Automakers seek more U.S. subsidies for electrics

Posted April 14, 2010 at 2:25 p.m.

Dow Jones Newswires | Automakers are pressing the Obama
administration for more government subsidies to spur mass-market sales
of electric vehicles, including new tax breaks for consumers, utilities
and car companies.

The Obama administration has committed billions to electric-car
programs, including aid to auto makers to revamp plants and tax credits
for car buyers.

Industry lobbyists say more government aid is needed if the industry is to achieve President Barack Obama’s goal of putting 1 million electric or plug-in hybrid vehicles on the road by 2015. Auto executives are concerned that unless the government offers more subsidies, electric-car sales could stall because consumers won’t have enough places to charge their cars or will balk at the relatively high cost of the technology.

Auto-industry lobbyists presented a list of proposals to Ron Bloom, a senior Obama adviser on industrial policy, including tax credits for homeowners to install electrical outlets, more money to build public charging stations and additional tax incentives for battery makers and car buyers. Also on the list: Relief from U.S. rules that reduce the credit carmakers get under federal fuel-economy standards for selling electric vehicles.

The requests — outlined in an April 7 letter from top industry lobbyist Dave McCurdy  — reflect concerns that the cars’ high costs and a lack of public places to recharge batteries will limit their appeal among mainstream consumers.

“We have to acknowledge that there’s a little bit of a ‘Field of Dreams’ here — that if we just build the technology that the consumer will buy them,” said Gloria Bergquist of the Alliance of Automobile Manufacturers, a trade group whose members include the Detroit Three and Toyota Motor Corp. “We hope that’s so, but we also need to look at all parts of the equation.”

She said that includes a national energy policy that could increase gasoline prices. The price of gas is a key factor in whether Americans will pay premiums for electric cars. Ideas for raising gas taxes are under consideration in Congress as part of potential energy and climate legislation. The Obama administration has in the past ruled out raising the federal tax on gasoline.

McCurdy, the Auto Alliance’s president, and Michael J. Stanton, who represents a coalition of the major foreign automakers, met with Bloom March 25 to discuss industry concerns about plug-ins and electric cars. Bloom concluded the meeting by requesting industry ideas for policies to ensure plug-ins are a success.

A spokeswoman for the Treasury Department, the agency for which Bloom works, said administration officials “appreciate” the auto industry’s input but declined to comment further.
Providing more aid to the auto industry would carry political risks amid a renewed focus on deficits in Washington and following the government’s bailouts of GM and Chrysler Group LLC.

But automakers are warning U.S. officials that without more government assistance, the move to electric cars could be a non-starter. They point to previous industry efforts to bring advanced-technology vehicles to the U.S. market that failed because of a lack of demand.

Only several hundred full-function plug-in vehicles exist on U.S. roads, according to the Electric Drive Transportation Association, a trade group in Washington. But major automakers including GM and Nissan Motor Co. are planning to roll out electric cars in the U.S. this year, and other major auto makers will follow suit in subsequent years.

The administration has awarded funds from a $25 billion Department of Energy program to help automakers retool plants to build electric cars. And the U.S. will offer a temporary $7,500 consumer tax credit for plug-ins. The administration has also awarded stimulus funds to electric-vehicle component makers and companies that build charging stations.

In their letter, McCurdy and Stanton urged many of those programs be extended, though their requests  didn’t cite dollar amounts. The requests could add up to billions of dollars, though, given the cost of existing programs.

The lobbyists also criticized an aspect of the administration’s new fuel-economy standards, released last month, that will require automakers to eventually score against electric cars carbon dioxide emitted from electric-power plants. The change will make it harder for automakers to meet fuel-economy targets that call for a U.S. fleet-wide average of 35.5 miles per gallon by the 2016 model year.

“This policy discourages future production of plug-in electric vehicles by making automobile manufacturers responsible for the electric energy mix of the country or a given state,” McCurdy and Stanton wrote.

The administration has said that it is necessary to recognize that there are carbon emissions associated with producing electricity.


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