In the United States, federal laws already allow significant income tax deductions that apply to new vehicles, such as the upcoming Nissan Leaf.   According to IRC 30D, purchasers of electric cars are allowed a basic tax deduction of $2,500 and vehicles with larger battery packs can provide tax savings up to $7,500.  Those who modify a gas guzzling car into a vehicle capable of operating with electric charge qualify for a tax benefit of $4,000.  Overseas in the UK, government grants provide up to £5,000 to buyers of ultra-low carbon hybrids, or plug-ins.

So what about the States?

Depending on the state in which you live, tax incentives can vary wildly.  For example, California‘s Clean Vehicle Rebate Project allows rebates up to $5,000 for low-carbon cars and up to $20,000 for commercial trucks.

Washington car buyers are exempt from paying sales taxes on electric and fuel-cell powered cars.   Converted cars are eligible for tax credits as well.

The state of Tennessee, choosing to go in an interestingly different direction, is offering free charging equipment to plug-in owners who need to refuel at home.  As of now, however, only certain cities are eligible.

Florida provides special financing arrangements for those who wish to install charging equipment on their property.   Residents or businesses in the Orlando metropolitan area can apply for free charging equipment from Coulomb Technologies.   All electric vehicles are allowed on the High Occupancy Vehicle (HOV) Lane.

To learn more about the wide variety of rebates, grants, and credits that might be offered in your state, the Department of Energy breaks down the laws and tax incentives.  As you can see in the table, certain states are way ahead of others (ahem, California) in the subsidizing game… for better or for worse.

These laws are fluid, and they are certainly going to be amended and updated once the plug-in rollout hits full speed.  In determining whether to opt for an electric car, price is obviously a major consideration for consumers.  Whether it trumps performance, and more importantly, convenience, is another question.  It seems, however, that all these considerations are at least being worked on.

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G

• The new Global Battery Systems Lab is located at the Warren Technical Center campus on the outskirts of Detroit. According to information coming from the company, it cost GM $25 million to construct, takes up 33,000 square feet, and employs over 1,000 engineers. The facility will operate 42 thermal chambers and 160 test channels that will expose batteries to real-world driving conditions and test the limits of their design and capacity. Included in the testing are 32 battery “cyclers” that will continuously charge and deplete battery cells for further efficiency studies. The battery headquarters will most likely be utilized by GM and its suppliers, LG Chem and Compact Power, to perfect the sort of lithium-ion batteries in the upcoming Volt and its successors.

While this new facility sounds like a definite step in the right direction to improve the technology and compete with Chinese battery heavyweights, some of the numbers don’t seem to add up. Firstly, $25 million is a very small number for a state-of-the art lab. To put it in perspective, Apple recently announced that it would be spending $1 billion on a server farm. Second, employing a thousand engineers would be very expensive – certainly exceeding the price tag that was given – and appears to be an excessive concentration in one facility. Additionally, the start date of construction was only last August and there is no word yet if more money is needed to operate and expand the center.

In the meantime, GM has plans to create a battery-focused engineering curriculum at the University of Michigan, around which they plan to construct another battery lab.

Amidst these developments, the speculation that the Volt program might be discontinued is probably going to quiet down, perhaps for good.

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There have been several prominent speculations over whether GM will abandon its plug-in program.   Keith Johnson, writing for the Wall Street Journal, has come out saying he believes the Volt will be an unpopular choice for consumers and the new government ownership.   He argues that with taxpayers now about to own 70% of the company, management will be trimming costs and focusing on models that are affordable and have a high certainty to sell well.   They can either cut the Volt line, or continue it in the hope that “either costs come down or consumers suddenly change their habits and run out to buy a $40,000 compact sedan.”

On the other side, Michael G. Richard writing for Treehugger.com,  believes in a more long-term approach.   Comparing the Volt to the Prius (back when oil was $20-$30/barrel), he argues that GM management will look towards a future where electric cars are in high-demand and oil prices are closer to the peak they hit in 2008.   Without introducing the Volt, they will not be able to learn about electric vehicle-technology and will thus “miss the boat” when its competitors are releasing 2nd and 3rd generation plug-in vehicles.

Is There an Internal Debate?

GM spokesman Tom Stephens proclaimed  earlier in the week that the Chevrolet Volt program has not been altered due to GM’s current financial woes.  According to Stephens, plans are still on track to bring  it to market by late 2010 — Additionally, they are even deciding on which other brand should get a vehicle based on the Volt’s Voltec technology.

Besides the optimistic statements from management,  Compact Power, GM’s battery supplier, recently offered their perspective that the Volt is GM’s highest priority program.  For now, at least, there does not seem to be any loss of commitment to the EV program.

Uncertain Future

There are dynamic forces at work affecting the supply and demand side of the electric vehicle equation.  The global recession has made consumers less apt to spend on a car with a $40,000 price tag that offers some green prestige.  Lower oil prices make the switch even less appealling.  On the other hand however, government subsidies and infrastructure spending by companies such as Better Place are providing  incentives that are hard to ignore.  If companies can plan for a future where charging stations are adequately dispersed, battery technology is improving, and competitors are cranking out newer and better models, it will be unwise to completely buck the trend.   Statements from the Saudi Arabian Oil Minister predicting  nearly $200/barrel oil within 2 years further that view.

With the flux in consumer spending habits and public/private expenditures, there is probably no real consensus within GM whether the Volt will be a success.  This is precisly why I believe they will continue the program.    Their survival will depend on diversification and an ability to respond to the market.   Keeping all their eggs in the combustion-engine basket could deliver a knockout blow should oil spike back up or a revolution in electric battery technology tags them as “behind the curve”.   As Mr. Richard argues, they need to have their first generation plug-in vehicle hit the market, not because it will be an instant success, but so they have the expertise and infrastructure in place to produce a best-seller years down the line.

Update (6/1/2009): Michael Moore, who has often spoken about GM and its problems, has blogged about his thoughts on the GM Bankruptcy affair.   Moore  offers his advice on how to save the entire  industrial complex built around automakers,  largely by advocating the development of an electric vehicle and light rail infrastructure.

Usually outspoken on issues of corporate incompetence, Moore takes on a more conciliatory and  foreward-looking tone.  It is an interesting read for anyone familiar with his historically “controversial” calls for action.

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Called “The Business of Plugging In”, the conference will be held from October 19-21 at the MotorCity Hotel and Conference Center.  It will bring together various interest groups to discuss the future of plug-in electric vehicles.

“This conference will foster the dialogue among utilities, automakers, regulators, universities and other stakeholders to assess the environmental impacts of PEVs and to assist with the understanding of how widespread adoption of electric vehicles will impact the electric system,” said Al Fields of DTE, an energy company.

An executive from GM said before the conference said that the industry needed “customer-pleasing vehicles, a mature supply base, a capable/green grid, plug-in ready communities, and plug-in ready car buyers… the key stakeholders must work together to deliver great cars, outstanding batteries, convenient charging outlets, and real value for the money.”

It should come as no surprise that Detroit will start playing host to annual meetings around the topic of PEVs.  You could argue that they are a couple years behind in the game.  It’s hard to tell from the news release, however, how many high-powered corporations and investors will be attending; and once they get through discussing the major hurdles, will everyone still be as enthusiastic about the sector?

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The new concept car by Bright Automotive is set to be unveiled in a few days in Washington D.C.   Eschewing the design practices of traditional auto makers, the hybrid vehicle will be built with lightweight, aerodynamic engineering as its core concept. This means stearing clear of large steel purchases and focusing on reducing the size and weight of its battery back.

The plug-in car is said to have a 30 mile all-electric range and will be coupled with a small gasoline engine. CEO John Waters expects to have an annual production rate of 50,000 vehicles per year by the end of 2013.

Before realizing this goal, however, the Indiana-based startup has to overcome a significant hurdle along the way: capital raising. Waters has said that his company requires $400 million in Department of Energy Loans before June 1st in order to meet its launch goal.   Any shortfalls would have to be covered by private investors.  The recent freeze up of credit markets makes this a challenging task, and there is a likelihood that the rollout will have to be delayed.   Another sign that a setback might be inevitable is that Bright Automotive is still conducting talks with major battery suppliers around the world.

Media outlets and consumers will be anticipating more information when the concept is rolled out on the 21st.

Update:  Bright’s new hybrid, called the Idea, was unveiled in Washington DC.  Executives from Bright Automotive made speeches in front of the Senate and House, hoping to garner support for a $450 million grant that would allow the company to begin mass production by 2012.

Mr. Waters called the plug-in vehicle the first “purpose-built, highly durable 100-mile-per gallon commercial utility vehicle.”  It has 180 cubic feet of space in its interior and is capable of carrying a payload up to 1 ton.  The Bright Idea can drive up to 30 miles using its electric engine solely.

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Here is the breakdown for the funding released by the Obama initiative:

1. $2 billion from the stimulus plan pushed through earlier in the year is set aside for electric-vehicle production.
2. Out of that package, $1.5 billion is for battery manufacturing within the U.S.
3. The remaining $500 million is slated for related technologies that compliment these vehicles, such as electric motors.
4. The Department of Energy (DOE) is setting aside a further $400 million for the infrastructure of plug-in automobiles.

One of the stated goals of these initiatives is to propel the United States position in plug-in battery technology, where it lags several countries in the industrialized world.   President Obama’s long-term vision is to have one million plug-in vehicles on the road by the year 2015, and the hope is that by then U.S. manufacturers will excel in their production designs and components.

“Every company that wants a shot at these tax dollars has to prove their worth,” were the president’s comments aimed at plug-in manufactureres.  Battery producers Ener1, and A123 Systems have already applied for DOE loans.

To spur demand on the consumer side, the stimulus plan is offering up to $7,500 in tax credits towards the purchase of plug-in electric vehicles.  With the infrastructure being built, the media and Uncle Sam churning up the appetite for hybrid vehicles, and the overall push for greener technology, the foundation is being laid for the president to meet or exceed his vision of one million, six years from now.

To read more about the plan, read the CNET article here.

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Green Car Advisor has delved a bit further into the Economic Recovery and Reinvestment Act of 2009, revealing many of the numbers that were designed to jumpstart the product of hybrid and electric vehicles.

Conventional hybrid manufactuers will continue to enjoy a $3,400 tax-credit for their first 60,000 hybrids, followed by a %50 drop each of the following 6 months.   Of course, companies like Toyota have already used up all of these tax-credits, while General Motors still has its full reserve available.

State sales taxes for the purchase of hybrid cars can be written off as federal income tax deductions.  This provision applies to other fuel-efficent vehicles, and interestingly, includes purchases of  Dodge Rams , Lincoln Navigators and Hummers (?).

Plug-in Vehicles enjoy the largest bounty of the Recovery Act, with tax credits going as high as $15,000 per vehicle.   The deductions are tiered according to the capacity of the vehicles battery pack and the weight of the vehicle itself.    Eligible vehicles must be powered by a battery pack with at least 4 kilowatt-hours to qualify for a $2,500 tax credit.  Each extra kilowatt-hour of capacity qualifies for an extra $417 credit, with cars under 10,000 pounds topping out at $7,500.  According to the article, “For vehicles weighing from 10,001 pounds to 14,000 pounds, the maximum credit is $10,000; it jumps to $12,500 for 14,001- to 26,000-pound vehicles; and tops out at $15,000 for vehicles in excess of 26,000 pounds.”

Interestingly, the growing popularity of aftermarket conversions of hybrid cars , such as the Toyota Prius, into plug-ins with all-electric range, can qualify the owner for a 10%  (of conversion cost) tax savings — up to $4,000.   Even electric motorcycles and low speed electric vehicles (EVs) qualify for a $2,500 credit.

There are also billions in the stimulus package dedicated to providing the sort of technology and infrastructure needed to convert America’s automobiles into less gas-dependent resources.

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