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By CER News Desk on Sep 24, 2012 with 16 responses

CBO: Electric Cars Will Flop, Despite $7.5 Billion in Subsidies

Despite the federal government pumping $7.5 billion into the electric vehicle industry in the United States through 2019, overall national gasoline consumption is unlikely to be significantly affected, according to a report released by the Congressional Budget Office (CBO).

Developed by the Bush administration in 2007 and initiated by the Obama administration in 2009, the program delivering the influx of cash is intended to help speed the growth of the fuel-efficient vehicle industry. The funds in question are made up largely by consumer tax credits that offer as much as $7,500 to consumers purchasing electric vehicles, followed by $2.4 billion in grants to electric battery manufacturers and $3.1 billion in loans intended to encourage automotive companies to increase production of electric vehicles. (See also: Will Range Anxiety Impact Electric Car Sales?)

Despite the good intentions behind the funds, the CBO report makes it clear that tax credits and other initiatives will not significantly affect the overall fuel-efficiency of cars on American roads.

“The more electric and other high-fuel-economy vehicles that are sold because of the tax credits, the more low-fuel-economy vehicles that automakers can sell and still meet the standards,” says the report, adding that the funds will have “little or no impact on the total gasoline use and greenhouse gas emissions of the nation’s vehicle fleet over the next several years.”

The report does have its critics, with many members of the electric vehicle sector coming forward with a view focused more on the report’s findings concerning the environmental benefits of pushing the industry towards faster growth. (See also: GM Losing Nearly $50,000 on Each Chevy Volt)

“While we do not agree with all of the assumptions made and relied on in the report, (the) CBO’s illustrations do show that tax incentives can help move electric drivers into the mainstream and reduce gasoline use and emissions, while growing the industry,” said a statement issued by Brian Wynne, president of the Electric Drive Transportation Association.

  1. By stan on September 25, 2012 at 11:48 am

    Well, we have just givin Egypt 2 billion dollars….there’s some development dollars which could have been funneled into companies who are developing the new technology of center charge batteries….where they would no longer take hours to charge because the batteries charge from the outside in. These batteries can get almost a full charge in less than 30 minutes. And THAT will just about fix the whole debacle. What is Obama THINKING? And I use the term loosely.

    • By shecky vegas on September 25, 2012 at 1:47 pm

      stan – get your head out of your arse. we’ve been giving foreign aid to egypt and half of the other countries in the world for decades now. and yes, it amounts to multiple Billions of dollars.

      stop implying obama started it all, turd-monkey. you don’t like it, contact your congressmen and senators. THEY are they ones who approve the funds.

  2. By CogWheeler on September 26, 2012 at 1:48 pm

    Lisa Murkowski sponsored the CBO study to agree with, guess who, big oil.  When you go to CBO, read the report, and begin to understand its wildly expensive assumptions, you will see how they framed EV’s.  Mullalay was liberal in estimating that his Ford Focus EV had a battery cost of $600 per kwh.  The GM Volt battery can be bought for $200 per kwh, yet CBO reaches for the sky with $1,200 per kwh.

    This article is just wrong.  Electricity is getting cheaper because natural gas is getting cheaper.  The Plutocrats don’t want you to know that, and will gladly accept your $4, at next fill-up. 

  3. By notKit P on September 26, 2012 at 5:39 pm

    The problem is consumers are not buying PEV (plug-in vehicle) while full size (super size me) pickups are selling like hot cakes.  You can blame CBO or Lisa Murkowski all day long but that is no going to change sales.  You have to come up with a policy that works. 


    I am not going to buy a PEV when I can buy a Corolla for a third of the cost.

  4. By Tom G. on September 27, 2012 at 1:36 am

    I am really surprised that there are only 4 comments on this story.  There is so much to  talk about.  

    First some hybrids like the Prius are selling well and have been for years.  Of course how many years has it taken for them to get to where they are now?  Will the same thing happen to the Volt, Leaf and others?   

    Second, pure electric vehicles have their place and that place is well known.  It happens to be for those individuals who hate buying gasoline and drive about  30 – 40 miles per day depending on the vehicle they drive.  Of course sometime in the future all vehicles will be electric but we have a long way to go before that happens.  And “future” to me means sometime between 10 – 30 years.  So in the mean time we really do need to drill-baby-drill since most of our oil is still coming from out of the country suppliers.     

    Third, I have said many times on this and other blog sites that our government is not very good at picking winners and losers are they?  Had it been up to me, I would have started out the transition of our vehicle fleet by first promoting hydraulic hybrids, then hybrid electric then plug-in hybrids and then EV’s.  Instead what we did is push for electric hybrids and EV’s right from the beginning.  We never really did have a transition plan or strategy in mind, our government just said here is a bundle of money go build something.  

    Some very interesting research has been going on at some of our universities and at some government agencies for years.  They have been studying and building hydraulic hybrids and we are beginning to see 40-75% improvement in fuel economy.   What is also very interesting is that this improvement in fuel economy can be achieved for about a $2,000 to $3,000 cost to the MSRP of a vehicle.   Had we started with hydraulic hybrids instead of hybrid electric vehicles we wouldn’t be spending $7500 per vehicle.  Instead we would be spending about $3,000 per vehicle which would have covered the ENTIRE cost of the hydraulic hybrid power train.  Certainly this would have been much better  for the consumer, our governments budget and the environment.  

    There are some other positive aspects to hydraulic hybrid power trains.  Existing Start – Stop technology can be used.  Smaller and more efficient engines can be used while still keeping the “burning rubber” crowd happy.  There is no drive-ability penalty for either summer or winter driving with hydraulic hybrids.  There is no battery cooling needed since there is no battery pack.  There are no planetary gear arrangements needed with a series hydraulic hybrid.  The internal combustion engines can be run at their most economical speeds.  And of course everyone knows we have been using hydraulic systems for generations so it’s not as if this is some unknown technology we have to wait for.

    Probably most people know that hydraulic hybrid systems are already in use by FedEx, UPS, Waste Management, a few school and senior citizen buses, a few trucking companies and many medium duty trucks are using hydraulic hybrid systems which are showing significant fuel efficiency gains.  Even the EPA and Chrysler are experimenting/working on a hydraulic hybrid mini-van.  

    So yes I believe we really blew it by trying to jump start the EV market without a plan in place.  It’s not that EV’s are bad, heck I would love to own one – But the current cost is just to rich for my checkbook.  However had we promoted the hydraulic hybrid and were now selling hundreds of thousands of them while continuing to finance battery research and development at our universities, we wouldn’t be doing dumb things like selling the battery maker A123 to China for pennies on the dollar.  Those dollars by the way are our tax dollars and yes some of them we even borrowed from China.  We are in my opinion about 7-10 years away from having the right technology at the right time for the right purpose when it comes to battery technology.  But in the mean time, I think hydraulic hybrids could be helping us save one heck of a lot of fuel.    


    • By Charles on October 2, 2012 at 8:09 am

      Tom,  Couldn’t agree with you more. Your Hydraulic comment spurred this reply. 

      I own a granted US Patent for an electric vehicle with hydraulic assist. In a preferred embodiment, deceleration energy is stored in accumulators and batteries, providing dual regenerative braking. Initial launch can be hydraulic only, eliminating the initial inertia breaking high current battery draw. Driving is provided by the batteries. Using at least one variable displacement pump on a series system can provide important role reversing characteristics of the components and very efficient use of both energy storage mediums. Efficiency and range is increased while battery chemistry and count is reduced (farther, cheaper, safer). In high stop/start cycles (thing USPS, Taxi, school bus, etc), this system performs the best, providing economic, environmental and societal benefits above other drive train options. 

      I created the idea in 1991 (I have great documentation), and have the earliest granted patent. Navistar filed for a similar patent, and their patent was rejected in part based on my IP, citing my patent 40 times in their rejection notice. The US EPA has also filed for a patent almost identical to mine, and they too will be rejected, as their application is almost identical and Navistar’s had a few more differences. 

      The University of Michigan (Ann Arbor) was being funded by the EPA to develop Electric Hydraulic hybrids before the current administration changed the rules and took funding away from the EPA and shifted it to the Dept of Energy. This makes no sense as the EPA is working with Chrysler on gas/diesel hybrids. But, that’s government for you.

      The U of Mich test vehicle was built, and performed very well considering it was designed and built by a senior engineering class over a few years. A more mature design would perform even better. The U of Mich’s Timken endowed chair of engineering wrote a white paper in April of this year, stating the system would be very beneficial to an electric vehicle, gaining a 65% improvement in range with a 26% decrease in battery energy consumption. And as I am sure you know, that lowers the price and increases the usefulness of a battery EV. 

      The path to commercialization is ridiculously complex and difficult. The days of building it and they will come are over. I am just a regular guy who has great vision in physics and system design, not a business creating entrepreneur. However, I have been forced to take that route because I can’t find capital and good business team members who are passionate about finding and implementing solutions, today. It doesn’t help that I live in Indiana, where capital and vision are not as plentiful as the corn. If anyone wants to help, feel free to reply. I am trying to do this on my own, and it isn’t easy!

      Anyway, great post and thanks for the space to opine. 

      • By Tom G. on October 2, 2012 at 11:12 am


        Excellent response – thank you for the information.  Is there a link you could provide to the April white paper?


        • By Charles on October 2, 2012 at 11:49 am

          Thanks for the compliment. I have several patents in the cleantech realm.  Here is the link. It’s $23.00, but it makes good reading. 

          Tried to get the Indiana Economic Development Corp on my side…no go. I was told I was too far ahead of the curve and the idea is too difficult to develop. OK…so a retrofit is too difficult? I tried to connect with Notre dame…but their community connection link has been broken for a long time.

          I also filed a patent based on my original system, but used on a train car. Decel energy charges containerized battery systems, and then uses the energy at any point, up to and including powering rail facilities and selling the electricity to other entities (picture a few container carrying train cars, having been charged by decel energy, and then dropped of at a manufacturing facility to power energy intensive systems). Of course, you can use existing infrastructure to deliver the containers anywhere, like a shopping mall, to power HVAC systems, which eliminates the mall using peak energy to power the HVAC system (which further reduces grid congestion and, eventually, power plant emissions). 

          You guys in the Valley, perhaps Boston or Denver, you should step up and help bring these affordable solutions to market. The patents all use existing tech in a novel and patented manner to provide the most efficient recycling of energy there is.

          Just sayin (oops, have we banned that phrase yet?). 

  5. By notKit P on September 27, 2012 at 4:45 pm

    “First some hybrids like the Prius are selling well and have been for years.”


    Hybrids are 100% ICE just using batteries to improve the efficiency if the ICE part of the time.  That is the theory anyhow.  More marketing gimmick than fuel savings.  PHEV are not selling well compared to Ford and Chevy full size trucks or the Corollas and Ford Focus, the latter two being in the same ball park for highway mileage. 


    It is not until the power comers from the grid that there will be much reduction in oil use but the power will still come from fossil fuels only the domestic kind. 


    “most of our oil is still coming from out of the country suppliers”


    Most of our oil is domestic.  The US is almost tied with Russia and Saudi Arabia these days. 


    “hydraulic hybrids”


    No matter how you do it, storing energy is not practical compared to storing fuel and converting it to power when the power is needed.  Think of a toy ‘Jack-in-the-box’.  Great concept when Jack pops out on cue.  The more energy you store, the heavier the box to keep it in.  If the net weight of storage weight and engine weight, it lower maybe it is a good idea.


    Since the power industry is going to benefit from the shift in market share, I would like to see companies like the one I work for each buy a few PEV and provide charging stations at work.  Then let employees who live within range drive them home and evaluate them.  When BEV are a good choice for some, we have the practical experience without turning consumers off with Edsels.   At least that is hwo I would do it. 

  6. By MWB on September 28, 2012 at 9:25 am


    Isn’t it nice to have the future Told to us with such certainty? Sounds like a Jedi Mind trick to me!


    Here’s a good run down of some of the other myths being circulated to squash Volt sales that real thinking consumers might find useful.



    One of the things I find amazing is how active the Volt / Leaf /Prius  owners community is becoming. The critical thinking being produced by folks who thought they where just buying a car is very encouraging. Volt drivers in particular have discovered that they have a front row seat of how Super Pacs work to pollute election issues like the US energy policy.


    This is not the energy solution you are looking for… move along and don’t forget to buy some more gas from our sponsor….


    • By Ralph on November 1, 2012 at 9:06 am

      Very well put. I own a volt. However, I educated myself before I bought the car. I have a Kill-A-Watt meter, so I searched for Volt owners using the meters to analyze their charging costs. I averaged my cost for power over a period of 1 year. I came to the conclusion that, given the credit, and my driving style, the extra cost for the Volt would be made up in 4-5 years with gas at 3.60. Well look who is smiling now.

      I know 2 couples who were on the brink of buying one. They kept asking me questions and I referee them to real world sites. Sites where real owners report their experiences. Both couples bought 2013 models and they can’t stop telling me how happy they are.

      These cars are not for everyone. If you drive long distances on the freeway, get a diesel. However, Diesel Car Magazine did name the Volt Best Eco Car. And the Ampera did win the Monte Carlo Alternative Fuel Rally.

      I just realized, I fall into the category of folks (plug in owners) you were talking about. It’s been over a year and I wouldn’t trade this car for the two awesome Sevilles I owned prior. I would just end up with 2 gas hogs.

  7. By Danny Rogers on September 30, 2012 at 6:59 pm

    Everybody is asking: ” Why are there no affordable, long-range electric vehicles? Are certain organizations and industry groups rigging the system to favor their old-fashioned competing products ?” “The public has spoken with a deafening statement. Almost nobody has purchased the recent batch of “new” electric cars. The customer rejection rate is one of the highest for any automotive product in the history of the industry. Why? Because the public is not being given what they are asking for! Many of these groups knew that their over-priced, low-range, non-innovative vehicles would never sell but they wanted the tax breaks and good PR they would get from announcing their efforts.”

    • By Ralph on November 1, 2012 at 8:47 am

      The Chevy Volt is outselling more than 50% of all the car models in the USA. It is outselling the Prius when it had 2 years of sales under it’s belt. Customer rejection rate? That makes the other 50% real turds because they have been around for a much longer period of time than the Volt.

      See my post on the cost of gas in 10 years.

  8. By Ralph on November 1, 2012 at 8:41 am

    Think 10 years from now. China bought 18 million cars last year. 6 million more than we did. Auto analysts say that in 10 years, that figure will be 30 million per year. Extending the math out, that will be 250 million more cars on the road.

    Predictions for India and other second world countries add another 100 million. Add 50 million for developed countries due to population growth and you come up with almost half a billion more cars on the road. In other words, another 50% more cars than today.

    Wonder what gas will cost then? If you think we can drill our way out of that, ask yourself, who will pay for all those drilling rigs, pipelines, ships, refineries, gas stations, and on and on. We will. That is the hidden cost of gas. Gas will go to the highest bidder, just like today. Analysts predict a minimum of $8 a gallon in the USA, but many say $10 is more than likely.

    I already have a Volt. I bought 6 gallons of gas last year. I can always go solar. In 5 years, solar will be worth it. We saw $5.50 a gallon in California after 2 refineries were shut down for a very short period of time. Just think what an additional 1/2 billion more cars will do to the price of gas.

  9. By notKit P on November 1, 2012 at 1:50 pm

    When people talk about saving money I wonder compared to what.


    “It’s been over a year and I wouldn’t trade this car for the two awesome Sevilles I owned prior. I would just end up with 2 gas hogs.”


    It would be hard to find someone who is saving money compared to my wife’s $16 Corolla.  When the price of gasoline increases, then might be the time consider charging batteries. 


    “I can always go solar.”


    True enough!  One can spend $40k to make 40 cents of electricity every hour that the sun shines.  However, the number of cars sold in China and India is not going to affect the cost of producing power in California. 


    The reason not many Volts will ever be sold is simple.  The number of people who can afford a $16k Corolla, Civic, or other quality 5 passenger car is much greater than those who can afford a $40k car.  Of those who can afford a $40k car, most are content to own a Corolla or Civic. 

  10. By Erocker on February 9, 2014 at 4:29 pm

    I think they said the same thing about the personal computers. Good luck on your fortune telling crystal ball career.

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