What rubs some the wrong way is the cash-back offer rewards the cause not the effect. Consumers get a break only on electric vehicles, not other more fuel-efficient cars and trucks that may use different, but equally advanced technology to get the job done.
Other detractors insist the government shouldn’t put incentives on vehicle sales at all, but provide financial backing directly to auto makers, suppliers and others for R&D projects aimed at weaning the country off its oil dependency.
Rewarding developers would ensure all new technology gets a fair shake. Faced with a severe cost disadvantage vs. the subsidized EVs, more promising fuel-efficiency solutions could be getting ignored.
Need convincing public policy is shaping automotive R&D? Just take a look at how far fuel cells and hydrogen power have fallen down the industry’s depth chart in the last few years as EVs and lithium-ion batteries have risen to the forefront.
Some, but not all, of the critics have a vested interest in seeing government funding shift away from electrics. Many are auto executives whose companies have an abundance of diesel-engine capacity or suppliers that offer turbochargers, modern fuel-injection systems and other technologies built around internal-combustion engines.
Others just don’t like the idea of their hard-earned tax dollars helping to pay for someone’s new car. And with reports that early Volt buyers likely will be shelling out well above sticker as initial demand outstrips the limited supply, it’s hard to argue with them.
Hyundai Motor America CEO John Krafcik puts it this way: “As a taxpayer, it makes me a little bit upset the government is going to subsidize these people that have average incomes of $150,000 – going to be stroking checks to them.”
But the problem isn’t so much the tax credit it’s the lack of an endgame.
This new wave of battery power is a potential paradigm-shifter, but consumers may need some enticement before they’re ready to embrace electric vehicles in a meaningful way. Using tax credits to seed the market may be necessary to get the ball rolling.
But what happens after the government incentives run out? We’ve seen Toyota Prius sales fluctuate dramatically with the up-and-down movement of fuel prices, and despite growing availability of hybrid-electric vehicles the segment still accounts for only 2.3% of the U.S. market.
If policy makers truly want to get Americans off their oil fix, they need to be thinking two or three moves ahead of the market. But so far, there’s little evidence of a master plan.
Once all the early adopters have purchased their new EVs with the help of government subsidies, will the electric-vehicle market be allowed to simply run out of gas?
