10 percent more for 5 percent better efficiency
So, the Chevy Volt will require premium gasoline, but don't worry, premium gasoline makes the Volt 5 percent more fuel efficient when in range extended mode. Unfortunately, however, premium gasoline costs about 10 percent more.
Then again, if you can afford a Chevy Volt, do you care about the cost of premium gas? Of course, if you can afford a Volt, do you need a $7500 tax credit?
“The Volt is a game-changing product,” says an Obama vehicles executive. The iPhone was a game-changing product, and it didn't take a tax credit. And they sold over 90 million of the things. A game-changing product does not need a tax credit. They're mutually exclusive.”
Rush Limbaugh made that point, recently, according to Straightline, which then used Limbaugh's rant to ask whether vehicles like the Volt are deserving of tax credits.
I say yes, but not in the way the plug-in tax code is currently written. Like the Volt, the current plug-in tax credit doesn't make cost-effective sense. Too much focus is on battery size rather than the potential of real world change. Unfortunately, if a plug-in is going to achieve success, it's probably going to have to be a small battery plug-in hybrid according to the experts, and even then success will be difficult.
Consequently, while I'm not a big Limbaugh fan or hater (to be honest I've never listened to a show), he makes a valid point. Ultimately, competition and free markets are not purely evil tools of the devil's capitalism, and when tax credits are focused on political favoritism rather than real world realities, inefficiency is inevitable.
Today, automakers have many tools to increase automotive efficiency, they just don't have any incentive. Consumers don't care that much, unless gas prices are sustainably significantly higher, and regulations don't demand pushing the limits of efficiency. Thus, if tax credits are the best solution, then they must inspire cost-effective, efficient competition. Otherwise, it's all just tax-funded greenwashing and a prayer for a miracle.
On the other hand, to be sure, America can expect Japan, Korea and China, for instance, to compete against our products, and in the end it will all boil down to one thing: the most bang for the buck.
For now plug-in tax credits have little to do with the most bang for the buck or real competition, and that might be OK, at the R&D level. The possibility of speeding up a battery breakthrough is a worthwhile endeavor, but it can't be the primary goal, especially when the science isn't very supportive. Furthermore, the move to battery-powered vehicles is ultimately about efficiency, and we should be striving towards that efficiency as efficiently as possible if we want the most bang for our tax-funded policies.