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Senate OKs Plug-In Credits, Toyota Frets; Free Press Lyrical about Plug-Ins
Sep 24, 2008 (From the CalCars-News archive)
This posting originally appeared at CalCars-News, our newsletter of breaking CalCars and plug-in hybrid news. View the original posting here.
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Today's amazing moments:

  • the long-hoped for extension of energy tax credits including
    incentives for PHEVs:
    • what Toyota said when outclassed by GM's large batteries;
    • read to the end and get the pleasure of seeing a long-time Detroit
      automotive journalist who "gets" PHEVs beautifully the Volt as the
      "dawn of a new era" and "a first step toward a new kind of car for everyone."

      The Senate has passed by an overwhelming 93-2 vote a long-awaited energy tax bill. It extends solar investment tax credits to 2016 and gives wind credits one year and geothermal two years -- far better than letting those lapse! See­apps/­news?pid=20601103&sid=az7nni6J4BZY&refer=us for a general summary.

      The measure includes the substantial credits for plug-in cars we've been hoping for. Here's a summary by Genevieve Cullen of the Electric Drive Transportation Association : Tonight, the Senate passed a tax extender bill that includes the plug-in electric drive credit that EDTA has been working to move since the beginning of this Congress. Specifically, it provides that plug-in electric drive vehicles with batteries of at least 4 kWh qualify for a $2,500 credit. An additional $417 is provided for each additional kWh, up to $7,500 for vehicles up to 10,000 lbs; $10,000 for vehicles up to 14,000 lbs; $12,500 for vehicles between 14,000 and 26,000 lbs and $15,000 for those over 26,000 lbs. The value ramps down in value after the number of vehicles sold in the U.S. reaches 250,000. The credit expires at the end of 2014.

      Find the text of the measure at­sitepages/­leg/­LEG%202008/­091708%20Legislatvie%20Text%20to%20Energy%20Improvement%20and%20Extension%20Act.pdf . The PHEV provisions are in Section 205, begining at PDF page 78. The credits apply only to "new qualified" vehicles -- unlike the proposals from the Senate "Gang of 10," conversions are not included. (That issue can be revisited next year.)

      ONE THING IT MEANS: Greentech Media story on today's developments, "Senate OKs $18B in Tax Credits"­articles/­senate-oks-18b-in-tax-credits-1456.html concludes: The $7,500 tax credit for plug-in hybrids gave cheer to Felix Kramer, co-founder of, which promotes plug-in hybrid and electric vehicles. "This will have an enormous impact," he said. Given his estimates that automakers could make current hybrids into plug-in hybrids for an additional $3,000 to $5,000, the tax credits "could conceivably entirely remove the cost increment that carmakers say is the cause of their reluctance" to build plug-in hybrids.

      WHAT HAPPENS NEXT? The House, which has passed legislation with different provisions, may re-visit the issue as part of negotiations about versions. If all goes well, the bill will go to the President, who has indicated he will sign it.

      NEW AREA OPENS IN PLUG-IN RACE AMONG AUTOMAKERS: Now Toyota is prospectively at a disadvantage because of its plans to begin with PHEVs with far smaller batteries than those in the Chevy Volt. That led to Toyota's Congressional testimony last week in opposition to the original 6kWh minimum planned by the Senate. The final version dropped to 4 -- still too high for Toyota to be happy. Below we include Toyota's position and a report on the conflict.

      Both Senate and House bills key incentives to the amount of energy storage available which makes the most sense: the more kWh, the better the benefit. Ron Gremban, CalCars' Technology Lead, has developed a simple way of thinking about this that is largely independent of vehicle weight and design: for vehicles that charge once a day, every kWh in a well-built PHEV will displace up to 50 gallons of gasoline a year with electricity.

      MORE ON TOYOTA'S PERSPECTIVE: This comes from the September 16 Senate Energy and Commerce hearing­public/­index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=4749a1a2-98dd-0ecb-fd41-4ed331f1745b . That URL also points to testiony by others including Brian Wynne of EDTA , Ed Kjaer of Southern California Edison and Thad Balkman of Phoenix Motorcars.

      TESTIMONY by Robert Wimmer, National Manager, Toyota Motor North America:

      Battery experts have estimated the cost of batteries for a plug-in hybrid to be $500-$1000/kW-hr. As such, the size of the battery pack will greatly influence the retail price of the vehicle and therefore, its market viability and sales potential. The Energy Tax package released late last week by the Finance Committee places an arbitrary 6kW-hr minimum on pack size before receiving a consumer tax credit. Toyota believes this is counterproductive. It will discourage manufacturers from developing smaller, lower cost plug-ins that are affordable to the greatest number of consumers. Toyota agrees the amount of tax credit should be based on battery size, but it should begin at approximately two times the size of a typical hybrid battery, 1.2-2.0 kW-hr. This way the consumer market will drive plug-in vehicle design, not legislation.

      Before high-volume production can begin, significant challenges such as battery cost, durability and safety must be addressed. We intend to examine these issues when we introduce our next generation plug-in hybrid with Li-Ion batteries as a 2010 model. A significant number of these vehicles will be deployed in commercial fleets around the world to help Toyota quantify real-world durability, performance and customer acceptance.

      Toyota is also re-examining battery electric vehicles. Between 1998 and 2003 Toyota delivered more than 1200 RAV4-EVs to customers in Arizona and California. Many of these were sold -- not leased -- to the general public, making Toyota the only Original Equipment Manufacturer at the time to sell full-performance EVs. With many of these still on the road and millions of miles of cumulative experience, Toyota understands the opportunities and challenges of producing and marketing battery EVs. [We can't resist noting here that had it not been for "Don't Crush" -- the successful campaign that led to the formation of Plug In America -- these cars would all have been off the road in 2005.]

      CNET: Sparks will fly over GM, Toyota plug-ins­8301-13746_7-10047679-48.html

      It's all been very gentlemanly so far. No name calling. No punches thrown. But a fight is brewing between heavyweights Toyota and General Motors over the way the government should support plug-in hybrid electric vehicles.

      Robert Wimmer, a Toyota research manager, told a Senate committee last week that proposed legislation "redefines plug-in electric vehicles to seemingly eliminate consumer tax credits for all but one plug-in vehicle design. Toyota believes this approach is counterproductive."

      He didn't identify the Chevrolet Volt by name. But the GM hybrid would be the main beneficiary of the bill, which would provide tax credits of up to $7,500. A plug-in hybrid being developed by Toyota might not qualify for a tax credit.

      The difference? The bill, as written, bases the credit on a vehicle's range in the electric-only mode. The Toyota design is expected to rely, more than the Volt does, on an alternating combination of electric and gasoline engine power.

      Said Wimmer: "We believe consumer incentives should encourage all plug-in designs and allow the consumer market to select winners, not legislation."

      GM spokesman Greg Martin challenged the assertion that only the Volt would benefit but said it is understandable that Toyota's testimony "would reflect their competitive interests."

      Also see a story in the Wall Street Journal about the Senate hearing, "U.S. Makers of Electric Cars Push for Consumer Tax Credits"­article/­SB122165151740247643.html?mod=googlenews_wsj

      MORE PHEV-CANDY: Another addition to those kudos we posted last week at "Our 1,000th Posting: A Moment to Celebrate"­calcars-news/­1000.html -- this one is by Mark Phelan, Detroit Free Press Columnist, who has covered the auto industry for 25 years.

      "Chevy Volt's value is as dawn of era" Sept. 21, 2008­apps/­pbcs.dll/­article?AID=/­20080921/­COL14/­809210488&imw=Y

      Two recurring strains of criticism surfaced amid all the hoopla over the Chevrolet Volt electric car last week:

      • It's too expensive. Nobody will buy it, and if anybody does, it'll be rich dilettantes, not the working folks who really need to cut their gasoline bill.
      • It doesn't go far enough. It's impractical for people who use one car for all their needs.

      Neither complaint is correct, but the way the misinformation proliferated across the Internet demonstrates how different the Volt is from any car on the road today.

      You can't judge the Volt based on traditional criteria like sticker price and trunk room.

      Don't think of it solely as a car. It's a lifestyle, a political view, a fashion statement and the coolest new gadget you can get.

      If GM gets the Volt right, it's the 1984 Apple Macintosh on wheels, smashing an old paradigm and setting America free. It's Mini Cooper compact cool mated to Prius environmental chic.

      It will also be a compact car likely to cost around $42,000 when it goes on sale, a premium small car with unique style and performance, like the $46,000 BMW 135i or $44,000 Audi A3.

      And it may be the only game in town if you want the latest and greatest technology on wheels, a vehicle that says you're smart, involved and want to thumb your noise at Big Oil and the despotic countries that produce it.

      Why did people stand in line all night to pay $400 for an Apple iPhone last year when other companies literally give mobile phones away? Because it was unique. Because it was the best.

      That's one reason the Volt's introductory price is immaterial. If the car keeps the promises GM has made -- 40 miles on battery power alone, and the ability to drive unlimited distances by using its onboard generator -- the first year's production will sell out the weekend the Volt goes on sale.

      The other reason not to fret about the initial price is that it will fall, and it will fall fast. The industrial model and product cycle that apply to the Volt are closer to the fast-paced development of mobile phones and laptop computers than the six-year cycle of most cars.

      Cost should fall quickly, and it would be very surprising if Volt buyers don't get substantial tax incentives.

      None of that makes the Volt the people's car, but GM plans to use its powertrain in other models.

      Concerns about the Volt's cruising range are even less significant than fretting over its sticker price, but they highlight the need for GM to explain the car to buyers. While electricity stored from an outlet provides enough energy to cover at least 40 miles (city or highway driving), the little gasoline-powered generator under the hood will keep the battery charged on longer drives.

      It's an elegant solution that engineers love, but it will take a while before less technically oriented people figure out they can drive the Volt cross-country all day, just like a conventional car.

      The Volt is the tip of the spear. If it works, GM plans to rapidly adapt its powertrain for high-volume cars with mass-market prices.

      It's not a car for everyone, but it's the first step toward a new kind of car for everyone.

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