Going Electric: State Policies Can Have an Enormous Effect on the Popularity of Plug-In Vehicles

By Andersen, Glen | State Legislatures, May 2011 | Go to article overview

Going Electric: State Policies Can Have an Enormous Effect on the Popularity of Plug-In Vehicles


Andersen, Glen, State Legislatures


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Imagine an America where the electric car is more popular and practical than the gas guzzler. Actually, you don't have to imagine it--you just have to read some history.

In the 1890s electric carriages outnumbered gas-powered vehicles by 10-to-1 in the United States. During their heyday in 1912, production peaked, and at least 38,000 electric vehicles were registered in the nation.

Now, advanced motor and battery technologies, higher gas prices and environmental concerns have spawned a resurgence in electric vehicles. Higher prices at the pump may be the biggest driver. The U.S. Department of Energy expects this year will be the first time U.S. drivers see average gasoline prices above $3 per gallon for the entire year. The department forecasts even higher prices in 2012.

Although the current electric cars have a premium price, they are far less expensive to run. With the national average price for electricity at 9.6 cents per kilowatt hour, new models such as the Nissan Leaf can travel about 30 miles on 70 cents of electricity, about a quarter the cost to drive a similarly equipped car at $3 a gallon. If gas prices continue to rise, the price difference becomes even more dramatic.

"You pay more when you buy a plug-in electric than for a gasoline-powered vehicle," says Dan Santini, a senior transportation economist at Argonne National Laboratory, "but if you have selected the right plug-in for your patterns of use and local electric rate structures, you should save considerably on fuel costs."

This year, two mass-produced plug-in electric vehicles have been released: the hybrid Chevy Volt and the all-electric Nissan Leaf. Many other auto manufacturers--BMW, Ford, Honda, Toyota and Volvo plan to release plug-ins in the next two years. The number of plug-in electric vehicles on the road is expected to reach 841,000 by 2015, divided between plug-in hybrids and purely electric vehicles, according to Pike Research.

How popular these vehicles become will be affected in large measure by state policies. States that offer rebates, tax and infrastructure incentives are likely to see the most people buying the new crop of electric cars. Since electric cars cost more, state and federal incentives make them more affordable compared with gasoline-powered cars.

Many lawmakers are willing to support electric vehicles until the technology advances enough to bring costs down. They see the incentives as a worthwhile trade-off to promote the use of domestically produced energy and encourage advanced technology industries.

Not everyone thinks state vehicle tax rebates are needed, however, given the large federal rebate.

"I'm not sure the exemption is needed to spur sales," says Washington Representative Deborah Eddy. "Many dealers reporting pre-orders are beyond expectations, so I'm not sure there is price-sensitivity for the supply anticipated in the next couple of years."

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"As production increases in the years ahead," she says, "we may want to revisit the question of incentives."

WILL THEY SELL?

A hurdle for the future of electric cars is whether consumers will want them. Will they be willing to pay for them? Will they be able to charge them conveniently? Will the cars perform the way drivers expect?

Drivers are accustomed to cars that go 300 miles or more between fueling; many are wary of being limited to 100 miles between charges. This "range anxiety" may dampen interest in purely electric vehicles, at least until charging stations become more commonplace or the cars can travel farther between charges.

Most new plug-ins are hybrids. Their gasoline engines extend their driving range, but the distance they can drive on an electric charge is shorter. If gas prices continue to rise, the prospect of saving 75 percent on fuel costs may be the antidote to range anxiety. …

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