The Case Against EV Tax Credits and RebatesBy Jeremy Anwyl February 22, 2011
The Honda Civic GX, powered by a natural gas engine, was named the greenest vehicle in America by the respected American Council for an Energy Efficient Economy (ACEEE) as Green Car Advisor Editor John ODell noted in a recent post. The high-profile Nissan Leaf tied for second place and the much-ballyhooed Chevrolet Volt ranked 13th. ODell interestingly points out that some of the lists best performers are powered not by electric motors and batteries but by internal combustion engines, albeit sophisticated, high-tech ones. That's interesting but also troubling.
This country has placed an enormous bet on electric vehicle technologies, in particular batteries. I have nothing against EVs. They are cool. And I would be the first to note that battery technology has advanced more in the past five years than in the previous 150. In particular, it is the tax credits that bother me -- up to $7,500 an EV from the Feds and, here in California, another potential $5,000.
The problem is this: When the government picks a technology, it crowds out development of other, potentially promising alternatives, like the compressed natural gas (CNG) engine used in the Honda Civic GX (above). CNG is not a new technology. I had friends who converted their vehicle to natural gas back in the Seventies. But how much are we hearing about it today? Or what about hydrogen fuel cells? A few years back, they were the stars of the major auto shows. Were any fuel-cell vehicles on display at the recent Detroit auto show? No. Every automaker was busy touting EVs.
A second problem is that there is a Cash for Clunkers-like aspect to these tax credits. Consumers buying Leafs and Volts right now are not that price sensitive. They are EV enthusiasts, early technology adopters. In other words, we are forking over deficit-funded dough to stimulate sales of vehicles that would be sold anyway. (Or in some cases, not sold.) Sure, at some point EVs are still too expensive to go mainstream. But is this the governments (i.e. taxpayers) problem?