A new study from Carnegie Mellon University is calling into question the wisdom of government incentives for all-electric vehicles, saying that conventional hybrids and shorter-range PHEVs like the forthcoming Toyota Prius Plug-in offer the government a bigger bang for its buck in lowering emissions from driving. The report, which was funded with a grant from the National Science Foundation, says that the long-term outlook for full-electrics is still unclear, as large lithium ion battery packs are heavy, expensive and will rely on technological breakthroughs and high oil prices to become viable from a cost perspective.
“It’s not that large battery packs are bad, it’s that they are not providing as many benefits per dollar,” said Jeremy Michalek, co-author of the study, to Bloomberg. “Ordinary hybrids increase fuel economy substantially, and the incremental cost of those systems is getting relatively small.”
American consumers thinking of trading in their car for a conventional hybrid can look forward to fuel savings and the feeling of doing something good for the environment, but one thing they can’t look forward to is a little help from the government in offsetting the so-called “hybrid premium.” Buyers of the 2012 Prius Plug-in, which gets about 15 miles of all-electric range and goes on sale in the United States next March, will be eligible for a $2,500 incentive. Meanwhile, purchasers of plug-in electrics with large battery packs like the Nissan LEAF and Chevy Volt qualify for a $7,500 government tax credit.
The reasoning behind subsidizing large-battery plug-ins while allowing the market for hybrids to grow organically is that, as the Carnegie Mellon study points out, hybrids are often already a cost-neutral investment for consumers. Assuming fuel prices remain at current levels or higher over the near-term, most hybrid owners can expect to save money over the life of their vehicles compared to the average gas car. Without government subsidies, the current generation of full-electrics will still fall far short of paying their owners back unless gas prices increase substantially in the coming years.
If the goal of stimulating the electric vehicle market is to decrease emissions and fuel use, the Carnegie Mellon study posits that more could be achieved by starting small—a vision Toyota has embraced in creating it’s short-range plug-in Prius. While Toyota has been extremely aggressive in building its hybrid lineup, it has been far less enthusiastic about full-electrics, for many of the same reasons cited in the Carnegie report.
“It’s possible that in the future plug-in vehicles with large battery packs might offer the largest benefits at competitive costs if the right factors fall into place,” said Mikhail Chester, the study’s co-author in a press release. “But such a future is not certain, and in the near term, HEVs and plug-in vehicles with small battery packs provide more emissions benefits and oil displacement benefits per dollar spent.”