U.S. Department of Transportation Secretary Ray LaHood said tax incentives for plug-in electric vehicles have been an effective way of boosting consumer interest in cars like the Chevrolet Volt extended-range plug-in and the Nissan Leaf battery-electric vehicle, even though the two models had weaker sales than expected, Reuters reported.

The $7,500 federal tax credit, which critics say has been used mostly by people wealthy enough to afford such vehicles without an incentive, "is real money and people have utilized it," the wire service said, citing LaHood's statements to reporters at the North American International Auto Show in Detroit. President Barack Obama has predicted that, all told, a million electric vehicles will be sold in the U.S. by 2015. Last year, Pike Research said Americans will buy about 300,000 BEVs and PHEVs in 2015, up from about 50,000 in 2011, while Michigan's Center for Automotive Research projected in early 2011 that U.S. electric-drive vehicle sales will increase to about 140,000 units in 2014 from about 30,000 last year.

Critics of the tax credit have questioned its effectiveness largely because of relatively low sales of electric vehicles in the U.S. so far. While Nissan sold almost 10,000 units during the model's first full year in the U.S., General Motors sold just 7,671 of the plug-ins last year. And more than half of the buyers of those cars had an annual income of at least $150,000, Reuters said, citing Edmunds.com.

Additionally, a Volt fire at the National Highway Traffic Safety Administration's (NHTSA) facilities over the summer and a battery recall of the Fisker Karma extended-range plug-in have caused some to question plug-in vehicles' safety.

Recently, green-technology research firm Pike Research reported that the percentage of Americans showing interest in buying an electric-drive vehicle has fallen during the past two years, as car buyers say the continued premium charged for electric vehicles and plug-in hybrid electric vehicles doesn't offset the effect of lower refueling costs. Forty percent said they were either "extremely" or "very" interested in purchasing a plug-in vehicle, down from 44 percent a year earlier and 48 percent in 2009.


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  • 51 Comments
      electronx16
      • 2 Years Ago
      If the price of gasoline even somewhat reflected the true cost of oil dependency to society we wouldn't have this discussion. People would make very different choices in purchasing cars, oil dependency would be drastically reduced and the economy/security/environment would be much better off for it. It's simple economic textbook stuff really: internalize those negative external effects of oil addiction. Too bad the army of oil lobbyists that infests Washington has got the politicians convinced that even the slightest increase in gas prices is political suicide and the car lobby is very effective in undermining plan B: better fuel economy mandates that sound ambitious at first glance but invariably come with the kind of fine print that makes sure not too much needs to change. In such a perverse playing field those tax credits, putting money in the hand of the consumer thus helping create demand for alt fuel vehicles, are a surprisingly sound approach to make at least an effort to turn things around.
      goodoldgorr
      • 2 Years Ago
      Don't worry, i been harsh about current batteries in the last 2 years and it show in that survy but things are getting cheaper and better but continue to postpone any expenditures toward cars except the volt. The thing that consumers were not asked in that survy is that they now want to recharge with free non-polluting electric solar panels. Up to now nor fisker, tesla, gm volt or nissan leaf sell their cars with adapted and complement solar panels to recharge for free the electric car. This is a bad omission from them so continue to postpone any expenditures till they offer the solar system along the car. The trick is this you put the solar panels at home or at work and you recharge for free with 220 volts a.c electric current. When the car is fully charged the system power the house or the working place. At night it's the car that power the system and give energy to the house. So almost just solar free non-polluting electricity is powering the house and the car. To do so it take mostly a solid-state battery or an ibm battery or an hydrogen fuelcell system with an electrolyzer. Remember to postpone any expenditure till they decide to sell the complete system. Current crop of green car offerings are simply not perfectionned enouph right now.
      solas
      • 2 Years Ago
      Tax credits in this case do more than offset the cost of the vehicle: it moves the economy. I (whether I be Republican or Democrat), hold onto my cold hard cash with greedy, stubby little fingers... I did NOT need a new vehicle now. I could have waited, say, 3 years. But I chose an EV in part of these tax credits. That's a purchase that puts $$$ in many people's hands... and out of mine, rightly so. In return, I get intangibles that are never mentioned in an article like this: for example, I can never go back to driving-around-trying-to-find-a-gas-station-or-waiting-in-line-at-said-gas-station. For normal daily usage, I plug in at home. period. It is a luxury worth cash actually, despite the fact it is far cheaper as fuel.
        EZEE
        • 2 Years Ago
        @solas
        Thanks for the insight.
        DarylMc
        • 2 Years Ago
        @solas
        @ solas It's a shame the rebate has become a political football in the USA. I dont have a strong opinion either way about tthe rebate but my guess is many people like yourself would have purchased a Volt? anyway. Sounds like you are enjoying it?
      paulwesterberg
      • 2 Years Ago
      Two years ago none of the normals knew anything about electric vehicles. Most of them still don't know anything. How can interest decrease when it starts at non-existent? If a republican wins the presidential election you can kiss these tax credits goodbye. It could be a very good Nov-Dec sales period for the volt & leaf if Obama is not re-elected. Post tax credit EV sales could fall off a cliff if gas prices remain low.
      fairfireman21
      • 2 Years Ago
      someone has too other wise it will be 10 years before the average family can afford them. $7500 may not be alot for the rich but for most $7500 can be a matter of a few months pay.
      Spec
      • 2 Years Ago
      It should be noted that Department of Transportation Secretary Ray LaHood is a Republican and these tax-credits were passed with Bipartisan approval. So we can get some things done when people stop acting like children and implement policies that are good for the LONG TERM health of the nation.
        EZEE
        • 2 Years Ago
        @Spec
        Salutes Spec
        EZEE
        • 2 Years Ago
        @Spec
        Honestly Spec, run for office. You already know how to use the right winger's language (when you want to) - you would be a shoe in.
      SpeedyRacer
      • 2 Years Ago
      Statistics can be used to prove just about anything. The average new car buyer makes close to $100,000 so $150k for cars that cost a bit more than 50% more than the average car sounds about right. Only about 20% of Americans can afford to buy new cars in the first place. The idea of the tax credit is to jump start the EV industry... And it is working. Nissan will have its plant in Tennessee ready to crank out up to 150,000 EVs a year starting the end of 2012. Those are real jobs.
        JPWhite911
        • 2 Years Ago
        @SpeedyRacer
        Yes they are real jobs at a time when they are sorely needed by the Auto industry/workers. If the credits go away then we may see layoffs. There are many out there that want to kill the electric car again. I believe credits or rebates are the way to go because they reinforce a desirable behavior. I see many calling for gas tax to make people switch to EV's. That punishes many who cannot afford to switch, like you say only 20% of people can afford a new car.
      EZEE
      • 2 Years Ago
      Pike research? :D All humor aside, as PR once noted, if the average is $100,000 - $150,000 and Matt Damon buys one, then that means you need a pile of people who make way less to buy them to counter the wage gap. Also, as I pointed out before, rich people are not stupid with money (they are rich...I mean...makes sense). They like rebates and tax credits as much as the next guy. Take away the credit and they just might get the BMW instead. Hopefully those plug in fusions and C-Maxes wont be too expensive, and maybe we will see a plug in Prius C soon (best hope for a cheap plug in).
        solas
        • 2 Years Ago
        @EZEE
        Not average, median. You don't need a "pile of people", 1/2 had an income less than $150k, according to this article (as this was rewritten by ABG, I will not vouch for this data in the slightest). As someone else also mentioned, the only reasonable comparison is the median income of *new car* [ICE] buyers. vs. EVs (by definition, new).
          EZEE
          • 2 Years Ago
          @solas
          Not sure a straight up comparison is fair - would one compare the median income of a person who buys a Nissan Versa to a Chevy Volt, or similarly priced BMW to the Volt? (smiling at your ABG disclaimer).
      mylexicon
      • 2 Years Ago
      We are a generation of Americans raised on demand subsidies. I'm not sure another demand subsidy is really the solution we need. We should be thankful this demand subsidy has failed, and we should create more effective programs for increasing fuel economy and reducing oil imports. Preferably, the new programs would be less focused on the upper middle class, less likely to increase prices, and far more effective.
        Spec
        • 2 Years Ago
        @mylexicon
        Hefty taxes on petroleum fuels would be a much better solution. But since that is political suicide, these tax-credits are the next best option.
          EZEE
          • 2 Years Ago
          @Spec
          @2Wheel I agree with you on the libertarian thing. I lean more that way than anything. For me, however, when I hear screaming about something that ends up being probably less than 1/10th the amount we pay in INTEREST on our debt, I have a hard time getting worked up about it. But yes - not a fan of subsidies, breaks, etc., for anything.
          2 Wheeled Menace
          • 2 Years Ago
          @Spec
          Or you could follow some principles and not play pick and chose with various industries.. I like the idea of a bigger gas tax, but the govt. doesn't need to be fed more.. go the opposite way and stop subsidizing the stuff.
          EZEE
          • 2 Years Ago
          @Spec
          I really have no issue with these, as they specifically have a sunset date limited by production. I think EVEN FOR RIGHT WINGERS (I say it that way to make everyone happy), the marketing portion is not that difficult. Obama, Romney, whoever - point out the total cost, percentage of the total budget (which is miniscule), the sun set date, plus focus on Ford and GM's efforts, plus new companies like Tesla (maybe ignore Fisker for the moment - too much downside for whoever wants to attack them), and point out the advantages of electric. Also point out that if we don't do this, the Japanese and Chinese will (and maybe the koreans - not sure about them yet, as Dan rightly pointed out). Use phrases like, "made in USA, American Worker's, Foreign Oil, expanding our tax base, bringing jobs home" - tailor the marketing to the audience....
      MTN RANGER
      • 2 Years Ago
      By Republican logic, the $7500 to high income Americans should be justified. That will give them more money for job creation. The top 5% who pay the majority of federal taxes are the ones who employ people, right?
      • 2 Years Ago
      Can we all agree that if you are going to mention the FUD about Volt battery fires, please do so in the context that there is no evidence that batteries are more dangerous then carrying big bladders of gasoline around on your car, and that the Volt aced all relevant safety tests? Or is all "journalism" just the same old churn of the same old worn out observations and talking points? At least in this forum, we can commit to some truth-based advocacy for green tech, right? Anyone?
        electronx16
        • 1 Day Ago
        "some truth-based advocacy for green tech"...amen to that! In that context it is rather bothersome that the author of this blog article saw fit to gratuitously bring up the Volt battery problems without bothering to put them in the proper perspective.
        EZEE
        • 1 Day Ago
        Works for me... ABG should always include: * How far it goes * How long to charge * Any relevant detail (like, does not explode driving down the road) * Basic grammar (If I catch a grammar error, well then it must be bad)
      Brand X
      • 2 Years Ago
      If you put this into perspective, consider the fact that the Federal Government and States issue billions of dollars in energy breaks to companies for existing businesses and for starting new ventures to compete. It's only fair for them to extend these breaks to buyers. If you want to put it into further comparison, the government pays a lot more than $7500 to millions of Americans who do nothing, so it's fair when you get down to it. Very fair.
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