Source: Clean Cities - Georgia Coalition
Think about your desktop computer, your flat-screen TV, or your smart phone.
At first, they seemed like a novelty. A few years later, everyone had them.
Will electric vehicles be next?
The question is hotly debated among car manufacturers, lawmakers, scholars, and electric vehicle (EV) aficionados. But with so many factors influencing car buyers’ decisions it’s not an easy one to answer.
Until recently, Georgia was poised to lead the way on EV adoption as one of the top states in the country for sales. However, advocates for the technology believe Georgia has been moving backward since last July, when a new law (House Bill 170) took effect that revoked a state tax credit of up to $5,000 and imposed a $200 annual registration fee. Since then, sales of electric vehicles have plummeted.
Rep. Margaret Kaiser, D-Atlanta, last week filed House Bill 877, which would reinstate a smaller tax credit of up to $3,000 for plug-in cars through 2017, and $2,000 through 2019. The tax credits would expire Dec. 31, 2019.
The bill comes as a loose coalition of Georgia utility providers, fuel station builders, EV advocates, waste and logistics industries and automobile manufacturers is lobbying for the creation of a legislative study committee to examine the financial impact of eliminating the tax credit.
“I definitely think there is a role for the state to be involved,” said State Rep. Don Parsons, R-Marietta, who chairs the House Energy, Utilities and Telecommunications Committee and supported HB 170. “The question is how much do you do? What do you do? And how do you impact the people who may never use these vehicles?”
Gas v. electric vehicles
Incentives and fees aren’t the only factors influencing mainstream adoptions of electric vehicles.
A global glut of oil supplies caused average gas prices in the U.S. last week to drop to their lowest level in more than 12 years. The result: electric car sales have slowed, while purchases of sport utility vehicles and pickup trucks have risen.
Elon Musk, the CEO of electric car maker Tesla, said this week on CNN that the EV industry will likely suffer, at least until gas prices rise again.
Another big factor is the sale price of the vehicle, and the ongoing maintenance costs.
The battery life on an electric vehicle is limited and can cost more than $13,000 to replace. But improvements in battery technology are likely to extend battery life significantly in coming years. At the same time, electric vehicles don’t require periodic maintenance like oil changes and don’t have components that can break down on gasoline-fueled cars like transmissions and fuel pumps.
Stanford University Professor Tony Seba believes improvements in batteries will be the catalyst for the changeover to electric vehicles by bringing down ownership costs. He predicts that by 2026, all new cars sold in America will be electric vehicles.
Seba, who studies disruptive technologies, spoke earlier this month at an annual State of MARTA breakfast about electric and self-driving vehicles.
He said companies are investing heavily in the development of cheaper lithium batteries and building mega-factories to ramp up production. These new batteries will be more powerful and increase the range of electric vehicles (which can be 80 to 100 miles for a Nissan Leaf) to more than 200 miles on a single charge.
Right now only luxury auto maker Tesla can offer that kind of range, at a premium price upwards of $71,000. But by 2017 or so, more affordable car manufacturers including GM and Nissan will begin offering these higher-range vehicles, Seba said. Tesla also intends to introduce a car that can travel 600 miles on a charge by 2017.
The median car price in the U.S. today is $31,000.
Electric vehicles tend to be higher-priced than similar gas-powered models. But when EVs drop below a retail price of between $35,000 and $45,000, “then, no gas car above that price will be worth it,” Seba said, because the new breed of electric vehicles will cost only one-tenth of what it costs to fuel and maintain gasoline-powered cars.
Professor Jeremy J. Michalek, who leads the vehicle electrification group at Carnegie Mellon University, thinks a 10-year time frame for going all-electric is too optimistic. Even when all new car sales are electric, it will take decades more for the entire fleet to turn over.
Michalek points out that foreign policies, technology improvements, fluctuating oil prices and other factors will influence EV adoption.
“It is certainly possible electrics will disrupt and take over gasoline,” he said. “But it’s also possible that they won’t.”
Pragmatists embrace EVs
While the number of electric vehicles sold in America and across the globe is growing exponentially, they still represent less than 1 percent of all new vehicles sold worldwide.
Throughout 2014 and early 2015, the number of electric vehicles registered in Georgia each month averaged around 1,000. After the new law took effect, EV sales took a nose dive. In September and October, the last months for which data was available, fewer than 100 new electric vehicles were registered.
“What we’ve done in Georgia is instead of pulling the market forward, we put up barriers to it again,” said Don Francis, executive director of Clean Cities - Georgia Coalition.
Francis said what’s particularly discouraging is that Georgia was just starting to see early adopters who were not just “techies” and pioneering types, but pragmatists for whom electric vehicles made good financial sense.
Lai Chan, a controller for Agnes Scott College, is one of those pragmatists. Chan and her husband both leased Nissan Leafs because of the tax credit, and are now big believers in the technology. When the lease terms of their vehicles expire in 2016 and 2018, respectively, Chan said they will probably look at either a hybrid or another electric car.
But she understands the dilemma her fellow EV owners face.
“Quite a few people I know (who leased electric vehicles) went back to gasoline cars,” Chan said. “They look at gas being so cheap right now and say they’ll wait until the price goes back up before they change again.”
Kaiser's bill to reinstate a smaller tax credit faces an uncertain future, as does House Bill 878, a separate piece of proposed legislation that seeks to reduce from $200 to $75 the annual registration fee for electric vehicles. Going into this year's legislative session, Gov. Nathan Deal, his legislative leaders and Georgia Chamber of Commerce lobbyists stressed the importance of preserving the income from the 2015 transportation funding legislation and giving the law time to take effect before considering any changes.
Rep. Chuck Martin, R-Alpharetta, who first proposed eliminating the tax credit in 2014, has said the 17-year-old incentive served its purpose by stimulating the electric vehicle market. He said it needed to be axed because it was costing the state about $50 million a year.
Parsons, the Republican from Marietta, said Georgia policies should encourage adoption of EV technology, since it would decrease pollution and reduce dependence on foreign oil.
No matter the outcome in Georgia, the policies of a single state are unlikely to have much impact on whether society as a whole embraces an all-electric future, Michalek said.
“I think the only thing the policies can do is speed it up a little bit,” he said.