DOE: How to Get to 1M Electric Cars by 2015

Nissan's LEAF

The U.S. Department of Energy issued a report Tuesday outlining how President Obama will reach the goal of 1 million electric cars on the road by 2015. The answer: basically combine the stimulus package funding for auto and battery technology with the fuel economy standards and add in some more incentives.

How doable is his plan? Analysts and researchers are predicting similar — albeit somewhat lower — figures without much more government support. Bloomberg New Energy Finance predicted late last year that there could be 1.6 million plug-in cars on the road by 2020, and 4 million by 2030.

The Obama administration has seeded the next-generation of a greener auto industry though the stimulus package, and announced loans of $2.4 billion to three electric car factories and grants of $2 billion to build batteries, motors and other components in 30 factories. The goals are to build enough production capacities to churn out 50,000 car batteries by the end of 2011 and 500,000 of them per year by the end of 2014. The stimulus also put up $400 million for charging station installations and projects to test how well electric cars can fit into consumers’ existing driving habits and lifestyle.

The report notes that non plug-in hybrid cars such as the Toyota Prius account for nearly 3 percent of the passenger car sales, and 1.6 million of them have been sold in the past six years. To sell 1 million plug-in hybrid and all-electric cars by 2015 (cumulatively), carmakers will have to sell about 200,000 each year starting in 2011. General Motors, Nissan, Tesla Motors, Ford, Fisker Automotive, Think City and Smith Electric Vehicles are already producing cars this year and Honda, Mitsubishi, Toyota and Volvo have plans to launch electric cars by 2015.

Fuel economy standards alone, implemented in 2009, could nudge carmakers to invest and roll out electric cars. The DOE’s assistant secretary for policy and international affairs David Sandalow commented briefly on fuel economy standards saying: “It reminds me of a famous saying from Wayne Gretzky: you skate to where the puck is going. In this industry, it means investing in advanced technologies, particularly electric vehicles. . . It already is making a huge difference in creating thousands of jobs around the country.”

And then there’s the tax credits. To spur consumer demand, Obama has proposed to turn the $7,500 tax credit for electric cars into a rebate that car buyers can get when they buy the cars. Sandalow compares this proposal to the popular Cash for Clunkers program because consumers can claim the incentive quickly rather than waiting to claim it as an income tax credit.

Lastly, Obama wants even more funding for research and development, including an “innovation hub” for batteries and other types of energy storage. He also wants to launch a program to give 30 communities grants of up to $10 million each to speed up electric car deployment. Ideas of accomplishing this include providing parking incentives, adding public access to charging stations and putting more electric cars to government fleets.

Obama will have to convince Congress to give him money for the rebate program, R&D spending and community grants. Sandalow said the president isn’t ready to say how much R&D funding he will seek.

At the end of the day, popularizing electric cars won’t be easy, notes the report. The success of electric cars will depend partly on the experience of early adopters, the wealthier people who could afford the first-generation Chevy Volt and Nissan LEAF. If they complain about these cars, then other consumers aren’t likely to consider the purchase.

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