The EVs and hybrid vehicles are still too expensive even with tax credits of $7,500 per vehicle.
According to the Congressional Budget Office’s presentation at this year’s Energy Information Administration conference, which took place on June 24th, based on the 2011 prices, the tax credits offered by the government could not offset the higher lifetime cost of EVs compared with the gasoline-fueled cars.
The government is currently offering subsidies on purchases of EVs and hybrids, which are fitted with an externally charged battery which can be powered by gasoline. The subsidy can be between $2,500 and $7,500 in tax credits, and depends on the battery’s capacity. The report also says that the federal tax credit should see a boost for the EVs to be as cost effective as traditional vehicles.
This means that it would take a federal tax-credit higher than $12,000 to make a 16-kWh battery-powered vehicle commercially competitive with the usual fuel-economy compact car. The gasoline prices also play an important role in this debate, but as the gas prices are below $4 per gallon, EVs are not cost-competitive.
Car companies have adopted an “all hands on deck strategy,” says Alan Baum, a principal at Detroit-based automotive market research and forecasting firm Baum & Associates. “They need to invest in fuel efficient technologies, including electric vehicles, to not just comply with higher emission standards but also to be ready to seize the moment when changes in technology reduce electric vehicle costs and drive sales volume.”