CNN Money: Electric Vehicles Still Too Expensive to be Cost Competitive; EVs Need a $12,000 Tax Credit to Compete
CNN Money says that, according to the Congressional Budget Office’s (CBO) presentation at the 2013 Energy Information Administration conference on June 24, electric vehicles are still too expensive to compete with gas-burning automobiles.
While we wholeheartedly disagree with this statement, it was definitely touched upon at the conference and so is worth highlighting here to further the discussion.
The CBO’s presentation wasn’t only examining the purchase price of electric vehicles. The $7,500 tax credit was included and it was one of those total ownership cost discussions.
Here’s the explanation from CNN Money:
“Based on 2011 prices, federal tax credits alone do not offset the higher lifetime cost of driving electric vehicles compared to traditional gasoline-fueled cars. A key assumption underlying the analysis is that tax credits are responsible for an estimated 30% of electric-vehicle sales.”
Of course, that “based on 2011 prices” is bound to be the biggest issue here, as several electric vehicles have come down in price since then.
Putting that price issue aside for now, Ron Gecan, analyst at CBO’s microeconomic studies division, states this, according to CNN Money:
“The federal tax credit would need a substantial increase for greenhouse gas emission-free cars to be as cost effective as traditional vehicles. It would take a federal tax-credit of more than $12,000 to make a 16-kWh battery-powered car commercially competitive with a traditional high fuel-economy compact car.”
It doesn’t take a rocket scientist to figure out that, at $12,000, some electric vehicles would essentially be free to lease, but we’re assuming the CBO examines only buying, while ignoring the method chosen by most Americans: leasing.
We personally wouldn’t push for a $12,000 credit, but we’d take it for awhile if the government wants to go that route. It surely would spark the industry, but it’s not sustainable and there’s really no need for it. The industry already grows on a monthly basis and will continue to do so without the help of additional incentives.
Source: CNN Money