100 mpg+, but not worthy of a $7500 tax credit?
The legacy of oil dependence
If there is one thing that really worries me about the auto industry and foreign oil dependence, it’s the legacy effect. Quite simply, it takes decades to replace the current fleet of autos in the US today. Even worse, a Japanese study finds that extending the life of a vehicle, rather than quickly trying to replace chunks of it such as with ‘cash for clunkers’, is actually the more environmentally-friendly choice. So, countering the the legacy effect with as much ammunition – building the most fuel efficient as possible vehicles today – is critical to a better future two decades from now.
Thus, many believe that tax credits for hybrids, especially the plug-in kind, are key. But does this thinking really make sense?
According to John Lauckner, President of GM Ventures and co-creator of the Chevy Volt, volume of battery production is not the key to cheaper plug-in vehicles. Instead, it’s technological breakthroughs – a thought shared by the consensus of battery technology experts. To some extent, one could argue that the battery-powered vehicles of today are an inefficient utilization of resources. Consequently, in theory, it might be more efficient and productive to pump consumer tax credits into battery research.
Still, without pushing plug-in cars into the marketplace, it might be harder to promote such research. Likewise, there are other technologies, such as electric motors, that are being advanced by today’s plug-in vehicle production. Nevertheless, might not the same means be achieved with conventional hybrid cars?
I know hybrid cars are passe these days, but let’s try to objectively think this through.
Analysis from Carnegie Melon University, for instance, suggests that the current tax credits are too focused on battery size, but not electric range. Does that make sense? Essentially, the tax credits, CMU warns, are not rewarding the most cost-effective EV range for the buck – in a battery package that still needs lots of improvements. Isn’t that inefficient?
Even more confounding, if volume isn’t the critical issue, why a big rush to 1 million plug-ins by 2015? What is this accomplishing if volume isn’t the critical issue right now? Again, isn’t selling as many electric cars with battery packs that are not yet ready for mainstreaming a bit of a waste of resources, an inefficient pursuit, if volume isn’t yet critical?
Of course, some might argue such a path is good for fighting the legacy effect, and I agree. But are plug-in tax credits the right kind of battery response to the legacy effect?
With the amount of battery material used in one battery electric vehicle, roughly 10 hybrids could be produced. Consequently, if 10 percent EV penetration were achieved by 2020, 100 percent hybridization theoretically could be achieved by 2020 as well. Not only would 100 percent hybridization result in a bigger impact on both the legacy effect and reducing foreign oil dependence compared to 10 percent plug-in penetration, but such hybrid penetration could extend the life of this hybrid fleet by enabling these hybrid vehicles to become plug-in vehicles if technological breakthroughs are achieved in the battery industry.
So, does that mean that plug-in tax credits should be converted into hybrid tax credits?
Probably not as I don’t believe that automakers are ready for 100 percent battery penetration across the entire fleet any time soon, even if just mild hybridization, unfortunately. So, while plug-in tax credits might not be the most efficient path forward, they might still be the best battery-powered plan forward.
Then again, should the focus even be on batteries?
For instance, why not just focus on fuel economy? Wouldn’t a 60 mpg (city) tax credit require a lot of batteries, for example? In fact, the only vehicles being produced today that achieve such fuel economy are plug-in vehicles. However, it isn’t inconceivable that a smaller Prius, such as the Prius C concept already headed for production, could achieve such a number – and at far less expense.
Likewise, in addition to batteries, new vehicle designs, lighter materials, biofuels, etc. – represented by some of the vehicles at the Automotive X-Prize – might also achieve breakthroughs using a fuel economy-based tax credit. According to a recent Accenture study, this is exactly the kind of technological diversity required for America to win the automotive future.
By no means are plug-in tax credits a bad idea, but they are not a highly efficient way to deal with the legacy effect of foreign oil dependence. So, it seems natural to ask, is there a better path?
I’m not certain, but the science seems to suggest we can do better.