How the Feds Can Make Every Dollar Count for Electric Vehicles

As reported by the Wall Street Journal last week, automakers are pressing the Obama administration for more government subsidies to spur mass-market sales of electric vehicles, including new tax breaks for consumers, utilities and car companies.

More money is needed on top of the $2.4 billion already allocated, automakers say, in order to achieve President Obama's goal of putting one million electric or plug-in hybrid vehicles on the road by 2015.

Automakers -- concerned about lack of consumer demand and availability of public charging options -- are worried that the move to electrified transportation may fail unless the federal government steps in. But, a long wish list leaves room for interpretation as to what investments (if any) are the smartest, and will sustain EVs as a viable part of a larger low-carbon strategy for the US.

Project Get Ready, an initiative led by Rocky Mountain Institute to aid U.S. cities preparing for widespread adoption and use of electric vehicles in their communities, regularly connects city leaders, technical advisors and energy providers to create a plan for plug-in readiness. Cost and financing are inevitably common topics of discussion. PGR managers Matt Mattila and Tripp Hyde weigh in on what cities looking to bring EV-readiness to their communities can agree upon when it comes to spending money wisely.

Affordability is Key

What's priority number one for EVs? "Making them cheaper," Mattila said. "Lowering the initial purchase price for consumers should be the first step."

Currently, buyers of plug-in hybrids and EVs benefit from a tax credit ranging from $2,500 to $7,500, depending on the size of the battery in the car (the greater the battery capacity, the bigger the credit). These credits are available through the American Recovery and Reinvestment Act, but begin to phase out after a specific automaker -- Chevrolet, for example, maker of the Volt -- sells 200,000 vehicles.

But let's not kid ourselves -- these credits won't be available forever. Consumer cash may be a quick fix, but money spent further upstream -- on better design, more efficient processes and more cost-effective materials -- could result in a much lower vehicle cost, which would ultimately be passed on to EV buyers.