Don’t Just Save EV Tax Credits, Fix Them

The potential ending of the federal electric vehicle tax credit seems to the first instance of falling footwear that EV fans have been cautiously awaiting for a while. Understandably, even the EV advocates have split between the “keep it at all costs” and “meh, doesn’t matter much” camps.

In reality, we shouldn’t just save the credit; we should fix it. In ways that should have happened from the start, but also some that reflect how far we’ve come and where we need to go now— whether in this program or others:

1. Point-of-sale rebates, not tax credits

The current credit structure can be confusing to buyers, exclude those without enough tax liability to qualify for it, is delayed enough to blunt the mission to make plug-in vehicles more affordable to acquire. It also disproportionately encourages short-term leasing, creating unnatural patterns in the used car market and lowering residual values.

Most people finance cars, with monthly payment mattering more than MSRP. EV buyers must currently also finance the tax credit (an extra $140/mo on an average 5 year, 4% loan), requiring them to both qualify for and accept a larger loan than they would otherwise need. Along the way, $790 of the $7500 credit is lost to additional interest.

Creating an assignable rebate would allow those who want to finance an EV to use it as a down payment, reducing required cash up front and/or lowering monthly payments.

2. Vehicles must be available for sale (not just lease), nationwide*

Compliance cars are the thorn in the side of EV success today: vehicles available only in one or a few states, in small numbers, lease-only, and/or otherwise artificially limited. Automakers complain about the lack of profit in and pre-existing demand for EVs, but it’s also a self-fulfilling prophesy; people simply cannot buy what isn’t available.

It is also absurd that taxpayers in many states continue to subsidize cars that have never been sold there. There are arguable “common good” environmental and economic benefits to EVs regardless of where they are used, it’s also time for plug-in programs to grow up.

(*Some automakers don’t have retailers in every state, but an 80% minimum participation rate among each company’s retailers is a reasonable compromise, and “available” need only mean that each store has at least one vehicle that is clean, charged, and can be test-driven— and, once acquired, serviced within a reasonable distance. Inventory needs and expectations will differ by geography and business plan.)

3. MSRP caps, but not means testing

It has always been a fair criticism that this credit subsidizes even cars costing $100k or more, contributing to the well-worn “EVs are only for rich people” trope. This sensitivity has inspired California to enact income limits on its EV rebate; but while that makes sense for certain other programs it’s less useful at a high level.

Today’s priority should be affordable cars, not passing judgment on who buys them. Bluntly, it’s better in the long run if a “rich” family buys a Nissan LEAF for each kid going off to college, than if a middle-class engineer is helped to lease a subsidized $140k BMW i8. Affordable plug-ins engender more adoption sooner both by virtue of visibility and by helping to populate the used car market. There is absolutely a role for aspirational, halo vehicles- but it’s not appropriate for them to be publicly funded.

And there is precedent here; the EV federal tax credit program of the 1990s included MSRP caps, at the time correlating to luxury tax limits. Today’s approach could be tiered to accommodate longer-range EVs that still cost more, while still being prudent.

4. Increased battery size requirements

One of the best things about the current program is that it is based on battery size, not range. Buyers—and therefore automakers—are rewarded for vehicles that are more electrified, but using battery size over range allows more flexibility in vehicle size, body style, performance, etc.

However, a plug-in vehicle currently only needs 16kWh of battery capacity to qualify for the full credit, and a mere 4kWh to get the minimum amount. No question, this range doesn’t cut it anymore. 

5. Credits should be pooled

The current allocation of 200,000 credits per manufacturer has encouraged some automakers to lollygag, knowing they have a sequestered allocation waiting. Meanwhile, those who supported higher-volume programs from the start may soon run out of credits just as they’re starting to bring lower-priced and longer-range EVs to market.

Automakers who were behind on their plug-in development have had over seven years to catch up. The remaining credits should now be pooled to encourage accelerated deployment, and so buyers who want to support the more ambitious companies aren’t penalized for doing so.

There are other, smaller points. Plenty of weeds to dig with those willing to share shovels.

Finally, we do need to plan for the phase-out of this and other programs. Such incentives should be both thoughtful and temporary, and this one ought to sunset in 5-8 years as batteries reach cost parity with internal combustion systems. Heck, it could go away tomorrow if only the same would also be true of other fuel subsidies, if there were a remote chance for an actually level playing field, and industry participation was less collectively ambivalent than it is today. Until then, EV deployment remains temporarily dependent on external policies, both carrot and stick.

So the EV tax credit should stay, for now. But we also need to make it better. More effective. More equitable. More responsible with limited—and public—funding.

We should continue to enthusiastically welcome all stripes of plug-in vehicles into the market, but it’s time to raise our standards on what we incentivize.

Catching flies..

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The growth of the EV community has always come with both pleasure and pain for some of the early passionate voices within it. More people into the tent is exciting and fun; the interpersonal dynamics sometimes not so much. But while an overall decline in societal civility is hardly unique to our ranks, it seems that lately more EV folks are riding high horses than driving electric cars.

A frustratingly perfect example is this response to a recent Green Car Reports article written by a new Bolt driver. Despite some reasonable pre-planning and a good-natured attitude, her first road trip experience was a bit bumpy. The responding blogger counters with his own successful adventure- but only after belittling her at length. Sadly, it was merely one of many similarly snarky, sarcastic, and/or condescending comments occurring daily across EV communities.

No matter the experience and wisdom of a veteran driver, this tone is counterproductive to getting more EVs on the road. It’s a variation of the EV purist’s attitude that any PHEV isn’t good enough, or the Tesla drivers who look down on any plug-in car that isn’t one, but the bottom line is about the same:

Enthusiasts who malign anything short of “perfect” EV adoption will only help sell more gasoline cars.

The biggest step for anyone is to try a plug the first place, on any car that compels him to. Then, the best way for us to keep new drivers in our fold–and hopefully, encourage increasing degrees of electrification–is to use the knowledge we’ve accumulated to help them have a good first experience. But shaming, especially for lack of knowledge, will only drive folks back to internal combustion and perpetuates the myth that EVs are only for elitist assholes.

Sure, we occasionally see an article in which seeming intention—or, at least, willful abandon of common sense—contributes to a negative experience for someone with an electric axe to grind. Dawn was clearly not one of those. But regardless of the author—and especially with those who’ve made enough of a commitment to buy a plug-in in the first place, what’s needed most is open-minded advice and coaching, and perhaps even a little humility about the fact that some of this is daunting at the outset, every one was once a new to it, and EV and (especially) charging information is not always as consumer-friendly as it could be. Anyone who makes a sincere effort at this stage to join our ranks should be encouraged, not chastised.

More honey, less vinegar.

For EVs: Work Trumps Hope

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I have long been prodding folks not to be too complacent about assuming an EV future is guaranteed. Good things are happening for sure, but I know too well that this rolling snowball can indeed be stopped.

My admonishments are typically greeted either with criticism for any shred of skepticism, or with a verbal pat on the head, an “aww, don’t worry, it’ll be ok.” You know, because these things take care of themselves and I just shouldn’t worry my pretty little head about it.
Especially today, I encourage anyone still resting on those laurels of hope to knock it off. No, the sky is not falling as a result of the last 24 hours. But most of the electric vehicles available in the US today are on the market because of two regulations—the CARB ZEV program and CAFE standards—that have never been invulnerable, and could be at risk in the new administration. To those who think Tesla will singlehandedly solve it all, they too rely on market and other incentives that are likely endangered. Those brand new nationwide EV charging corridor plans and the loan guarantees to help create them? Donald Trump has been clear in what he thinks about such things. And EVs. Battery and other research. His plans for the EPA. And, quite possibly, DOE. If you believe he is likely to follow through on even some of his intentions, these threats can’t be ignored or overcome with mere faith.

It is also long past time for the conservatives to come back out of the closet in support of EVs. Many retreated when EVs became associated with President Obama, but if national, energy, and economic security are indeed the priority, then driving on cleaner, cheaper, domestic electricity is still a crucial component to address those issues. This topic is as bipartisan as they come, and there is no longer any excuse not to support it.

I’m still an optimist, but there is a tremendous about of work to do. We need all hands on deck, and not simply with fingers crossed.

GM’s Dan Ammann Gets Itchy Twitter Fingers Over EVs

© General Motors
© General Motors

General Motors President Dan Ammann commandeered the company’s Twitter account today as he toured the IAA Motor Show in Frankfurt. Among a handful of benign comments, he dropped this little gem:

“On a tour of #IAA2015. More automakers unveiling EVs for the elite. We’re focused on EVs for everyone, like the upcoming @Chevrolet Bolt.”

The remark was a dig at Audi, who yesterday gave a first look at the mighty compelling e-tron quattro SUV coming to market in 2018, and Porsche, who unveiled a beautiful but optimistically-specced concept electric vehicle, the Mission E. Collectively, they have comprised most of the media attention from the show so far, certainly in the electric vehicle segment.

But GM’s foray into these snark-infested waters started with January’s unveiling of the Chevrolet Bolt, with previous comments aimed primarily at Tesla- ironically when Tesla itself is finally throwing fewer stones and instead imploring more companies to join the EV party.

I like a little competitive feistiness among manufacturers. And I’m especially rooting for more high-volume, affordable, nationwide EV programs. So I was thrilled to see GM steal the show in Detroit, so to speak, with the Bolt and second-generation Volt.

But the particular streak of arrogance revealed by such remarks against other companies making plug-in cars aimed at their own markets is not only a dicey strategy, but tone-deaf.

Not only because GM’s own premium brand, Cadillac, produces a plug-in vehicle that is certainly not “for everyone”. Nor because Dan Ammann himself just purchased one of the highest-priced houses in Detroit’s history. Or that GM has had its own challenges with its plug-in programs, and has hardly earned the right—yet—to claim the moral high ground on fully electric vehicles.

“EVs for everyone” requires diversity. Choices. Vehicle variations in all the ways we’re used to seeing them. No single car—gas or electric— is “for everyone”. And especially at this still nascent stage, more automakers invested in EVs “for real” means a higher likelihood that they become here to stay this time. Crucially, this is not yet a foregone conclusion, and no single company can change that alone.

At the same time, GM raises its own stakes with every remark. The loftier GM’s claims and the deeper its digs, the more the company will have to live up to via the Bolt. It will have no choice but to market it brilliantly and consistently, to engage with the community and stakeholders to leverage all of the support it can possibly earn. Because GM, of all companies, must make a success of its first major foray back into EVs. Any failure of the Bolt will be seen as self-inflicted, a deja vu moment.

So Dan, you keep on talking all you want. I’m all ears.

Captain Awesome drives electric, of course!

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Before Who Killed the Electric Car? officially hit theaters in 2006, Chris Paine and I hopscotched the country with it on a Sony press tour. Over the course of a few weeks, we hit a different city every day: local screening in the evening, press the next morning, and off to the airport to repeat the process. It was an absolute ride, dramatic and exhilarating but more than a little exhausting.

We arrived in Minneapolis, MN with no idea what to expect, but found our last stop to be one of the most enthusiastic. As we’d done nightly, we hit up the audience for local dinner suggestions, and were informed we must go to Galactic Pizza. We were beat, but promises of electric delivery vehicles and men dressed as spandexed superheroes could not be ignored.

The pizza was great; no surprise it’s been popular there for years. But the people were better, every bit as passionate and quirky as we’d been led to believe, with adopted personas like Captain Awesome and Luke Pierocker. And as promised, they were ferrying those pies around the city in funky three-wheeled Gizmo EVs, because well…it was what they could get. The perfect final note to our celluloid adventure, and a great memory. The next day, I was standing on a street corner not far away when a reporter called for my first response to what would become the Chevrolet Volt

Years later, the costumes and EVs have been upgraded to some I know well, but a recently-released video shows the gang at Galactic Pizza is still at it, and clearly still having fun. If you’re in the area, save me a slice. 

Hat tip to Brian Henderson for the video!

Plug-in Hybrids and HOV Lanes: Déjà Don’t.

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Ahh, one of my favorite California bills is back. No, not that one. The one that allows plug-in hybrids into CA HOV lanes with just one occupant.

The original allocation of 40,000 green stickers that indicate HOV eligibility for PHEVs has been exhausted. AB 2013 proposes to make 45,000 more stickers available immediately, and is currently headed to the CA Senate. All 85,000 PHEV stickers would still expire in 2019.

The bill’s proponents mean well. Problem is, without any meaningful EV range requirement, it remains the poorly-constructed law it always has been. Parameters for each incentive should be based on its intended goal: in this case, to encourage commuting on plug-in electric power. Stands to reason then, that eligible vehicles should be able to operate in electric mode at freeway speeds for the length of a standard roundtrip commute (~30 miles, give or take).

For the last couple years, the lanes have been open to any car with a plug, even those that are far more gas than electric. But it’s time to step up. If we’re going to allow more PHEVs into HOV lanes, we need to expect more from them.

I get the inclination to take the easy win toward selling a few more PHEVs, I really do. But in the grand scheme, it wasn’t much of a win nearly four years ago when this law was first passed, and it certainly isn’t now.

 

Your California State legislators may be found here. Assemblymember Al Muratsuchi (sponsor of AB 2013) can be contacted here.

Cars and Cow Pies in the Garden State…

 

New Jersey’s Motor Vehicle Commission just became the latest to ban direct auto sales (read: Tesla Motors). In what is, at a minimum, poor timing, the state’s Coalition of Auto Retailers justified its position by alleging that, “an auto manufacturer is congenitally incapable of fully and faithfully honoring warranty and safety recall obligations.”

Congenitally incapable of faithfully honoring safety obligations. No subtlety there. So, we need independently-owned auto dealers to sell us cars specifically so they can later protect us from those who built them in the first place? If that’s truly the case, where we buy our cars is the least of our worries.

Meanwhile, 1.6 million Chevrolets, Pontiacs, and Saturns have recently become the focus of not only a massive product safety recall, but a Congressional inquiry and federal criminal probe, in the wake of evidence that General Motors and its dealers have known for more than a decade of the ignition switch problems linked to over thirty vehicle crashes and at least a dozen deaths. By law, each of those vehicles was sold by the type of franchisee the NJ dealer lobby claims is a buyer’s best – if not only – defense against such flaws and an automaker’s refusal to correct them.

Hmmm…..

I’ve worked in and with auto retailers for more than twenty years. The folks within a few have rivaled any customer service Tesla provides. But never in my lifetime have conventional dealers, as a category, been considered bastions of consumer protection or a customer-centric experience. When franchise laws were established nearly eighty years ago, some of those arguments may have been legitimate. Today, organizations like NJ CAR are seeking merely to protect the same monopolization they once fought against.

It’s not just Tesla that suffers. “Incumbent” automakers with existing franchises have also become handcuffed by such a singular, narrow model, even as it may no longer be optimal– particularly for new technologies and vehicles. Most importantly, the customer is the biggest loser as companies big and small compete not on value of service, but on political expenditures and the like. Increasingly, those customers know it and are acting accordingly.

To wit, fans of Tesla’s direct-sales model (including those who don’t drive Tesla’s vehicles) showed up on a few hours’ notice to put their support on the public record, even after the Motor Vehicle Commission’s decision had already been made. In six years of Tesla’s corporate-owned stores, I’ve yet to see a similarly reported show of public support for traditional dealers, in any state.

If those dealers truly believe they offer a better experience, they should embrace the competition. And then quit whining and win it. In some cases they undoubtedly will, but they need to be willing to do so. 

All else is just old school, four-square era bullshit. And the lobbyists defending it need either a better argument or higher boots.

(Disclosures: I worked my way through college mostly by selling cars for Saturn, obviously some years ago. I’ve since known and worked with many other dealers from different brands. For years, my husband was a technician and/or manager at a franchised dealer, and between us, we’ve worked with/for every single brand I mention in this post at dealer and/or corporate levels, including Tesla. Also, we still own and love a 2004 Saturn, now apparently affected by this latest recall. The boy is still hoping to inherit it.)