Miracle Revealed: How To Make EVs Nearly Affordable

Cammy Corrigan
by Cammy Corrigan

Whenever a new technology comes to market the process is fairly simple. Ridiculously expensive for the first year, then slowly the price comes down as the customers become less willing to pay the original RRP, then competition kicks in which drives the price down even further. It happened with mobile phones, big screen TV’s, DVD players, etc. But what happens if the technology is something the government wants to implement? Then, you skip step 1 with the help of tax payer money.

International Business Times reports that Nissan and their Leaf are going to enter a price war with Chevrolet and their Volt. And it’s all on the taxpayers! The Nissan Leaf will start at $32,780 and that doesn’t include an unspecified destination charge. But with a wave of the US Government’s wand, that price comes down to $25,280 via a $7,500 federal tax credit. Over at GM, the Volt starts at $41,000, but once that magic wand is waved, it comes down to $33,500 via the same tax credit. The US government has also instigated a rebate program whereby vehicles that do not emit tailpipe emissions qualify for a rebate. And it is because of this rebate program that in California, the Leaf qualifies for a $5,000 rebate and the Volt $3,000. If you lease the Leaf, Nissan will pass the tax credit savings onto the customer. And if you buy the Leaf, your charging equipment will qualify for tax credits, too. Blimey! If Nissan isn’t careful, they might start getting a bunch “Federal Government bailout” jokes aimed at them…

Cammy Corrigan
Cammy Corrigan

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  • Paul Niedermeyer Paul Niedermeyer on Oct 10, 2010

    The linked article (and this post) is misleading: It says that GM and Nissan may start a price war. No such thing. Governmental incentives are hardly "a price war". And we've known about these incentives for what, a year or two now?

  • Vww12 Vww12 on Oct 10, 2010

    «It happened with mobile phones, big screen TV’s, DVD players, etc.» These technologies became affordable because electronics got cheaper at exponential rates. Battery technology, on the other hand, has not been shown to become exponentially better nor cheaper. Instead you see steady but moderate improvements over time. Government is engaged on a race: will the techologies of these new tech cars become cheaper and better faster than the government subsidies that prop them? In the Carter administration, billions were spent to create gasoline from coal. Process efficiencies were gained. But the improvements were too slow to ever make fuel-from-coal competitive with gasoline, so in the end all the taxpayer money was wasted and the project was killed.

    • See 4 previous
    • Charly Charly on Oct 11, 2010

      Robert Schwartz, Integrated micro devices are almost 50 year old and they still improve with Moore law. The same is true of batteries but the doubling period isn't 2 years but much longer (my guess would be a decade or 5) but is definitely there. Gslippy, Energy density isn't everything but you also measure it wrongly. It is not the fuel only otherwise nothing would beat nuclear, but also the rest of the propulsion system

  • George B George B on Oct 10, 2010

    Consumer electronics products don't get magically less expensive due to economies of scale and competition. There has to be some real savings somewhere that reduces cost. Higher volumes can help a little by spreading the development cost over more units. In semiconductors, process changes that increase the number of chips per wafer and increase wafer size can reduce the price per chip. A decontenting race to the bottom can trade off the number of features in exchange for performance and quality. Think smart phones that run aps but drop phone calls. The point is some part of an electric car, probably the battery pack, needs to significantly drop in price due to some material or process change that reduced cost. Government subsidies to goose up volume won't get you there on increased volume alone.

    • Healthy skeptic Healthy skeptic on Oct 10, 2010

      > Government subsidies to goose up volume won’t get you there on increased volume alone. Yeah, but increased volume helps. Especially when the scale of manufacture is so tiny to begin with. With economy of scale, your biggest gains come early on. The total number of Leafs (Leaves, dammit!) that will be sold during 2011 are just a fraction of a percent of the overall market. Semiconductors long ago flooded the world and are made in huge numbers, so economy of scale has already been realized there. Also, there's value in just getting these cars out there and simulating consumer interest, infrastructure, etc. I don't favor government subsidies as an eternal way of life, but if it's used to artificially accelerate the onset of an advantageous technology which would have eventually happen on its own anyway, I think it can be a good thing.

  • Edgett Edgett on Oct 11, 2010

    Government subsidies are not new to the auto business. Reagan's tax bill allowed three year write-offs of "business" vehicles, and it was remarkable how many were then used in "business". Similarly, the ability to fully expense >6000lb SUV's and trucks amounted to government subsidies of large and fuel-inefficient vehicles. At least with subsidies of all-electric or hybird cars, the nation at large is improving technology while reducing fuel usage.

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