Feb 25, 2009 (From the CalCars-News archive)
Many PHEV fans heard about the $2,500-$15,000 tax credit for 250,000 plug-in vehicles in the TARP legislation in late September (total $1B). And you probably heard that the vehicle number would be doubled in the stimulus bill. When the dust settled from Congressional Actions the funds grew to levels we had never hoped for -- most importantly, we went from one pot of money shared by all carmakers to sizable funds for which every carmaker in the world can be eligible. Everyone is doing the math a bit differently, but all agree that the ultimate total going to plug-in vehicles is over $6 billion. Just think: we were celebrating increases in the US Department of Energy's budget for plug-in vehicles from a few million dollars five years ago, to tens and then hundreds of millions. (And this doesn't count substantial funds allocated in Europe and Asia to incentivize plug-in cars.)
WHAT WILL BE THE IMPACT? The U.S. government is sending a message to every automaker: If you begin now on what you all say is inevitable -- the rapid transition of vehicles to be powered mainly by electricity -- we'll pave the way with up to $7,500 in tax credits for your first 200,000 customers. And U.S. companies will get tax credits for new facilities you build and for battery research you're involved in.
We hope this will speed up the efforts of domestic and international automakers, and their suppliers. It helps that President Obama, in his speech to Congress, fast-forwarded a bit when he said, "New plug-in hybrids roll off our assembly lines, but they will run on batteries made in Korea."
And the fact that the government is saying "hurry up" is seen in the announcement by the Energy Department (an agency that has been slow and understaffed) two days after the bill was signed, that it is putting allocation of funding, loans and loan guarantees on the fast track. At http://www.energy.gov/news2009/6934.htm we read, "DOE Secretary Chu Announces Changes to Expedite Economic Recovery Funding: Restructuring will lead to new investments in energy projects within months," with Chu saying, “These changes will bring a new urgency to investments that will put Americans back to work, reduce our dangerous dependence on foreign oil, and improve the environment. We need to start this work in a matter of months, not years – while insisting on the highest standard of accountability.” The goal is to "Disperse 70 percent of the investment from the American Recovery and Reinvestment plan by the end of next year."
Responding to the lack of general awareness of the scope of the new programs, Autoblog Green's Sebastian Blanco reported with the headline, "$2 billion? Nah, more like $12.5 billion for plug-in cars in the stimulus bill" at http://www.autobloggreen.com/2009/02/21/2-billion-nah-more-like-12-5-billion-for-plug-in-cars-in-the/ He based his total on a tally from the always-helpful Jay Friedland at Plug In America (see http://www.pluginamerica.org for more). What we include below is based on Jay's updated summary and his citations and list of sources.
HOW WE CALCULATE THE TOTAL: We've taken the same numbers and broken them out in different ways to see what's definite and what's possible. We want to be careful not to overstate the numbers. Note: IT'S ALL FUNDED, SO IT DOESN'T DEPEND ON FUTURE APPROPRIATIONS. (On the first item below, Jay points out that the IRS will be weighing in so the final info will come out over the rest of 2009.)
$2B PLUG-IN VEHICLE TAX CREDIT (Section 1141 of H.R.1) is first on the list. This breaks out as follows:
- $2,500 to $7,500, depending on size of battery (4kWh-16 kWh), for electric-drive vehicles (EVs and PHEVs) sold after December 31, 2008. Extends and expands Plug-in credits passed with TARP in October 2008. The original plug-in tax credits remain in place for 2009, then the new provisions kick in furing 2010 for this part of the credit. The IRS will need to create the actual forms and regulations later this year.
- The credit was changed from 250,000 vehicles total to 200,000 per automaker. Each automaker will get 100% credit for their first 200,000 vehicles, 50% credit for the next two quarters, and 25% credit for the final two quarters.
- Sales and leases are both covered.
- There is no limit to the number of vehicle manufacturers that can qualify for this process. [Importantly, so far, at least eight carmakers -- GM, Chrysler, Ford, Toyota, Nissan, Mitsubishi, Hyundai and BMW -- have announced plans to sell PHEVs and EVs; especially because of this, the $2B number assigned here is a COST ESTIMATE, NOT A CAP.]
- 10% separate consumer tax credit for 2-3 wheeled vehicles (up to $25,000 for a $2500 tax credit). This incentive helps the most affordable and already available vehicles including electric motorcycles (Zero Motorcycles, Vectrix, Brammo, Mission Motors, etc.) and enclosed 3 wheelers like Aptera, Persu Mobility, and Myers Motors. Vehicles must have a minimum of 2.5 kWH or battery energy. Sunsets 12/31/2011. (H.R.1 - Section 1142)
- 10% credit for low speed electrified vehicles (Neighborhood Electric Vehicles), up to $2,500 ($25,000 SRP) until December 31, 2011. (H.R.1-Section 1142)
- 10% credit for plug-in conversions up to $4,000 ($40,000 conversion value), tax credit also available until December 31, 2011. This applies to both PHEV conversions and ICE to EV conversions. IRS will set exact rules. [Note: we're keeping our eye on this one, and it's the place where we think we have the most potential to increase the amounts as conversions of internal combustion vehicles become more credible. Since these vehicles may provide as much benefit as new plug-ins in displacing petroleum and thereby improving prospects for energy security and addressing climate change, and since their conversions will create installer jobs everywhere, we'll make the case that their incentives belong in the $5-$10K/vehicle range.]
Other items include:
- $2B GRANTS FOR ADVANCED BATTERY MANUFACTURING, (H.R.1, pg. 24; originally authorized but not funded under the Energy Independence and Security Act of 2007, EISA-Section 135).
- $400M DEPLOYMENT of plug-in infrastructure and vehicles. (EISA Sec 543B, H.R.1-pg.24).
- $300M FEDERAL PURCHASE of commercially available high-efficiency vehicles (including hybrid, plug-in hybrid, and battery electric vehicles) to remain available until September 30, 2011. (H.R.1-pg. 36)
- $10M additional for ADMINISTRATION of Advanced Technology Vehicles Manufacturer Loan Program (EISA-2007, H.R.1-Title 17, pg. 26)
$4.7B plus $1B from September TARP Bill is $5.7B SUBTOTAL
Additional items for which plug-ins are easily eligible:
- $1.7B MANUFACTURING TAX CREDIT for advanced energy investments up to 30%, including plug-in vehicle manufacture. (H.R.1-Sec 48C)
- $54M ALTERNATIVE REFUELING PROPERTY TAX CREDITS (including EV/PHEV charging). They raised the limit from 30% and $30,000 to 50% and $50,000, until 1/1/2011. They also increased the residential refueling property tax credit to 50% of up to $2000 (This is a TARP modification). (H.R.1- Sec 1123)
$1.7B SUBTOTAL, $7.4B RUNNING TOTAL
- $6B ADDED TO INNOVATIVE TECHNOLOGY LOAN GUARANTEE program which could go to plug-ins. (authorized under Energy Policy Act of 2005). This program provides loan funding to help automakers retool to make much more fuel efficient vehicles like EVs and PHEVs. (H.R.1-pg. 26)
- $1.7B NEW AUTOMOBILE PURCHASE SALES TAX CREDIT will also apply to plug-ins. The bill provides all taxpayers with a deduction for State and local sales and excise taxes paid on the purchase of new cars, light truck, recreational vehicles, and motorcycles through 2009. This deduction is subject to a phase-out for taxpayers with adjusted gross income in excess of $125,000 ($250,000 in the case of a joint return). (HR1-Section 1008)
$9.5B SUBTOTAL, a substantial portion of which can go to PHEVs, $16.9B RUNNING TOTAL. So that's how we may see over $10 Billion to plug-ins.
SOURCES: here are links to the full legislation and the key summaries: http://frwebgate.access.gpo.gov/cgi-bin/getdoc..cgi?dbname=111_cong_bills&docid=f:h1enr.txt.pdf http://appropriations.house.gov/pdf/PressSummary02-13-09.pdf http://finance.senate.gov/press/Bpress/2009press/prb021209.pdf
ALL THE DETAILS (for lawyers, accountants and policy people) are at: http://www.rules.house.gov/bills_details.aspx?NewsID=4149 http://thomas.loc.gov/home/h1/Recovery_JS_DivA.pdf http://thomas.loc.gov/home/h1/Recovery_JS_DivB.pdf
Other sources of summaries are from the Electric Drive Transportation Association, which played a key role in the legislation http://www.electricdrive.org/index.php?ht=display/ReleaseDetails/i/11331 and, for the broader picture of funds for renewable energy, http://breakthroughgen.org/2009/02/14/detailed-summary-of-energy-investments-in-stimulus/
P.S. Since the stimulus is all about jobs, don't miss one of the best articles on the Green Jobs side of the new cleantech economy, on the front page of the Feb. 17 Wall Street Journal: A New Gang Comes to Los Angeles: Solar-Panel Installers: In Tough Economy, Homeboy Industries Trains Ex-Cons for Brighter Prospects, by Miriam Jordan. Read it and see a short video at http://online.wsj.com/article/SB123457326090086555.html