US Senators Introduce Bill to Promote Plug-In Electric Drive Vehicles, Including Plug-In Conversions
18 June 2007
US Senate Finance Committee members Senators Maria Cantwell (D-WA) and Orrin Hatch (R-UT), and Senator Barack Obama (D-IL) have introduced a bill to support the development of commercially viable plug-in electric drive vehicles (PEDVs), including pure battery-electric, plug-in hybrid electric, and plug-in fuel cell vehicles.
The bill—the Fuel Reduction using Electrons to End Dependence On the Mideast Act of 2007, or FREEDOM ACT (S.1617)—would provide four significant tax incentives:
A tax credit for consumers who purchase plug-in electric or plug-in hybrid electric vehicles. Freedom Plug-in Credits would cover the consumer purchase of vehicles which use batteries and which plug into the electric grid for at least part of their power. This would include plug-in electrics, plug-in hybrids, and others.
The amount of the credit is a $2,000 base plus $400 for each kilowatt hour of traction battery pack capacity in excess of 2.5 kWh, with a cap of $7,500 for passenger vehicles of up to 10,000 pounds. A GEM (gasoline-ethanol-methanol) flex-fuel plug-in or a plug-in vehicle warranted by its manufacturer to run on biodiesel receives an extra $150. The same is true for heavier duty vehicles, except that the caps are scaled up for each vehicle weight class and range from $10,000 to $20,000.
A tax credit through the end of 2010, for consumers who convert their existing hybrid electric vehicles to high quality plug-in hybrid vehicles. The credit is either the amount calculated as above (with a $4,000 cap), or 50% of the cost of the conversion pack, whichever is less. Only kits that are of a standard configuration, mass-produced, and certified by NHTSA would qualify for a Freedom Conversion Credit.
First-year expensing for the US manufacture of plug-in vehicles and of major components of plug-in vehicles, such as batteries, electric motors, and electronic controllers; and
A tax credit for electric utilities that provide rebates to customers who buy plug-in vehicles. The amount of the government reimbursement would be based on the rate of greenhouse gas emissions for each utility.
With the rapid industrialization of countries like India and China, the demand for gasoline is unprecedented, and that’s translated into higher costs at the pump. We’re already feeling the pain of that, and it’ll get worse unless we start shifting our transportation sector away from liquid fuels and on to electrons.
—Sen. Hatch
US Representative Lloyd Doggett (D-TX) has introduced similar legislation (H.R. 1331) in the House (earlier post), and expects the Ways and Means Committee to consider it by the end of the month.
(A hat-tip to Joe!)
Resources:
It's about time! Perhaps now that Detroit has had several years and - soon to be - subsidies to catch up to what the Japanese innovated on their own, we might see a viable PHEV sometime before the century ends.
Posted by: Andrew | 18 June 2007 at 07:51 AM
Good. Five and a half years late, but good.
Posted by: Engineer-Poet | 18 June 2007 at 08:14 AM
Not too bad considering that the plug-in electric convertions break the ordinary hybrid's warranty.
Posted by: Gerald Shields | 18 June 2007 at 08:16 AM
Gotta love the acronym: FREEDOM = "Fuel Reduction using Electrons to End Dependence On the Mideast"
using Electrons!!! I'm afraid it's time to pass the "Control Acronym Breeding on Ordinances of Senate and House" (CABOSH) Act
Still pleased that plug-in hybrids are getting some official support.
Posted by: Jim Greene | 18 June 2007 at 08:22 AM
This bill looks to successfully incentize the consumer, the manufacturer and the provider. On top of that, this provides relief to the early adopters who wish to convert their hybrids today.
If this passes, this should allow a manufacturer to sell a PHEV somewhere in the neighborhood of 35K to 40K and all parties should benefit from this.
I'm very excited to see this type of legislature being discussed and look forward to tracking this bill and its results.
Posted by: Mike L | 18 June 2007 at 08:22 AM
Simple question: does this include regular EV conversions ? if not, why not ?
Posted by: kert | 18 June 2007 at 08:25 AM
Kert, yes - "including pure battery-electric,".
Posted by: Joel | 18 June 2007 at 08:40 AM
Legislation like this would have to make automobile manufacturers, especially those planning to expand their lines to include phev, reconsider voiding the power train warranty. Toyota could significantly benefit by backtracking on the voiding of warranties. Now, there are thousands of used Priuses on the market. If they could be converted or are converted it will only help Prius resale values. The proceeds of higher resell of Priuses would likely be put toward newer Toyotas.
Of, course, if Toyota doesn't change their position their competition will. And Toyota will take a small hit to sales. No big deal for Toyota, but could result in a competitor gaining ground toward becoming a contender.
Posted by: Kevin Frieden | 18 June 2007 at 08:41 AM
Does this have broad support? I hope this doesn't get stalled
in the House or Senate. It would be great to get away from
the pump and onto the grid for local driving at least.
Posted by: William | 18 June 2007 at 08:52 AM
Convert a Smart Car today!!
Posted by: John | 18 June 2007 at 08:56 AM
I know it has yet pass, but this bill will still seriously annoy the "government can't do anything right" crowd.
Good.
Posted by: Lou Grinzo | 18 June 2007 at 08:59 AM
This legislation could essentailly cut the price of a conversion kit in half. That may be just what the industry need to move forward.
Posted by: jeff ray | 18 June 2007 at 09:02 AM
This is exactly the kind of bill that will jump start the sales of BEVs and PHEVs when they hit the market in the coming few years.
The other measures of increasing fuel efficiency by 10 or 20% or increasing bio fuel production are only partially helpful. They pale by comparison when you consider that PHEV will increase fuel efficiency by several hundreds of percentages and the purely electric vehicles will completely eliminate the need for liquid fuels.
More than anything the US and the world need legislation to jump start the sale of BEVs and PHEVs. Once the total sales of such vehicles reach more than say 4 million units a year in the US they can phase out the subsidies. After that the economics of scale will ensure that they do not cost importantly more than pure ICE vehicles.
Posted by: Henrik | 18 June 2007 at 09:03 AM
Mike,
If Toyota sticks with NiMh for their Prius PHEV as announced, their MSRP should be under 35k. Which means that with these incentives a consumer may have to pay 25k for a 40 mile all-EV range and 60 MPG HEV range.
On the other hand the Chevy VOLT with 40 EV and 600 mile extender range will probably MSRP around $25k, meaning with incentives it will be the vehicle for the "rest of us." Either way things are looking quite bright indeed.
Posted by: gr | 18 June 2007 at 09:04 AM
Good to see America moves ahead.
I appreciate the lead in this sector, we all should free us from oil dependence.
Hope our Eurocrats will adopt that or rather come up with some similar stuff.
Posted by: krautman | 18 June 2007 at 09:41 AM
This might be a dumb question, but are there currently any NHTSA-certified conversion kits available?
Posted by: Travis Rassat | 18 June 2007 at 09:44 AM
gr,
Good point on potential Toyota NiMh MSRP - I didn't take that technology into consideration. Thanks for those details.
I don't see a Volt as being 25K, either pre or post incentives. My guess will be around 40K before incentives, which gets the price to about 35K after incentives. Of course, this is all just a swag, but the manufacturing process still has a long way to go, so until that time, the cost of that technology will still remain high.
As cars become more and more like technology, then Moore's law will apply more and more to the car industry. Every 18 months the capacity/speed doubles and the cost is cut in half. I know that batteries have their own progression, but with money and funding now coming in from many geographies and from both public/private sector - we should start to see the curve on the battery price / performance improve. Especially true if targeting PHEV batteries vs. BEV batteries.
Lastly, for better or worse, manufacturers and dealers alike will use the 35K up front is cheaper than 25K + $4/gallon approach over the course of a 100K life.
Posted by: Mike L | 18 June 2007 at 09:56 AM
Can't hurt, might help. But the time for demonstration or tax subsidies is past.
Nothing would do more for the adoption of PHEVs than for the government to say it will purchase some x% of the current percentage of PHEVs manufactured to establish a guaranteed marketplace, where x% is twice or 3 times the total marketplace percentage of such vehicles.
For example, If PHEVs were to reach 3% market share as HEVS now have the government would purchase 6 or 9 percent of its vehicle needs only from available PHEVs modesl.
What the manufacturers need is assured sales of PHEVS to amortize the massive investment in manufacturing facilities, not some tax subsidies as they change from demonstration production to mass manufacture.
Posted by: Stan Peterson | 18 June 2007 at 10:45 AM
This is beautiful! (Even if the title of the act is unbearably cheesy) I'm guessing "passenger vehicles" doesn't include motorcycles.
Posted by: Neil | 18 June 2007 at 10:46 AM
Lets do this thing.
-Neil, I believe the term passenger vehicle generally includes motorcycles, although I could be mistaken.
Posted by: Bob Bastard | 18 June 2007 at 11:05 AM
"If Toyota sticks with NiMh for their Prius PHEV as announced, their MSRP should be under 35k."
Did toyota announce a plug in hybrid prius?
Posted by: Brad | 18 June 2007 at 11:36 AM
Bob: That would be very interesting since $2000 could be up to half the price of a limited speed electric motorcycle and would make things a whole lot better for Vectix.
Posted by: Neil | 18 June 2007 at 11:39 AM
It would be great to see similar legislation for heavier vehicles. Token adoption of green tech by companies like UPS and Fedex are terrific examples of corporate responsibility. However, companies require real return on investment before they adopt anything. Incentives that lower their tax burden are a step in the right direction. Also, does anyone know if Eaton, Permodrive, or others are working on a hydraulic hybrid retrofit kit for commercial trucks and large SUVs?
Posted by: Kevin Frieden | 18 June 2007 at 12:05 PM
what is the electric utility we all plug our electric vehicles into going to use for new power generation to fuel all our new vehicles? coal, oil, gas, nuclear...or hot air like this from congress?
Posted by: t1 | 18 June 2007 at 12:17 PM
t1: There is a huge amount of unused capacity already in our generating system. EVs are so much more efficient than a regular car you could take the gas being burned in cars today, use it to create electricity (a waste of long chain polymers), and you'd still come out ahead. Then since you are using an energy carrier in your vehicle instead of a primary energy source, you have the option of switching your primary source to any number sources, including renewables or other fossil fuels (which has the potential to be cleaner when converted to electricity in a large stationary plant)
Posted by: Neil | 18 June 2007 at 02:07 PM