Congress Throws Cash At Plug-In Hybrids

The $700 billion bailout bill signed by President Bush yesterday includes tax credits up to $7,500 for US buyers of electric vehicles and plug-in hybrids. Only one such vehicle—the Tesla Roadster—is on sale today, and volume production by other makers will not start for at least another two years. Total funding for the credits is $1 billion, and they will expire in 2014.

The goal is to help offset the high retail prices of vehicles with high-capacity—and initially very expensive—battery packs, to kick-start consumer purchases and get much thriftier vehicles on the road faster. General Motors, for example, has quoted a price of $40,000 for its compact Chevrolet Volt, a plug-in hybrid vehicle.

For qualifying light-duty plug-in electric drive vehicles, the amount of the credit is based on the energy stored in the battery. The battery pack must have at least 4 kilowatt-hours (kWh) to qualify; the base credit for a vehicle with that pack would be $2,500. The credit rises by $417 for each additional kWh, to a maximum size of 16 kWh—which is, not coincidentally, the size of the pack in the Chevrolet Volt, qualifying that car for the full $7,500 when it launches late in 2010.

By comparison, the pack in today’s Toyota Prius—which can only run a mile or so on electricity alone—contains 1 kWh of energy. Though Toyota hasn’t released specifications for the plug-in Prius it expects to sell to US fleets next year, that pack is expected to be less than 4 kWh, and so would not qualify for any credit.

The credits would begin to phase out once more than 250,000 qualifying vehicles are sold in a single calendar year. They would be cut to 50 percent for the two quarters following that event, and then 25 percent for the two quarters after that. For larger commercial vehicles, defined as those weighing more than 10,000 pounds, the formula is the same but the maximums are higher, from $10,000 to $15,000 depending on weight class. To be eligible, vehicles must comply with the Clean Air Act, meaning that private converters would presumably have to certify their vehicles under the Environmental Protection Agency’s emissions testing cycles.

The bill also extends current tax credits for development of cellulosic ethanol and biodiesel (and revises their definition to include production from non-biomass sources—one of which might be municipal garbage, for instance); wind, solar and hydroelectric power; heavy-truck idling reduction equipment; and makes it possible for utilities to recapture the costs of “smart meters” and associated components of the electricity transmission grid more quickly.

It does not, however, address the current tax credits for today’s hybrids—meaning that a cap of 60,000 qualifying vehicles per manufacturer remains. The result is that Toyota buyers are no longer qualify for that credit, while buyers of lower-volume hybrids from Ford, Nissan, and General Motors still do.


  • Need2Change

    If Congress really wanted to help the U.S. economy, they would have restricted the credit to cars and batteries built in the U.S.

    It appears with this credit, we’re going to trade dependance on foreign oil for dependence on foreign cars and batteries, and Congress will need further tax credits to bail out the U.S. auto makers and suppliers.

    P.S., I’m aware that Toyota complained that the credit doesn’t help Prius sales or hybrids with small batteries — but Toyota is already selling every Prius they can build. The Prius does not need more incentives.

  • jvoelcker

    Need2Change:

    While the tax credit for purchase of an electric-drive vehicle applies to vehicles built anywhere, as you note, the $25 billion in low-interest loan guarantees to automakers and parts makers (see last paragraph) can only be used for manufacturing facilities in the US.

    You could make the argument that the tax credits are temporary, with the goal of kick-starting the market, while the loans will have a much greater long-term multiplier effect for US manufacturing.

    The much greater issue is where the Li-ion batteries will be manufactured–not the cars.

  • kerry bradshaw

    I guess the mistakes concerning the Volt won’t stop
    until the car has been in production a couple years. The price of the Volt has not “been quoted” by GM. Wagoner gave the first (and only) estimate during the past 3 months : “between $35 and
    $40,000, depending upon the cost of the batteries at its debut.
    Why don’t you all check your “facts” before spreading them over the (unreliable, unsafe) internet.

  • WompaStompa

    You heard it here first: Buy American, get tax credits.

    I’ll be in line for a plug in Prius, tax credit or no tax credit.

    Volt = Overpriced Hype.

  • Bryce

    lol, yea, I am sure the plug-in prius will be so much cheaper. It won’t even be a series hybrid. If it can’t go strictly on electricity, what’s the point?

  • Jerry

    Those guaranteed funds, however, must be used to develop and build vehicles whose fuel economy is at least 25 percent better than the vehicles they replace.

    Don’t worry citizens we will get those 10MPG cars up to 12.5 to get the loans.

    I think the ideas was for significant savings not some loop hole

  • Big Green Turtle

    I wonder if the $7500 applies to plug in hybrids, including conversions? That would go a long way to making my Prius a plug-in!

  • Samie

    Does it really matter who gets tax breaks for EV’s? I really don’t care if it is a foreign or domestic car. We didn’t care about the tax breaks for Toyota and Honda drivers in the early days of hybrids. GM maybe playing some games with their pricing of the Volt around the rebates but again who cares that is if we do really see other competition with the Volt, it seems really stupid for them to do that since I think their strategy is to try to capture lots of the early market like Toyota did with the Prius.

    I’m sure lots of peps will get mad but why not offer larger rebates for SUV’s and things like mini vans (hybrid or EV). I shake my head at those who drive around town in new non-hybrid 2009/10 tank SUV’s but guess what there is at least 1 of these peps in every town. Point is lets get all those luxury SUV’s to convert to Hybrid tech & EV tech. We could then impose higher standards or mandates on those monster luxury vehicles so we don’t ever fall back into the 90′s- early 2000 consumer buying habits of low MPG’s and higher emission vehicles.

  • Zero X owner

    I actually fully own a 100% electric drive (100% wind powered, thanks to a subscription plan from my local power utility) lithium power pack (less than 2 hour recharge) street legal (cheap after market kit) vehicle, my daily driver for my 26 mile commute.

    This article is factually incorrect. The credit is not for electric vehicles but rather for an extremely restrictive subset of electric vehicles. For example, the credit does not apply to my Zero X. I bought it anyway, as it’s cheaper up front and cheaper to operate and maintain and has better performance than the closest equivalent gas powered vehicle.

    Still, how about a level playing field for once, instead of penalizing those manufacturers who are actually producing and selling electric vehicles in the real world (such as Vectrix and Zero), not just playing with public relations and imitative one-off prototypes (GM and Chrysler come to mind)?

    By the way, a credit limited to products created completely within the United States would disqualify almost every singe product sold in the US in the last 200 years (except maybe solar or wind power). The Zero X qualifies, though, as its official certificate of origin is in the US).

    Bryce – the Prius can run entirely on electricity. Feel free to spout off about something you know nothing about.

  • ex-EV1 driver

    Zero-X owner,
    I’ll have to take issue with the information you provide. However, before I begin my argument, let me congratulate you on your Vectrix and Zero-X purchases. These are wonderful vehicles for the market they fit in.
    Now the bad part: The market they will work for as well as the market in which the Prius can run entirely on electricity are trivial, irrevelant, and not part of any serious problem in the US.
    The US needs electric vehicles that can drive us on real highways, where most of the miles are driven. Not on slow, city streets.
    For those not familiar with the Vectrix, Zero-X, or Plug-in Prius, let me state what Zero-X owner neglects to say:
    The Plug-in Prius can only go about 35 mph in all electric mode, with anemic acceleration. The Gasoline engine must kick in if you want to really accelerate or go faster than 35 mph although the mpg is pretty good – a lot better than a regular Prius.
    The Zero-X is a great off-road motorcycle but it tops out at 45 mph. The Vectric is a cool scooter but it tops off at 62 mph (100 kph) so, while technically freeway capable, you risk life and limb on a freeway going so slowly. I really can’t see anyone using a Vectrix to drive regularly on a freeway.
    We need plug-in vehicles that are real vehicles, not niches within niches.

  • Dom

    I’d like to know where the 700 Billion is coming from. And I have a better idea for jump starting the economy – take that 700 Billion and divide it up between the 300 million US citizens. I could do a lot of buying with 2.3 Billion dollars…

  • hybridman2

    Actually, I think that comes out to roughly $2300 per person.

    This fluff written into the bail out is nonsense and the reason we continue to go into debt in this country. They give $1 billion worth of incentives for 16 KWH qualifying only Tesla motors (great car but too high price for most) and a non-existent late to the show Chevy Volt. A $7500 tax credit for an over-priced $40,000 hybrid will not help it’s sales in my opinion.

    That credit should be available to current hybrids, regardless of KWH.

    So GM wins in this deal, especially if you add the extra 25 billion Bush slipped in their for the auto industry.

  • Will S

    Bryce wrote:
    > If it can’t go strictly on electricity, what’s the point?

    But it *can* go on electric, just not as far as the Volt.

    Kerry wrote:
    > Wagoner gave the first (and only) estimate during the past 3 months : “between $35 and $40,000, depending upon the cost of the batteries at its debut.

    “The company once targeted $30,000 as the price for a Chevy Volt. But the cost of developing the technology is making that an unreachable dream. Lutz now figures a more realistic price for the Volt would be about $48,000. He reckons that $40,000 might be possible, without making any profit.”
    http://www.businessweek.com/bwdaily/dnflash/content/mar2008/db20080321_805508_page_2.htm

  • Will S

    ex-EV1driver said:

    > The Plug-in Prius can only go about 35 mph in all electric mode, with anemic acceleration. The Gasoline engine must kick in if you want to really accelerate or go faster than 35 mph although the mpg is pretty good – a lot better than a regular Prius.

    I agree with most of your point, so this is just a quibble; the kick in speed for the Prius is 42 mph. Certainly not for highway speeds, and while doable for non-highway hypermiling (I get between 50-60 mpg), the more aggressive drivers sometimes become annoyed. This will go away, of course, when oil goes back up again (or when the aggressive driver stays home for whatever reason).

  • V

    Check out lionev.com, (DIY Ranger). Why can’t Ford do this now? Off the aasembly line it shouldn’t cost much more than a regular Ranger pickup.

  • Bryce

    Zero-x……

    So I guess that 1.3L four cylinder engine in there burning gas under the hood of the prius is purely aesthetic and really has no function at all. lol

    People shouldn’t talk about what they know nothing about.

  • Dom

    Silly me – I guess I didn’t pay attention in math class…

  • ex-EV1 driver

    Will S,
    Quibble accepted. I’ll change my story to 42 mph.
    Toyota promises their future plug-in Prius will have an even higher electric only speed but it will still be below 65 mph.
    I agree with hybridman2 that this government money is misplaced (like most government money). Tesla owners can afford the vehicles already. Fortunately, many of them will likely just reinvest their saved money in other clean car ventures since many have purchased Tesla Roadsters for the purpose of saving the planet, not saving money.

  • Shines

    OK so I thought about the speed issue on the Prius and I thought, ‘Does Chevy say the Volt will go 40 miles at freeway speeds?’
    This is straight from the Chevy Volt page:
    2) Assumes fully charged battery. Actual range may vary depending on driving habits and conditions. Vehicle features and performance capabilities subject to change without notice.

    We may find that the Volt will get it’s 40 mile range only on level side streets traveling less than 45 mph. This is still good, but some of us may be disappointed to find the Volt ends up only going for 20 miles (or less) on its battery if most of the miles are at freeway speeds…
    It’s going to be interesting so see how things really turn out…

  • Bryce

    40 miles of range assumes in city driving with stoping and starting again, which allows for regenerative braking. Highway requires less energy for re-acceleration, but also does not have regen braking usually, so the range will be slightly shorter. (not 20 miles, more like 35) And of course, like in a regular car, it will take more energy to go up a hill, so the battery will be drained slightly faster. Then again, on the downhill stretch, your electric range would actually probably be even more, maybe 45, so really, unless you go uphill both ways to work, it will balance out.

  • Bill Cosworth

    Lets face the facts. The Prius technology is old school and over hyped. Its a basic electric motor to help the car out.

    Its a hybrid.

    Full electric like the Volt and Tesla are the only way to move into the future because you dont need to use the engine at all.

    I hope GM can get the volt out soon. I am tired of going to the gas pump.

  • Shines

    Bryce – I recall you mentioning another site that kept up on all the Volt’s engineering details, can you pass that along again?
    As far as highway driving; 50 mph uses much less energy than 65 mph. I’m not convinced on the Volts all electric range – we really will have to wait and see.
    Bill Cosworth – The Volt is also a hybrid
    Who’s to say putting a Lithium battery in the Prius (old school) hybrid system won’t extend its range to 40 miles on electric alone…
    Seeing as the Prius is here today and the Volt is still over a year away I’m not sure how you determine what is old school…

  • Bryce

    The difference is the prius is a parallel hybrid while the Volt is a series hybrid. One uses no gas, and one will always use a little. Volt only will use that little bit of gas if you happen to go beyond its range, which in all likelihood, in a day, you won’t.

    The site is gm-volt.com

    It is run by a guy back East who was really enthused by the concept last year and created the site to essentially make sure GM made the car. You can thank him probably for this car actually coming to fruition. It has articles on it (new ones almost every day, sometimes twice a day) that talk about new developments in the underlying technology. He has managed over the past year to get lots of inside connections on the project, so besides the people actually building the Volt, he probably knows more about it than anyone else.

  • Bill

    What the hell is congress doing rolling this up in the bailout plan?

  • Bill

    Bryce, I think you misunderstand the technology differences between the Prius series-parallel hybrid design and the more limited technology of either a series hybrid like the Volt or a parallel hybrid like the Vonda. You should do a little more reading before you bash, because your comments look a little foolish and naive.

  • Bill

    Dom, the first thing I’d suggest you buy with your share of that money is “The Video Professor’s Remedial Second Grade Arithmetic” DVD

    700 billion divided by 300 million is about $2,300, not 2.3 billion. If it is divided amongst the taxpayers fairly, in the proportion of taxes they paid in, since 10% of the taxpayers pay 90% of the taxes, regular guys like you and me would get $230.00. That will probably get you the video prof’s DVD and a nice player, and maybe a couple of beers to help you through it.

  • Bryce

    limited use of a series hybrid. I don’t know about you, but no complicated transmission makes it LESS complicated. The biggest barrier now is software optimization and battery development. The battery is there and the software is being written as we speak.

    Like I said before, you can drive whatever car you want, but while you are burning gas, I will be zipping by on only electricity.

  • Bill

    Any bets on who “zips by” who, Bryce?

  • Bryce

    Probably the one with more horse power and torque, which the Volt would have….lol.

  • Flash

    Try spending $2,333.33, not $2.3 billion dollars. Do the math!

  • Zero X Owner

    How sad that the credit was gamed so that my registered daily driver, my high performance electric motorcycle with a 2kWh lithium power pack, doesn’t qualify. Only cars that don’t exist and the Tesla Roadster currently qualify for the credit in 2010. What a rip.