CelticSolar: Plug-in Cars Get Kick Start

There are several Plug-in Hybrid Electric Vehicles (PHEV) and Extended Range Electric Vehicles (EREV) that have been announced for 2010 and later. Most publicized of these is the Chevy Volt.

There is also a long list of Battery Electric Vehicles (BEV) announced for the same time-frame including the Tesla Model S. I'll use the term "plug-in vehicles" to collectively refer to PHEV, EREV, and BEV.

The Volt price tag has not yet been set in stone, but it has been slowly creeping up from that first muttered $20k number over a year ago, to the current $37k estimate. The Model S will be an estimated $60k.

What makes these cars expensive? One big factor is the batteries. To have a significant electric-only range, these vehicles need the latest battery technology. That expense means that they will not compare well to the proven hybrid technology that is available today. Here are two examples of 2009 hybrid cars that are much more affordable.

2009 Honda Insight

Under $20,000 MSRP
1.3-liter, 4-cylinder engine
battery type not available
40 mpg city, 45 mpg highway
five-door, five-passenger hatchback

2009 Toyota Prius$22,000 base MSRP

1.5-liter in-line 4-cylinder engine
NiMH battery pack
48 mpg city, 45 mpg highway
five-door, five passenger hatchback

If the current hybrid technology can be made so affordable, is it important we move to plug-in cars at all? Read on.

Today's hybrid vehicles have one fuel source, gasoline. The addition of the electric motor allows them to be more efficient, but every inch they travel is originally sourced by petroleum.

Plug-in cars can be (or must be) fueled by plugging them in. This gives them several advantages:

Offer Fuel Choice (plug in and/or fill up)
Utilizes existing infrastructure
Are cleaner
Are cheaper to fuel than combustion
Fueled by locally sourced electricity

As we approach the last trillion barrels of oil, the well-to-pump pollution to generate the gasoline will get continually worse, offsetting any pump-to-wheel improvements. On the other hand, the power grid is becoming cleaner and you can generate green power yourself.

If you agree that plug-in powered transportation matters (and I hope you do), what can be done to make it cost competitive? Government incentives. I'd prefer just to be taxed less and use my money as I see fit, but that is not the system that we have, so I suggest that you use the incentives since you are paying for them.

Here are the incentives that I am aware of:

Federal Incentive

The Wall Street bailout bill passed October 1st included several “sweeteners”. Somewhere down on that list was a plug-in vehicle credit. A plug-in with a 4kWh battery pack will get a $2500 tax credit. Add $417 per kWh of battery power above 4 kWh, and capping out at $7500 for a 16kWh pack. 16kWh happens to be the size of the Volt's battery pack. This credit will apply fully to the first 250,000 plug-ins sold, then will be phased out over the next year’s worth of sales after that milestone number is reached. (See Section 205 on page 186 of the bill.)

The bill also adds electricity to the clean-burning fuel property tax credit. (See Section 207 on page 197 of the bill.)

Oregon State Incentive

Oregon currently has a $1500 incentive for hybrids. The Governor has a proposal to eliminate that and replace it with a $5000 incentive for plug-ins. No details about battery capacity requirements (if any).

Results

If the Oregon incentive passes at its planned level, how much will those two plug-in car examples cost?

Volt:

Estimated MSRP: $37,000

- Fed Incentive: $7,500

- Ore Incentive: $5,000

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After incentive net price: $24,500.

This price is much more competitive with a $22,000 Prius. If the Volt gets gas mileage that is twice as good as the Prius, it could even payback the price difference within a few years, while being greener.

The Tesla Model S, on the other-hand, is not attempting to compete with the Prius. It is a luxury sports sedan, so its competitors are in the class of the BMW 335, Infiniti G35, or even the Cadillac STS-V which has a price tag over $80,000. Let's do the math anyway: $60,000 minus $12,500 for a net price of $47,500.

There is the wrap-up on the plug-in vehicle incentives. Now we just need to see plug-ins on the dealer lots. Below is a list of plug-in cars that have been announced. If even 10% deliver in 2010, that will be more choices than we have now.

Here is a partial list of the announced PHEV/EREVs: