How The Recovery Act Will Make EVs Affordable For The 99%

Right now, it now seems as if the first American car to need no gas for most daily commutes has been short-circuited. The rollout of America’s GM Volt has been jolted, not just by an economy that has had Americans reeling for the last three years, but by attacks from media allies of the fossil fuel industry, like Rush Limbaugh and Fox News.

A calculated attack from one political party and its spokespeople on the first mass-produced American EV as an “Obama-mandated death trap” made by a “corporation that’s trying to kill its customers” has had its intended effect on sales.

volt

image via General Motors

This month, the Volt—the first mass market EV sedan—had to halt its U.S. production temporarily.

“We did not engineer the Volt to be a political punching bag,” new GM CEO Daniel Akerson said at a Congressional hearing in January.  “And that, sadly, is what the Volt has become.”

The January congressional hearing—or inquisition?—at which Akerson testified was titled, in a reference to the Watergate coverup: “Volt Vehicle Fire: What Did NHTSA Know and When Did They Know It?”

The Republican-held House Oversight regulatory subcommittee trumped up charges of fire danger that were not borne out by the facts: that after six months of routine tests, the National Highway Traffic Safety Administration had cleared the Volt of any fire risk.

Republicans have never held hearings into fires in fossil-fueled cars, yet we have always lived with fire risk from gasoline ignition. In 2010 there were 184,500 fires in gasoline-powered cars, resulting in 285 deaths and 1,440 injuries (data).

So it seems as if the electric car has been killed for the second time. The first was in the ’90s, when under the less-enlightened leadership that drove the Big Three to bankruptcy, GM lawyered its own way out of Californian climate policy (like this current policy) that required the development of vehicles with low to no greenhouse gas emissions.

But that relationship broke up with the bailout. “The oil industry didn’t do us any favors when we were going through bankruptcy and they were making billions of dollars in profits,” GM’s new spokesman for environment and energy matters, Shad Balch, told the California Air Resources Board (CARB) in February.

This second death appears to end a progressive chapter in climate policy history, this time with Republicans as proxies for the fossil industry. But their opposition to gasoline competition didn’t just begin in the last year.

Although the nascent fossil industry received huge subsidies to get going (oil cost over $500 a barrel when it was first drilled in the 19th century), Republicans in Congress have consistently refused to allow anything other than a tax credit to subsidize the jump-starting of post-gasoline driving, which ensures that the only early adopters of the Volt are the few who remain financially secure after 2008.

If you don’t owe more than the tax credit in taxes, you can’t take the Volt’s $7,500 tax credit. Since the national median wage of $26,000 to $30,000 is in the 15 percent tax bracket (incurring taxes of under $5,000) this tax credit does not help most people afford the switch from a gas car, even though gas exacts a much heavier toll on the pocketbook over the years.

By contrast, Japan subsidized the beginnings of the Prius by paying half its initial cost, speeding the day that it became affordable.

However, things could change over the next few years.

The Obama administration—in the 2009 American Recovery & Reinvestment Act (ARRA), aka the stimulus—made a strategic investment in advanced battery technology, with a huge investment of more than $5 billion in grants and low-cost loans to battery manufacturers. The U.S. Department of Energy funded hundreds of companies, researchers, startups and university labs working on next-generation battery technology under the Recovery Act.

The announced goal was to cut battery costs in electric vehicles by 70 per cent by 2015, propelling the U.S. ahead of Japan and Korea to global leadership in the next generation of advanced electric vehicle technologies.

That investment is starting to bear fruit.

Susan Kraemer enjoys writing to publicize the many great solutions for climate change that we can find if we just put our minds to it. She covers renewable policy and clean energy for CleanTechnica and GreenProphet and green building at HomeDesignFind. She recently moved home to Waiheke Island where her writing is now powered by the 80% renewable electricity that powers New Zealand.

    • Devin Serpa

      The electric car is not dead. The Volt is a nice concept, bad platform. PG&E’s converted Chevy truck to a range extended EV is the platform to lead on if going for $40k+ price point. People say American car manufacturers can’t compete with Japanese auto makers, but Chevy didn’t even try to compete. A 30-35mile REEV is not a 80-100mile full electric. If the Chevy Spark or Ford Focus EV go fully electric then it’s a level playing field. I might buy American for the first time in 12 years.

      Gratefully happy LEAF owner,
      Devin Serpa
      VehicleoftheFuture.com

      • http://muckrack.com/dotcommodity Susan Kraemer

        Glad to hear from a happy EV owner. Some people have range anxiety, though, and for them, the Volt is a better fit. Chacun a son gout!

    • http://www.facebook.com/SullyMD Saleem Sully Azad

      Great article, really highlights some concrete ways the assault from the right wing is hurting both American quality of life and the American economy in general 

    • http://muckrack.com/dotcommodity Susan Kraemer

      Just read in the NYT today that Obama suggests allowing buyers to benefit from the $7,500 tax credit at the time of purchase, by transferring the tax credit to the dealer or financier, who could take it off at point of sale. If congress would just do this (easy to say!) that would make a big difference in affordability. He also suggests raising it to $10,000 – even better.

      • http://www.kompulsa.com/ Nicholas

        Yes. The point is to make EVs cheaper to buy up front. Making people pay the full price (and they may not have enough money to even take out the loan) and then get back $7,500 is not enough. They should lower the price at the dealer by agreeing to actually pay $7,500 of the cost during purchase. Good point. :)

    • djw

      If GM had to stop production of the Volt, it means not enough Americans are buying them, period. Not all Americans listen to Limbaugh or watch Fox News. Where are all your liberal
      friends when it’s time to put their money where their mouths are?  They didn’t show up, so GM is winding down.

      Republicans didn’t make the Volt explode when it was hit. They do, however, want accountability for the taxpayers money – something your party knows nothing about.

      As for Fox News, it’s clear you have never watched it in your life. If you had, you would be familiar with O’Reilly’s constant complaining about oil company profits, and the need for government oversight of them.  But for you lefties, it’s the same old kneejerk line – blame the right when something goes bad.