EV Bills On The Hill
By EV World
22 May 1999 -- Sometimes you have to take two steps backward to take one step forward.
That axiom seems all the more appropriate given recent developments in the electric vehicle industry. While EdisonEV is in the process of shutting its doors and Honda has ceased production of its EV Plus electric car, there are signs that the US Senate is getting serious about EVs and alternative fuels. Four Senators, lead by John D. Rockefeller (D-WV) and Orrin Hatch (R-UT), along with Richard Bryan (D-NV) and Michael Crapo (R-ID) have introduced the Alternative Fuels Promotion Act of 1999.
Merged EVAA & ETC Help Form Bills
The recently merged Electric Vehicle Association of the Americas (EVAA) and Electric Transport Coalition (ETC) were instrumental in helping formulate and encourage key provisions in this bill, as well as a related bill sponsored by Georgia Congressmen Collins and Lewis (See also: Gary Floyd Interview).
Kateri Callahan, the newly appointed director of the combined organizations now known as the EVAA, briefed EV World on the background of both bills. She also explained the reasons for the recent merger, citing recent "consolidations" in both of auto and electric utility industries and the need to present a stronger, more-united voice in Congress.
"There was a significant overlap in the membership," Callahan stated. "Both organizations enjoyed the strong and full support of the international automotive community and electric utilities from across the United States. The Electric Transportation Coalition also had a significant presence of state and local governments. and academic institutions who were supporting the use of electricity as a transportation fuel. The EVAA enjoyed a significant representation in component suppliers to electric transportation modes, as well as entrepreneurial and very young firms in the industry. So, there was good synergy and overlap in the membership."
According to Callahan, prior to the merger the ETC had some 62 members, the EVAA, approximately 39. The new EVAA has some 80 members, reflecting the obvious overlap in memberships.
"The members of the two organizations thought the industry had grown up enough, and that there was a significant enough need to make sure the messages were the same in all of the critical aspects of the industry: policy, public information, conferences and market development, that we wanted to bring it all under one umbrella."
Briefly, the EVAA's main office is now located in Washington, DC, the original home of the ETC which was founded in 1989. The original San Francisco office of the EVAA will be maintained in recognition of the importance of the State of California in the development and deployment of electric vehicles. The office will be reduced in size and its primary focus will be on the organization of the Electric Vehicle Symposiums and NAEVI, as well as public outreach, part of what Callahan referred to as its original "charter."
Callahan said the Washington office would "beef up" its staff somewhat with its primary focus on policy development activities, organizational administration, and communications activities.
Callahan wanted to talk about the Collins-Lewis bill first because it has been, in her words, "in the hoper longer."
Introduced by two Georgia Congressman, the Collin-Lewis bill incorporated a number measures originally formulated and proposed by the original ETC, two of which have already been implemented in other legislation, Callahan explained.
"There were six different actions that our association...identified. The auto makers sat down with the utility industry folks and sat down with folks on the Hill (US Capitol) and said, 'What do we need to do and can the federal government do drive the industry. You tell us. What are the critical needs and where can we fill some holes.'"
What came out of these discussions were a number of tax incentives which found their way into the Collins-Lewis bill. Callahan enumerated them for EV World:
Make current 10% tax credit on EV a flat $4000 tax credit. Extend application of credit to 2008 instead of 2004 deadline. Allow tax-exempt government bodies to apply tax credit as "buy-down" mechanism to reduce cost of EV acquisition. Extend current $50,000 tax deduction enjoyed by all other AFV buses to electric buses, instead of the current $4,000 limit applicable to EVs.
The Collins-Lewis bill, if passed, would apply to battery-powered EVs, fuel-cell EVs and hybrids which must be plugged in to recharge their batteries, or what is considered a "charge-depletion" hybrid.
Ironically, however, "charge-sustaining" hybrid-electrics, like the soon-to-be-introduced Toyota Prius and Honda VV, would NOT qualify under the current bill. Callahan explained this dichotomy as an artifact of the industry's original definition of what constituted an "electric vehicle." That early 1990s-vintage definition envisioned EVs being powered by electricity stored in batteries onboard the vehicle. The pace of hybrid and fuel cell development wasn't imagined at that time.
The Effectiveness of Tax Incentives
According to Callahan, the auto makers have long argued that they needed at least $10,000 per vehicle in various government incentives (slightly more for battery-EVs) in order to entice sufficient numbers of buyers for EVs to make building electric vehicles a profitable business.
But in the case of the State of Arizona, which has recently passed incentives that are the most generous in the nation and which Callahan said meets and exceeds the $10,000 threshold, sales of EVs remain slow. She attributes this, in part, to the limited number of EV choices available. She thought there were only three choices available in Arizona: the GM EV1, the Ford Ranger EV and Chevy S-10 EV, the latter two tending to appeal more to fleet buyers than the average consumer. And in the case of the EV1, she thought there were only 3 dealers in the entire state, two in Phoenix and one in Tucson. "You're not going to get large volume (of sales) on one model selling in three dealerships," Callahan stated.
She also observed that while the current EV charging infrastructure in Arizona is adequate for the number of vehicles currently on the road, it would need to be significantly expanded if large numbers of EVs began to be leased or sold in the state.
Even if the federal government and other state legislatures followed Arizona's sterling example, there is still the question of EV availabilities. At present, only the GM EV1 is available for lease to consumers and this only in parts of two western states.
Callahan thinks the car makers are trying to grow the market. "I think Ford is doing what I would consider to be a very good job in getting the vehicles out and around the United States. They have dealerships that have been set up... in states across the country that are ready, willing and able to provide vehicles." She guessed the number of EV-ready Ford dealerships at about 45.
"General Motors, I think, is doing its best to meet demand, satisfy demand and build demand for EV1s. You have a couple of problems there...the advanced batteries are just being introduced into the vehicles by General Motors and Ford. It's a new technology, an immature technology, so there are going to be price premiums associated with that. It's something they have to... work on, study, test and evaluate before they can put out to customers."
"There's lag time there," Callahan went on to explain, "that we wished didn't exist, but it does and I think, in the end, we'll all be grateful it's a product that finally goes out into the consumers hand is one that's good. None of us can risk having people have bad experiences in electric vehicles and not be satisfied with the product. That will spoil the market faster than anything. I hate to counsel patience, because it's not in my nature, but this is something that I've seen is going to take some time. But what's encouraging is that the people who are receiving the vehicles and are able to get them, love them."
Callahan pointed to the success of the RAV4 EVs and GM EV1s being driven by employees of Georgia Power in Atlanta. In the case of the EV1s, GM went outside of its West Coast-only policy and made a number of them available in Georgia. "People are clamoring to have the opportunity to lease them for one month. People love them once they get their hands on them. It's a education exercise, a buying-down-the-cost exercise."
"That's something I haven't touched on yet. You know the car makers aren't making any money on these vehicles yet. They are, in fact by their accounts, losing money on every copy they build. Even if demand is there, they can't turn a profit on the vehicle. Why would they want to satisfy demand? That's no acting in a rational manner from a business perspective. That's why the incentives are so critical. It helps them make their business case."
While the Rockefeller-Hatch bill does provide some incentives for EVs, its primary objective is, as it's entitled, the "Alternative Fuels Promotion Act", Callahan explained.
"It is something that the other alternative fuels have been looking for for a couple of years," she stated. "The incentive is a fifty cents gallon equivalent tax credit for their fuels. It applies to all fuels with the exception of ethanol which already enjoys... an equivalent tax credit." Callahan explained that alternative fuels include natural gas, propane, M-85 (85% methanol, 15% gasoline). "It's basically fuels that are non-petroleum-based."
Callahan provided EV World with a little background on the origins of the bill, parts of which were derived from an earlier piece of legislation sponsored by Senator Jay Rockefeller who represents the state of West Virginia where the mining of coal is still an important sector of the local economy. According to EVAA's director, the senator became interested in alternative fuels because methanol can be derived from coal. In addition to his being a long-time member of the US Senate Energy Committee, "he's a believer in cleaning up urban air quality problems, in getting us weaned of foreign oil. This is something he is philosophically attracted to and has been incredibly helpful over the years."
Rockefeller apparently also insists that all alternative fuel interests work together as the price of his sponsoring these bills. "He wants legislation that is comprehensive," Callahan said. "He's not an advocate of methanol.. or electric vehicles, per se. He's a advocate of alternative fuels and finding the future."
Senator Hatch's co-sponsorship of the bill seemed to have come about as a result of efforts by natural gas interested in his home state of Utah, Callahan thought. "You'd have to talk to them, " she said.
Chances of Passage
Just because EV and alternative fuel bills are introduced in the US Congress, does not guarantee their passage into law, nor does it mean they would receive funding, even if they did pass.
Callahan doesn't think either bill stands a chance of passage on its own. "There's not broad enough interest in Congress and they're not big enough bills." Instead, she thinks pieces of both bills could become law if they can be "crafted" to a larger tax bill. The trouble is, there doesn't seem to be much action in Congress to move forward with a comprehensive tax bill, at least not this year. "I talk to some people and they think the chances of an appropriate tax bill are good this year and I talk to others and they say, 'forget it, you're not getting anything this year.'"
If the odds seemed stacked against these measures, Callahan pointed out that the industry has been successful in getting pieces of legislation passed including a provision allowing single-occupant AFVs access to HOV lanes and exemption of EVs from the luxury tax. "We've been ticking off pieces of this thing for years now. We think the odds are very good that we are going to get one or more provisions... if a tax bill moves."
Even if it takes time to pass EV-friendly laws, Callahan says the Congress is being educated about alternative fuels. There are already two renewable energy and sustainable development coalitions within Congress. In addition, the Clinton Administration has introduced its own EV tax incentives. "The more places this bubbles up," Callahan said, "the better our chances are, and the more people who have an interest, even if they're not looking for exactly what we're looking for, the chances of something good happening get greater."
Closing the Incentives Gap
Harkening back to an earlier statement she made that the amount of incentives car makers wanted to see before they seriously committed to building AFVs, Callahan didn't think the federal government would be willing to fund the $10,000 Detroit was looking for. Instead she said, we'd have to aggregate credits and incentives from federal, state and local programs.
She pointed to Southern California's South Coast Air Quality Management District as an example. SCAQMD adds a $5000 rebate on top of the 10% federal tax credit which brings total credits close to the $10,000 figure. They also add available funds from several other sources such as the California Energy Commission. Efforts like this are helping close the gap between the cost of a conventional vehicle and an EV.
Callahan acknowledges that efforts like this are only stop gaps until the industry can get through what she calls, "The Valley of Death of Market Introduction" where building even small numbers of EVs is unprofitable for car makers. "It is not rational for any business to produce a product whereby it loses money. People are looking to turn a profit."
"We've got to get the price points right so people will experience the technology, will like it, will demand it, and will buy it in enough volume where prices can start to come down. (Where car makers) can see the light at the end of the tunnel. That's what we're looking for. And if we don't have it, if the auto makers are only told they have to build these things to meet requirements, and they're the ones that take all the risk and the total loss, there's no motivation for them to continue to act that way. Why would they build it if they are going to lose money and they don't preceive a market for it and it costs them even more money to develop the market."
"It's a question of partnerships, of spreading the risk around," Callahan stated. "If we can do that, we all win. And if we can't, we might as well look at shelving electric vehicles for the next several years, because its not going to happen without the full participation of the government, the utility industry and the autos."
If Wishes Were EVs
When asked what the ideal EV incentive program might look like, if she had a free hand in writing it, Callahan replied she's not even bother with tax credits. She'd give EV buyers a straight rebate similar to SCAQMD program. "You get a rebate, you'd get it handed to you." In addition, EV buyers would get a sticker when they bought their electric vehicle that allows you to park in any public parking place free of charge for the first year. It would also allow you to go in any HOV lane.
Callahan would also put in place a very large public education program that would include public service announcements EV owner testimonials. She'd also provide funds to insure that every Interstate highway rest stop would have a public EV charger which would allow EV owners to venture future afield.
Given omnipotent powers, Callahan would also give the US Post Office all the funds it needed to buy the 6,000 electric postal vehicles it has said it wants to place in service. She'd also provide comparable funds for the Department of Energy to be able to follow suite. A third part of money would go to the Department of Defense so it could buy AFVs for its bases.
"It's getting information out. It's getting vehicles out. It's buying down the cost."
Letting Congress Know What You Think
Callahan said that if Americans want to participate in getting EV and alternative fuel bills passed, she said they should write their represenatives in Congress at the following addresses:
|To Write Your Senator:|
Washington, D.C. 20510
To Write Your Congressman:|
House of Representatives
Washington, D.C. 20515
She also offered to assist interested parties by providing them with sample letters, as well as the telephone numbers of their congressmen and senators. Send email to: email@example.com.
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