Filed under: EV/Plug-in, Hybrid, Chevrolet, GM, Legislation and Policy
No $30K Chevy Volt without Congress' help
Since the inception of the Chevy Volt program in 2006, GM's goal has been to offer the range extended electric vehicle for a sub-$30,000 price point. That level has always been seen as the threshold to get high-volume sales of an electric car. Unfortunately, lithium ion batteries remain far too expensive to be able to sell the car at that price profitably. GM has always indicated that they expect the car to remain a money loser in the early years of production, but given the financial difficulties of all the domestic automakers, they can only go so far in subsidizing the car.
In order to help make the Volt less financially painful both for the manufacturer and consumers, GM is lobbying Congress to pass a new batch of tax breaks for plug-in vehicles. There has been on-going debate in Congress for some time about tax credits for plug-in hybrids and GM wants to make sure that ER-EVs are specifically included. A credit of $7,000 for the purchase of such a vehicle seems to be the target point. According to GM sources cited by Automotive News (subs req'd) a $30,000 price seems unlikely unless tax credits are passed by Congress and the White House. The House of Representatives already passed a bill last week that included PHEV tax breaks but the White House has threatened a veto. More than likely, nothing will happen until early in 2009 when a new President is in office.
UPDATE: typo fixed
[Source: Automotive News - Sub. req'd]
Reader Comments (Page 1 of 2)
Wave54 1:05PM (5/26/2008)
Is there anyone out there more knowledgable than I am who can describe how a tax credit such as this would work? Is it a reduction off taxes owed or a deduction off taxable income?
Either way, for me, it would mean little to nothing to receive a $7000 credit compared to a lower initial purchase price.
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stockdad 1:05PM (5/26/2008)
"expect the car to remain a money looser"
Spell check alert.
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Bryan 1:10PM (5/26/2008)
It doesn't really sound like we need a tax credit with people willing to put down almost $90,000 for a used RAV4 EV on eBay.
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Rei 1:46PM (5/26/2008)
You do need it for mass-market adoption. It's not like there are 10,000 people a year who would put $90k down on a RAV4EV.
Anyways, the last bill that passed was a big improvement on the earlier bill, which *only* covered PHEVs (not BEVs) and specifically mandated four wheels. I referred to it as the "Volt Bill" because it was obvious that it had pretty much been designed for, if not by, GM. The latest incarnation only mandates an electric drivetrain and at least a few kWh of batteries, and leaves the definition of automobile up to the EPA -- a big improvement. Still, this would likely still end up ruling out vehicles like the Aptera and VentureOne. If you don't like this fact, write, call, or email your members of congress:
http://www.apteraforum.com/showthread.php?t=889
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ebra 1:57PM (5/26/2008)
There is no money for plug in cars. All of the money is spent giving subsidies to oil companies...
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ivor 1:58PM (5/26/2008)
Why is GM going for a heavy, luxurious EV? The luxury price point means it's NOT going to be widely purchased--it will certainly be out of my comfort zone. I don't envy the choice GM is facing; make a true 'hypercar' game changing vehicle rendering obsolete the rest of their lineup, or making a not-too-radical but cool and pricey EV that is less threatening to existing paradigm.The first option might ultimately save the company, but the second most assuredly will not. Typically, the board seems to have gone with option 2 and is lobbying for some kind of tax funded bailout.
GM, why not dust off the EV1 plans? That car would rock with lithium batteries.
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Mort 2:15PM (5/26/2008)
GM is a bunch of inbred morons. Let them die.
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Azrael4h 2:42PM (5/26/2008)
The Volt is a luxury car? GM wants to push it at a price point comparable to a nicely equipped Malibu, not a Cadillac. At $30k, it's a midrange car. Lower-end luxury cars start just above that, around $32k and up.
The issue is, as with any electrically driven vehicle, battery costs. When you have $10k+ in batteries alone, things get difficult to build at a price point that people would buy. At current battery prices, GM would be selling Aveo-level features and fit and finish in a top-of-the-line Malibu price range.
And at this point, GM knows it can't rely on gas burners alone anymore. Toyota is number 1, after GM's dominance for how many decades? Ford also realizes it, but unlike GM hasn't the capital to absorb heavy losses while they turn around and build the cars they need. Chrysler was robbed by Daimler, and thus has no more money (8 billion in reserve funds back in '98, vanished after the takeover).
The EV1 would not sell in the numbers the Volt can. Why? Because, after all the BS is cut through, it's a frigging two seater. Volt, is a typical family sedan. Which sells less than 100K per year across the segment, and which has the weakest cars in that class selling far in excess of 100k units a year? Hint, Chrysler will sell more Sebrings in a single month than GM could sell EV1s in a year.
All these people who claim they would buy an EV1, only a small fraction are not lying through their teeth. Fully half could not deal with a 2 seater as their only car. Another quarter could not afford two cars. Many of the same people couldn't afford to wire 220v in their garage, or even have a garage. Many people live in apartments.
Then these same people who complain that a $30-40,000 EV1 was as cheaply made inside as an Aveo. That it didn't out handle a Corvette. Ad infinitum complaints. In the end, only a small fraction of the number of people who say they would buy one actually would or even could.
Even though I'd love an EV1, and my personal life is where I could deal with a two seater, I still couldn't. Even though I can afford a $40k car. I don't have the ability to rewire anything for the charger. I may not even be able to deal with the range, I need a minimum of 80 miles average to be secure.
A basic family sedan IS what is needed to push widespread adoption, not a 2 seater. Toyota too realized this. That is why the Prius is a 5 door hatch; you give up nothing to get one. Not a back seat, or cargo area (actually, it's better in that regard due to being a hatch). Making a $30,000 'sacrifice' is a lot easier when you're really not giving up anything but a little performance.
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TX CHL Instructor 3:06PM (5/26/2008)
If it needs taxpayer subsidy, then it's a bad idea.
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Rei 3:23PM (5/26/2008)
"The issue is, as with any electrically driven vehicle, battery costs. When you have $10k+ in batteries alone, things get difficult to build at a price point that people would buy."
But that's just the whole point: the more toward a "hypercar" you go, the less batteries you need. If you build it big and heavy like the Volt, you need a lot of batteries. Case in point: The Aptera Typ-1e gets 120 miles out of 10kWh of batteries. The Volt gets 40 miles out of 18kWh of batteries. Now, some of that is because they go easy on the batteries (since PHEVs like the Volt are, by their nature, rougher on batteries than BEVs like the Aptera) and don't completely charge/discharge them, but most of it is that it's just plain a heavier and less aerodynamic vehicle.
Bigger battery packs and less efficient vehicles also mean more maintenance costs and either longer charging times or higher voltages required, as well as increased electricity costs and more environmental damage.
At the rate things are going, the Aptera "Palomar" (their four seater followup to the Typ-1) will probably hit the road only a year or two after the Volt does.
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Ping 4:00PM (5/26/2008)
@ Wave54
a tax credit directly reduces taxes owed, dollar for dollar. This is different from a tax deduction, which reduces your taxable income.
I'm looking at this chart, and i'm wondering whether its possible to get a hybrid tax credit for a used vehicle.
http://www.hrblock.com/taxes/tax_tips/tax_law_changes/hybrid_vehicles.html?ttiptitle=Hybrid%20Vehicle%20Tax%20Credit
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Dave 4:50PM (5/26/2008)
They should use an existing Compact platform and make an EV version of it. The volt is a sexy idea /design but not practical the way oil prices are escalating every day ( Memorial Day driving lowest since data recorded ). If they don't come up with viable realistic options their compatition will overtake them IMO.
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Throwback 6:02PM (5/26/2008)
The Volt is being built on the next generation Cobalt/Astra platform. GM's plan is to build as many e-flex cars as possible. Hopefully driving down the price. The first cars will be expensive, I don't see any way around that, most leading edge products are.
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Bill 7:43PM (5/26/2008)
No tax credit - the Volt will still sell out at $40,000 (cheaper than the "Whitestar")
Again, the Aptera is *not* a car, but a enclosed cockpit motorcycle.
It is not required to pass even the most minimal crash tests a 4-wheeled vehicle must pass.
Until someone rams a sledge into the side of the Aptera, no one knows how it will do in a real crash, regardless of their "simulation" claims.
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Wave54 8:52PM (5/26/2008)
@ Ping
Thanks, that answered my question. It does bring up a question on the value of a $7000 tax credit for those who don't even owe that much to IRS.
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Rei 9:48PM (5/26/2008)
"Again, the Aptera is *not* a car, but a enclosed cockpit motorcycle."
Be sure to point that technicality out to them when they're passing you on the highway without burning a drop of gasoline, having paid less for their vehicles, and using about a third as much electricity per electric mile, having charged almost three times as fast, with half the pack size to maintain.
"It is not required to pass even the most minimal crash tests a 4-wheeled vehicle must pass."
Yeah, and it's not like they're doing them *voluntarily* or anything. Oh, wait, *they are*, starting this summer.
"Until someone rams a sledge into the side of the Aptera, no one knows how it will do in a real crash, regardless of their "simulation" claims."
Ramming a sledge -- you're talking crush strengths, I see. You mean like the recent crush tests on a *physical* crush test rig where they got over twice the NTSB standard for both door and roof crush strength, getting a better on the roof than a Civic (which is the third best mass-produced car on the road in terms of roof crush strength)? You mean like that? Yeah, wake me up when the Volt finds a way to beat a composite-shelled vehicle with an arched steel rollcage in terms of crush strength.
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Bill 1:46AM (5/27/2008)
We're still waiting on evidence that the Aptera can survive car crash tests (add offset frontal collisions to getting t-boned by the sledge)
Otherwise, it's just a faster NEV.
Only after independent (not performed by Aptera) tests can we believe their claims, fanboys notwithstanding.
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Juan Esperanza 2:32AM (5/27/2008)
Why does GM need to have tax payers foot the bill for a car that will surely have no problem completely selling out even at $40,000? To me, this would be welfare for the rich.
GM will immediately sell every Volt it makes over the next few years, even if the price ends up being $50,000.
Let the free market decide what concepts are feasible rather than having taxpayers fund wealthy people's new toys.
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BlackbirdHighway 6:29AM (5/27/2008)
Juan Esperanza, where was the outrage a few years ago when congress passed tax credits for people to buy Hummers? Why wasn't that welfare for the rich?
http://www.taxpayer.net/TCS/whitepapers/SUVtaxbreak.htm
Unlike promoting sales of Hummers, conserving oil is absolutely in the national interest. It will take several generations to get the price down to the level of conventional autos. If GM had kept going whent they had the EV1, we would be on the third generation by now, and almost there. But GM took them all back and crushed them, and now we are starting over. For a while, this is only going to happen with governement help.
The free market is a myth, there is no such thing. Milton Friedman is dead, it's time to give up that fantasy and join the real world.
I'm all for this tax credit, as long as it doesn't apply only to cars with names that start in "V" and end in "T".
They also need to make this apply only to vehicles that are sold, not leased, and if GM cancels the program prematurely, there has to big a penalty, and big penalty.
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Chris 6:46AM (5/27/2008)
I don't which is worse, the Aptera fanbois who believe untested marketing hype or the EV-1 revisionist.
Lets see, the Aptera is a TWO seater. They claim 120 miles on a full battery charge. The 40 mile range people toss out with the Volt is its minimum design range AFTER TEN YEARS.
The EV-1, yet another two seater which failed to sell. The fact people wanted them is meaningless because if you go look at the numbers of interested people versus those who leased one when offered the option to do so only proves "when push comes to shove"...
Come back when Aptera is building cars, not trikes. They are going the three wheel route to specifically avoid federal regulations which GM is required to adhere to. That means their product is not competing with GMs
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