at the annual Vienna Motor Symposium.
Prof.-Dr. Fritz Indra is a former powertrain guru at GM and Audi, now an advisor to automotive specialist AVL. Among his provocative quotes: “I am convinced that the market for privately owned electrics is virtually saturated.” On government subsidies: “They will disappear…. In the end, they’ll need to count electric bicycles to meet their self-imposed quota.” On clean air: “At the very moment in which these cars connect to the power grid, the power stations are blowing dirt into the air, and in fact incomparably more than modern internal combustion engines.”
We live in interesting times, and I’m pleased that Automotive News covers all sides of these complex issues. ds
© Dennis Simanaitis, SimanaitisSays.com, 2015