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New paper: US policies to support plug-ins are ineffective

Governments around the world are taking many different measures to encourage the adoption of plug-in vehicles, but it’s far from clear which of these policies will prove to make sense in the long run. A new paper published in Energy Policy argues that current US policies are inefficient and ineffective.

One of the main culprits is “mainstream consumer bias.” That is, the government is trying to prop up plug-in purchases within the mainstream market, whereas leveraging certain strategic niche markets might be more effective.

Erin Green and his co-authors note that US policies to encourage EV adoption fall into three categories:

  1. Research & development
  2. Investments in charging infrastructure
  3. Vehicle tax credits or rebates

Building up charging infrastructure is central to US policy. Many policymakers assume that, as legacy vehicles do, EVs will require a dense, elaborate network of public charging stations. That reasoning is flawed, say the authors, because more than half of US households already have the ability to charge EVs at home, and surveys of EV owners indicate that charging at home and at work is the preferred method. “In effect, millions are being spent on public EVSE to alleviate mainstream consumers’ range anxiety, while failing to significantly increase PEV adoption,” says the report.

When it comes to tax credits, the authors note that the Congressional Budget Office has concluded that the EV tax credit is too small to stimulate much consumer demand, and that most taxpayers do not have a tax liability great enough to even use the credit. “Thus, the majority of PEV tax credits will subsidize purchases that would have happened anyway, and will have little to no effect on petroleum displacement and emissions reductions.”

The researchers list three strategies that might be more cost-effective:

  1. Strategic niche management (SNM). SNM aims for sustainable diffusion of technology by identifying market niches where the unique strengths and benefits of a technology are maximized, and where barriers and challenges are minimized. Examples of promising market segments for EVs include car sharing and US postal delivery vehicles.
  2. Focusing research and incentives on early adopters and markets. Policymakers could focus in the short term on lowering EV cost by identifying the performance, features and costs acceptable to early adopters and most ideal for niche markets.
  3. Making loans and financing more accessible for PEV buyers. Although early adopters may be willing to pay more for PEVs to realize fuel savings or environmental benefits, their ability to pay can be hindered by the financing process. Incorporating fuel costs into loan approval criteria would make EVs and other efficient vehicles more financially accessible.

There’s a lot of sense in this report, but how many policymakers will pay attention? For local governments, installing public charging stations is popular, because it’s a highly visible action they can take at little cost. And politicos generally love to hand out tax breaks, whether they accomplish anything useful or not. Meanwhile, the Senate Finance Committee is now considering eliminating tax incentives for plug-in vehicles (send your comments to: Tax_Reform@Finance.Senate.gov by January 31, 2014). 


Source: Green Car Congress

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