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Congressman Proposes Tax Credit for Plug-in Hybrids and EVs

26 March 2007

US Representative Dave Camp (R-MI) has introduced new legislation that would provide individuals and businesses with a tax credit for the purchase of vehicles with larger battery packs, such as plug-in hybrids or battery electric vehicles.

To qualify under Camp’s proposal, a vehicle must have at least a 4 kWh battery pack. The credit would be the lesser of either 10% of the cost of the vehicle or $4,000 plus $250 for each additional kilowatt hour of battery capacity above 4 kWh up to 50 kWh.

Camp, who authored existing tax credits for hybrid vehicles, said the new credit would add incentives to manufacturers already exploring the viability of plug-in vehicles. 

Unfortunately, new technologies always cost more at the start.  My tax credits will help put the cost of hybrid electric vehicles more in line with their traditional, gasoline counterparts.

Our domestic auto manufacturers are already working on this technology and we cannot afford to have the government playing catch-up in this area. In order to maximize the benefits of the new, clean technology, it is important to have these tax credits available the day these vehicles hit the salesroom.

—Rep. Camp

In order to appeal to varying automakers, the bill does not discriminate between types of plug-in vehicles such as pure battery electric, extended range electric, hybrid electric and plug-in fuel cell vehicles.

GM, Ford and Chrysler all have revealed plug-ins at various stages of development; Toyota has indicated it is working on a plug-in.

DaimlerChrysler has the Dodge Sprinter plug-in parallel hybrid, currently in road testing (earlier post); General Motors is working on the Volt plug-in series hybrid (earlier post) and its E-Flex architecture; and Ford is researching the Edge plug-in series fuel-cell hybrid (earlier post).

March 26, 2007 in Plug-ins, Policy | Permalink | Comments (29) | TrackBack (0)

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Comments

Great Idea. This is a MUST HAVE! I would encourage everyone to contact their congressmen and urge them to support this great step forward. And all those people who you have been talking to about PHEVs, tell them to write their congressman also.

I googled this article and couldn’t find anything. Just because the press isn’t picking up on it doesn’t mean we can’t make it happen.

Still a modest incentive compared w the 6000lb SUV instant 25K depreciation (plus another 30%) which is still ongoing. With a marginal tax rate of 30%, that gives a windfall of $8K or more in federal taxes. So give us a plugin Suburban, Navigator, X5, etc and we will save a bundle!

I agree, time to notify legislators at all levels. It's a novel proposal.

A plugin hybrid SUV would be welcome and it would probably hold its value better in the longer term. A Suburban with a 20 mile EV range and a V6 genset, perhaps?

Feel free to copy:

Dear Rep. Turner,

I'm a lawyer, constituent, and someone who believes with the utmost urgency that we need to cut our dependence on foreign oil. I believe it can be achieved quickly with electric vehicles. To get to the point, I saw the proposal that Rep. Dave Camp proposed (below) and thought it was an EXCELLENT idea. There are many indiviuals who think the same. With a little incentive, big business will build the electric cars. Please sign on to this legislation, endorse it, and lobby whoever will sign on to the bill. Thank you for all that you do, and with bills like this, we can get out of the Middle East in months, not years.

Sincerely,
Sign here


CAMP PUSHES TAX CREDIT FOR PURCHASE OF “PLUG-IN” VEHICLES
Attach some text of the article

Finally a politican with a brain !

Considering that a republican from Michigan is proposing this tax credit, one might guess that Detroit is closer to introduction of a plug-in than many of us would have guessed.

Great ideas,like this carrot, dangling in front of future PHEV
owners, will make converts out of many would be V-8 ICE SUV
buyers. I think the specific incentives should be geared
torwards the range in all electric mode of 35mph or less. These
vehicles will be the ones to gain market share as their smaller batteries will not dramatically increase the sticker shock of
larger Li-ion battery pac SUVs. The graduating incentive range of 10-20mi., 20-35mi., and 35-60mi, would be about right. This would support the initial roll out of these vehicles and provide more incentive for the development of battery capacity as it will gradually increase with natural market efficiencies in $per KWH of storage.

Great ideas,like this carrot, dangling in front of future PHEV
owners, will make converts out of many would be V-8 ICE SUV
buyers. I think the specific incentives should be geared
torwards the range in all electric mode of 35mph or less. These
vehicles will be the ones to gain market share as their smaller batteries will not dramatically increase the sticker shock of
larger Li-ion battery pac SUVs. The graduating incentive range of 10-20mi., 20-35mi., and 35-60mi, would be about right. This would support the initial roll out of these vehicles and provide more incentive for the development of battery capacity as it will gradually increase with natural market efficiencies in $per KWH of storage.

I'm all for this idea, but the tax break should be phrased in terms of all-electric miles and not kwh (e.g. a car that goes 20 miles on a 4 kwh pack should get a bigger tax break than a car that only goes 10 all electric miles on a similarly sized pack). This way it will encourage efficiency along with encouraging people to go all electric.

Politicians should definitely NOT pick technologies, whether they be under the hood or in the fuel chain. Instead, they should design policies to reward outcomes that society desire (e.g. reduced dependence on OPEC) but the majority of individuals will not pay for in the free market (e.g. because of the free rider problem).

In this particular context, pols should tie any incentives to MPGe (gasoline equivalent) based on the new(!) EPA test procedures for estimating the fuel economy advertised in showrooms. EVs need to be evaluated based on the mix of power plants in the state the vehicle is initially registered in. For PHEVs, a new, standardized formula reflecting the duty cycle split between pure EV and HEV modes is required.

Incentives for domestic alternatives to OPEC oil and/or fossil fuels generally should be handled separately, because they impact a related but separate industry. Specifically, skew fuel taxes etc. in favor of desired alternatives and VLFs etc. in favor of vehicles that are compatible with them.

The pols also need to figure out for each incentive if it should be temporary (to establish a market, hoping the cost premium will go down as sales volumes go up) or permanent (to guarantee sustained impact). In both cases, the incentives need to be fully funded.

Beyond that, please let the engineers figure out how to combine technologies for maximum consumer appeal (= minimum need for incentives) and minimum cost. The reason such technology-neutral approaches are rare in the US seems to be that pols must raise substantial sums of campaign funding from donors who naturally want favors for their particular solution.

So, Camp's the guy who authored the current tax credits, huh?

Tell him with this new plan to not tie in the AMT hook (or Tentative Minimum Tax). My $2600 Camry Hybrid tax credit was reduced down to $1200 because of this slight of hand.

Unbelievable! I dislike the bill's imperfections, but for this independent, the very idea of a Republican! suggesting anything positively environmentally beneficial in regards to BEV's and PHEVS is enough to think favorably of at least that one politician. I'll be curious if his democratic counterpart can improve what he suggested or if Mr. Camp himself will.

These incentives, combined with recently suggested third party warranties on battery components struggling to meet life-of-vehicle standards - will help launch the new EV revolution. Whatever the backroom reasons, Camp's proposal is practical and necessary for next generation electric vehicles to succeed. I'll be writing my Rep to strongly support these incentives.

"In order to appeal to varying automakers, the bill does not discriminate between types of plug-in vehicles such as pure battery electric, extended range electric, HYBRID ELECTRIC [emphasis added] and plug-in fuel cell vehicles."

Rep Camp is from Michigan. So GM, Ford, and Chrysler management either got a chance to comment on the legislation, or they actually wrote it. That's the way politics works. Given that Detroit had a hand in the bill, what does that say about their plans? Does the bill actually require that the vehicle be a plug-in? The press release doesn't say that. It says it doesn't discriminate against "Hybrid Electric" vehicles. So can GM put a 4 kWHr battery in a Chevy Tahoe mild hybrid and give a tax break to the purchaser, enabling GM to keep their price up? Mild hybrids are fine, but they certainly shouldn't get special tax breaks.

I hope I'm wrong about this one, but just today Rick Wagoner appeared on the White House lawn at a mini auto show with the President. He spoke about the need for E85, and said raising CAFE was a bad idea.

The auto companies and the ethanol lobby are working real hard to defeat any attempt to raise CAFE standards, prefering flex-fuel instead. [As if we couldn't do both.] Ethanol is Detroit's way of pushing the energy dependence problem onto somebody else. Congress is working on a new CAFE bill. Maybe that's the one we should be writing about to our Representatives.

This flex-fuel push is going to put only a another 2 or 3%
dent in fuel imports. It is intesting to see that this administration clinging on to the last vestiges of the ICE and its manufacturing infrastructure. If any progress is to be achieved in a domestic energy solution, wouldnt't a significant CAFE graduated increase be more in line with what this countries
energy security needs? Doulbling the roll out of flex-fuel vehicles without doing the same in efficiency standards, is just a nod to the agribussiness lobby and their oil/gas corporate
ethanol sponsors. Renewable energy and battery/supercapacitor
storage will be the interim solution, but getting the manufaturing sector to embrace this will be difficult, untill
they can figure out a profit base with an assured revenue stream
going forward. Got Milk? / Got Grain?

This flex-fuel push is going to put only a another 2 or 3%
dent in fuel imports. It is intesting to see that this administration clinging on to the last vestiges of the ICE and its manufacturing infrastructure. If any progress is to be achieved in a domestic energy solution, wouldnt't a significant CAFE graduated increase be more in line with what this countries
energy security needs? Doulbling the roll out of flex-fuel vehicles without doing the same in efficiency standards, is just a nod to the agribussiness lobby and their oil/gas corporate
ethanol sponsors. Renewable energy and battery/supercapacitor
storage will be the interim solution, but getting the manufaturing sector to embrace this will be difficult, untill
they can figure out a profit base with an assured revenue stream
going forward. Got Milk? / Got Grain?

Stop subsidizing specific technologies. If we are going to subsidize, we should provide incentives for measurable objectives likes grams of co2/km. Subsidizing kwh size is absurd. There is a big difference in co2 output and petroleum use between a plug-in Prius and and a plug-in Suburban, but yet, under this bill, they both get the same subsidy. Don't encourage this stupidity by encouraging your congressperson. Write your congressperson and tell them to incentivize goals, not specific strategies.

While we are at it, repeal the E85 loophole. An inefficient and wasteful vehicle is still wasteful and inefficient regardless of the fuel type used. Ethanol, in itself, is simply not a good way to reduce our use of fossil fuels.

William, I agree with you except for one thing. It's not the oil & gas lobby that's blocking higher CAFE standards. It's the US auto industry.

The Big 3 plus the UAW have more political power than the oil & gas industry. Together with the ethanol/farm lobby they form Midwest Inc. They are a strong political force -- neither party can get a president elected without key Midwestern states. Does America have a strong (read that popular) enough politican to stand up to them? And just how can the USA make needed changes for energy security and greenhouse gas reduction with an uncompetitive auto industry? It's a very big problem.

The political solution so far has been the E85 loophole. Yes, that's insane. But it keeps the Big 3 in business, providing jobs and management bonuses. This time we can't blame BIG OIL.

Incentives are welcome.
More public participation is required to reduce the consumption of fossil fuels. But I believe small steps take you nearer to goals rather than drastic one. One can save a lot using public transportation. Checking air pressures in tyres. using available efficient vehicles. so stop waiting for major breakthrough and start conserving now!!!

Great, but this proposal should be technology neutral and based on the electric range instead of the battery capacity. Lightweight vehicles would then be encouraged too by their extra range for the same battery capacity.

Way to go, Dave!
Here’s mine.
Feel free to copy.

Dear Congressman Kirk,

We are very concerned about our Nation’s energy security, supporting both sides of the “war on terror” with our gas dollars, as well as greenhouse gas emissions and pollutants generated by today’s millions of vehicles.

For several years, I have been studying plug-in hybrid electric vehicles (PHEVs). This technology is here today. I have driven a PHEV Prius with a 30 mile all electric range. Due to newer more expensive lithium ion batteries, these cars will cost more than conventional hybrids, until economies of scale kick in.

Fuel cell vehicles are decades away and currently cost over $1,000,000 each.

Yesterday, I saw the proposal from Congressman Dave Camp (R-MI), and believe it is an EXCELLENT idea. I strongly urge you to support this bill.

.


I then quoted the passage from the bill. Action or criticism. It’s your choice.

James,
Good summation. It is interesting to mention a U.S. without a competitive auto industry. We pretty much created the oil and auto industries . We peaked on our oil in the early 1970s and have the seen auto industry go up and down over the last 30 years. Not the right cars, no quality, the SUV craze and so on...Could the U.S. survive without an auto industry? We are so used to people talking about the Big 3 which is now the struggling 2 1/2 that we identify the industry with the country. What is good for GM is good for the country, is an often misquoted bromide. I think we can survive, but it would be a major blow to our identity not to have a predominate industry in America for America.

SJC,

I believe the US auto industry can get competitive again. I certainly haven't given up on them. But they don't want to take their medicine -- lower management bonuses and no raises for UAW workers, plus higher contributions to their healthcare costs. That's where the money goes when they can sell more SUVs because of the E85 loophole.

We need congress to keep the pressure on them. Competitive pressure from Toyota and Honda isn't sufficient. That means raising CAFE slowly enough not to cause massive layoffs, but fast enough that they can't do business as usual.

After their aging baby boomer workforce starts to retire they will start to downsize to a sustainable level. Many of their workers & managers just want to hang on for 5-10 more years. If the union won't play ball by then they'll see their membership plummet. That's why they're so desperate to unionize Toyota's plants.

The was some discussion on Japanese plants in the U.S. paying good wages without unions, because of competition with unions. The conclusion was that if the unions go down, the wages will also. If the Japanese car makers can not sell as many autos in the U.S. because of declining wages, it is not as likely that they will stay here to produce. What goes around comes around in economics.

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