7500 credit for Plugin hybrids

To really know the best deals, you have to figure in the state incentives.
Best state for Volt is CO w/ add'l ~$6000 state incentive.
GA, WA, NJ have some nice incentives for BEV only.
CA of course has good incentives+HOV but the PHEV golden days are apparently ending (BEV still gold there)

CA alone (my calc) has 42% PHEV market at 46% of BEV market in 2013.
If you add in the other states with great incentives you're probably well over 2/3-rds Plug_ins sales are related to strong incentives program in the states + Federal of course.

 

It's not just how much you pay. It's what you get and how well the vehicle fits your needs. As mentioned, state incentives can be significant.

 

Isn't the point to encourage & spread plug-in vehicle acceptance?

We'd get more bang for our buck if 600,000 people got $2,500 credits than 200,000 getting $7,500.

The same amount of money would have triple the market impact.

 

A Volt and BEVs use more than 3 times the battery cells of a PPI, and the point of the credit was to spurn on and support battery manufacturer until costs could be lowered through manufacturing advances and increased scale.

 

...OK well for Pete's sake, Troy please put your state in your user profile for me...from now on I will give you CA-specific answers.

 

How would 3 times the number of vehicles not accomplish the same thing?

That added benefit of having reached 3 times as many consumers and prevented those traditional vehicles from being produced & purchased cannot be denied either.

Reaching mainstream consumers is very, very important.

 

There is no shortage of credits to go around at this point though, so offering three times as many would provide no benefit if supply is already greater than demand. Offering larger tax credits as battery capacity goes up allows manufacturers to experiment with different styles of vehicles rather than being effectively forced into small battery plug-in hybrids if the credit were one size fits all. It appears that the credit should serve its purpose well; by the time they run out BEV tech should be sufficiently advanced to stand on its own.

 

double post

 

Because 3 vehicles with a 4.4kW pack is less demand to the battery manufacturers than one with a 16+kW pack. The credit was implemented to alleviate the high cost of the battery to the consumer, and to drive demand to get the battery companies to invest in mass production. The more individual cells called for in a car's manufacturer, the more incentive to the battery company to expand production.

That assumes that there are those extra consumers willing to buy a plug in, and that they find the $2500 credit car compelling enough to take the plunge over a traditional car. Of course the plug in car has to be available in their market for them to buy it.

Reaching mainstream is important, but that doesn't mean it needs to be the first step. The Model T was not the first car offered for sale. It wasn't even the first car Ford was involved with. There were several car companies making cars that only the rich or well to do could afford. There existence did increase awareness among the public. With awareness came acceptance. So when the Model T came along, the general public was ready to have a car of their own. Ford may not have been has successful releasing an everyman's car in the beginning.

Tesla has adopted a strategy that mimics how the first cars came to market by releasing expensive high end ones first. Nissan did the opposite with an everyman BEV. Which car is selling more? Which is likely making more profit per car?

 

That's a circular statement. Offering three times as many could cause a shortage.

The "each automaker" approach doesn't stimulate competition, it just subsidizes early rollout. Breaking away from niche has to be accomplished somehow. What will address that?

Remember, battery-packs are called that because they are a bunch of cells packaged together. So, capacity doesn't directly come into play. There's just a different quantity of the same cells.

 

That sounds quite resaonable. But in actual practice, has proven false. The disconnect between classroom and real-world does that, sadly. Ramp-up makes it even easier to see that too.

Demand for the vehicle itself has been revealed a more significant factor. Volume and risk go hand in hand. That's why the stability provided by on-going high-volume sales is so important.

How to achieve business-sustaining profit is a debate no one will never win... since the market is ever-changing. The catch is to recognize when something isn't working and adjust accordingly. The tax-credit rules did not offer that flexibility.

 

The tax credits are set up to be finite, and proposals are underway to make changes. As is they will last a manufacturer into the second generation of their model. That is where the step from niche to a larger market will happen, and with dropping battery prices, the current tax credit will be subsidizing more of the car's cost than the battery. With that I don't see why it would be necessary to support plug ins directly. Indirectly with a higher gas tax would have a bigger effect for all fuel efficient technologies. Plus, our roads need the cash for repairs.

 

I'm afraid I don't follow. If automakers can't sell enough cars to take advantage of all of their available subsidies now, what advantage would there be to offering 3x as many? The smaller per-car subsidy would create a dis-incentive for putting larger packs in cars, or for making pure BEV's as the $2500 would only subsidize a small portion of the cost of the battery, making the vehicles too expensive. That's why the subsidy scales with capacity: it costs a whole lot more money to make an 85kWh pack than it does to make a 4.4kWh one.

From where I stand it certainly stimulates competition; without the subsidies, manufacturers would not be able to make cars at a price that consumers would be willing to pay. With the subsidies there are a wide-variety of plug-in vehicles available, mostly from manufacturers that I would never before have considered purchasing from (this Toyota included).

 

That happens. I was enlightened to find out how many different approaches were actually available. The study of economics is a challenge to convey online in forums though, since focus is heavily skewed towards engineering instead.

 

I am perfectly capable and willing to discuss economics here, so if you'd like to expand I'm all ears.

 

The plug in credit is also there to promote BEVs, and not be limited to a single solution. It allows market forces a chance to play in the success of a PHV or BEV without favoring a predetermined, by a corporation or government, solution.

If we were going to set the amount of available tax credit to a dollar amount instead of a fixed number of cars, it will apply to three times as many PPIs as the Volt. This will just extend the amount of time the PPI can benefit from the incentive. It will not increase current sales or greatly speed up the PPI going from niche to large market. The only limit on how many credits can be claimed in a year is the number of eligible cars that can be sold in that time frame.

tl;dr, the credit isn't the limit on PPI sales.

A flat $2500 credit for all would have reduced Volt, Leaf, and other large battery plug in sales. It isn't a guarantee of increased PPI sales. They could increase, but more likely at the expense of sales for the others. The total numbers of plug ins wouldn't increase and likely drop from where they are now. Less plug ins sold, lower demand for battery cells, and less investment in their development and production. Even if the numbers stayed the same, a greater number of small battery PHVs would still exert less pressure on the industry than what credits in place have done because of the fewer cells.

 

To be fair, the main purpose of the tax credit appears to have been to save the Volt

If it was aimed to drive battery volume, it would have continued to scale to larger pack sizes. If was aimed to drive number of plugs to build market acceptance of plugin vehicles, a flat credit would have made more sense. Instead it was crafted to make sure the PiP would get no credit as designed at that time, and only a minimal credit as redesigned, and so that the Leaf and future BEVs would get no more credit than the Volt which would get the max.

I'm not saying that was the wrong thing to do, but its pretty clear that was a primary driver of the formula used.

Rob