EV Incentive Thoughts
As I wrote my last article on Electric Vehicles I got thinking; the PHEV works for me because the car we bought was near enough to our price range, and thanks to the improved efficiency and rebates, it eliminated the cost differential over my existing vehicle.
Furthermore, as I analyzed the situation, one conclusion I came to was that, even if the EV range weren't enough to cover my daily needs, the better fuel economy of the hybrid mode alone still has the potential to square away the difference, while improving my emissions.
But, the saving are also not obvious.
While I disagree with Doug Ford's scrapping of Ontario's Green Energy program. I can't help but understand how people could sympathize with his claim that the credit Ontario gave on EVs was only helping the rich out.
I'm not rich, but my PHEV is basically one of the cheapest on the market. And it was by no means "cheap".
Another component of the overall equation is that hybrids use battery packs like a BEV. Just on a MUCH smaller scale. Which in turn means that hybrid sales promote R&D and help advancement for all greener vehicles using battery tech.
And, with that in mind, if governments are truly interested in impacting the global automotive carbon footprint, they really need to extend the rebates into the realm where the average person can actually afford them. Which is in regular hybrids.
On top of that, they should be investing in educating people on the benefits of hybrid and other electrified drive trains.
I had to work it out myself. But, I'll spare the nitty gritty details. Everyone was shocked at the low mileage on our trade in. But the fuel usage, very optimistically averaged out to $133 a month. Which, opens up almost $10k of wiggle room to consider a more fuel efficient vehicle. Obviously, with the fuel consumption of the new car eating into that. But, it also meant an extra $2500 for a lower range PHEV or $5000 for a higher range one or a BEV.
Where all of this leads me is, governments need to educate people on this. I'm sure more people would switch to at least a hybrid, even without incentives, if determining the actual cost were made more transparent. And none of this considers additional sources of savings like insurance and regular maintenance.
But, the real problem is rebates need to be extended to hybrids. And, to encourage adoption, and discourage exploitation, some portion of the rebate should be restricted to those trading in an older gas vehicle.
Giving a $5000 rebate to people buying $45k cars once a year with no stipulation on trading in an ICE vehicle, really is kind of silly. Especially given widespread availability issues on all electric vehicles. The industry really needs the push to start where they can actually deliver the volume. At the moment that is hybrids, and maybe PHEVs.
I think the once a year credit should go like this:
Once a year a purchaser can get 1 rebate as follows:
The price cap helps prevent abuse by those with the means while extending the rebate to those buying hybrids. This acknowledges that while these have no all electric range, they are nonetheless lower emissions vehicles and they are within the range of a large enough group of people to make an impact.
By extending the same base rebate to all classes of greener vehicles, it doesn't unilaterally promote automakers to produce Pure BEVs which they currently can't even stock sufficiently, despite being out of the price range of the average consumer.
And the final pillar further locks half of the rebate money away for people actually improving their carbon footprint. So, someone trading in their Tesla for a newer Tesla would get nothing. Whereas someone trading in a Corvette would still get some rebate in acknowledgement of them trading in their gas guzzler.
At the same time, someone going from an Elantra to a Hybrid Sonata would get a full $5k. Even though it is "just" a hybrid.
I would think that such an approach would see a sharp increase in the number of greener vehicles sold, as it would extend rebates to a larger audience. An audience who may actually need the rebates. Beyond that, it would also encourage people to gradually purchase increasingly more efficient cars.
At the moment, we're trying to leapfrog too far technologically. While we can produce cars that go 400KM+, we cannot produce enough of them for the meagre demand which exists at the moment. And, that range comes with huge problems when it isn't long enough. And a price tag which cuts off most people automatically.
So, I feel like the current incentives aren't doing anything to energize the green vehicle industry in Canada. Nor substantively impact the environment.
In fact, given stock levels, it certainly doesn't seem infeasible to me that they would sell out, even without the incentives. I mean, I love that I got one. And I may not have bought my PHEV without it. But even the PHEVs aren't sticking on the lot long. And the rebate isn't nearly as shiny as the one on BEVs.
A reasonable strategy from the government in tandem with this would a mandate that looks like this:
Honestly, with this approach, rebates and deltas may actually be able to go lower to save on tax dollars.
Where hybrids are offered on multiple trim levels, the gap is already less than $5k in some cases. For instance, the Hyundai Sonata Hybrid is only $5100 more than the base model. And it is much better equipped than the base model. In fact, unsurprisingly, as the Hybrid is the Preferred trim, it is otherwise most similar to the Preferred trim in the base variant. And it is only about $1000 more expensive than that model.
So, it seems like Hyundai could make a Hybrid "Essential" variant, and even charge $2500 more and turn a tidy profit on the whole affair. And, if they can do that on the Sonata, it really doesn't seem like it would be infeasible to do so across the whole lineup. In fact, doing it across the entire lineup would like bring efficiencies from ramping up production of such engines and increase either their ability to bring the costs down or just line their pockets more.
Frankly... with that in mind it seems an awful lot to me like if the government simply offered a $1000 rebate on hybrids, and a further $1500 on ICE trade-ins for hybrid or first time car buyers, then give Hyundai a few years to retrofit hybrid engines across the lineup, and they could kill off their entire ICE lineup completely.
And, if Hyundai can do that, I find it hard to believe that others couldn't pull off the same feat.
Similarly, the Niro from Kia only has Hybrid, PHEV and BEV models. And the PHEV starts off in the EX trim. The Hybrid Niro in the EX trim is only $6k less. That is already, just $1k difference between those 2 trims from that proposed $5000 rebate to eliminate the gap. Given a few years, especially with Hybrids as the lowest common denominator across the board, and that gap should easily shrink.
And as I suggested on the current state of BEVs... The Niro BEV EX trim is more like $11k away from the PHEV, so that clearly needs some time. But, my plan allows for that.
This would allow forced adoption of vehicles based on battery tech on a wide scale. Which in turn would pump more consumer money into the market which would stoke both competition and development. And would have a much more immediate impact on national automotive carbon emissions.
Right now, automakers aren't competing against each other. They don't need too. Even if their vehicles aren't priced competitively or aren't as feature rich. The lack of availability means that they will sell out as well. A person will only wait so long on a Tesla Model 3 before they break and buy a Kona EV instead.
They are really just competing for the government rebate to further cement ensure those sales. And limited stock just ensures that emissions aren't going down at the rates that they could.
Furthermore, as I analyzed the situation, one conclusion I came to was that, even if the EV range weren't enough to cover my daily needs, the better fuel economy of the hybrid mode alone still has the potential to square away the difference, while improving my emissions.
But, the saving are also not obvious.
While I disagree with Doug Ford's scrapping of Ontario's Green Energy program. I can't help but understand how people could sympathize with his claim that the credit Ontario gave on EVs was only helping the rich out.
I'm not rich, but my PHEV is basically one of the cheapest on the market. And it was by no means "cheap".
Another component of the overall equation is that hybrids use battery packs like a BEV. Just on a MUCH smaller scale. Which in turn means that hybrid sales promote R&D and help advancement for all greener vehicles using battery tech.
And, with that in mind, if governments are truly interested in impacting the global automotive carbon footprint, they really need to extend the rebates into the realm where the average person can actually afford them. Which is in regular hybrids.
On top of that, they should be investing in educating people on the benefits of hybrid and other electrified drive trains.
I had to work it out myself. But, I'll spare the nitty gritty details. Everyone was shocked at the low mileage on our trade in. But the fuel usage, very optimistically averaged out to $133 a month. Which, opens up almost $10k of wiggle room to consider a more fuel efficient vehicle. Obviously, with the fuel consumption of the new car eating into that. But, it also meant an extra $2500 for a lower range PHEV or $5000 for a higher range one or a BEV.
Where all of this leads me is, governments need to educate people on this. I'm sure more people would switch to at least a hybrid, even without incentives, if determining the actual cost were made more transparent. And none of this considers additional sources of savings like insurance and regular maintenance.
But, the real problem is rebates need to be extended to hybrids. And, to encourage adoption, and discourage exploitation, some portion of the rebate should be restricted to those trading in an older gas vehicle.
Giving a $5000 rebate to people buying $45k cars once a year with no stipulation on trading in an ICE vehicle, really is kind of silly. Especially given widespread availability issues on all electric vehicles. The industry really needs the push to start where they can actually deliver the volume. At the moment that is hybrids, and maybe PHEVs.
I think the once a year credit should go like this:
Once a year a purchaser can get 1 rebate as follows:
- $2500 for buying a hybrid, PHEV or EV under $47,500 (after which, prorated until hits $50k). Perhaps adjustable upwards for larger vehicles (minivans and SUVs could possibly be eligible for a larger cap). A cap may also be determined for a minimum rated fuel efficiency by class of car to ensure that automakers aren't cutting corners just to be able to offer the rebate.
The price cap helps prevent abuse by those with the means while extending the rebate to those buying hybrids. This acknowledges that while these have no all electric range, they are nonetheless lower emissions vehicles and they are within the range of a large enough group of people to make an impact.
By extending the same base rebate to all classes of greener vehicles, it doesn't unilaterally promote automakers to produce Pure BEVs which they currently can't even stock sufficiently, despite being out of the price range of the average consumer.
And the final pillar further locks half of the rebate money away for people actually improving their carbon footprint. So, someone trading in their Tesla for a newer Tesla would get nothing. Whereas someone trading in a Corvette would still get some rebate in acknowledgement of them trading in their gas guzzler.
At the same time, someone going from an Elantra to a Hybrid Sonata would get a full $5k. Even though it is "just" a hybrid.
I would think that such an approach would see a sharp increase in the number of greener vehicles sold, as it would extend rebates to a larger audience. An audience who may actually need the rebates. Beyond that, it would also encourage people to gradually purchase increasingly more efficient cars.
At the moment, we're trying to leapfrog too far technologically. While we can produce cars that go 400KM+, we cannot produce enough of them for the meagre demand which exists at the moment. And, that range comes with huge problems when it isn't long enough. And a price tag which cuts off most people automatically.
So, I feel like the current incentives aren't doing anything to energize the green vehicle industry in Canada. Nor substantively impact the environment.
In fact, given stock levels, it certainly doesn't seem infeasible to me that they would sell out, even without the incentives. I mean, I love that I got one. And I may not have bought my PHEV without it. But even the PHEVs aren't sticking on the lot long. And the rebate isn't nearly as shiny as the one on BEVs.
A reasonable strategy from the government in tandem with this would a mandate that looks like this:
- At launch, the rebates exist. No other changes implemented at this stage.
- Within 5 years, no vehicle can be sold unless there exists a hybrid or some other green alternative for the same make, model and trim, where the price difference is $5k or more from the ICE equivalent.
- This effectively creates scenario where anyone trading in an ICE vehicle could upgrade to a greener alternative, effectively for free.
- 5 years after that, ICE vehicles are prohibited without a permit, and all makes, models, etc... must offer a PHEV or equivalent option which costs no more than $5k more than a similarly equipped hybrid. Hybrids no longer qualify for rebates.
- Again, this effectively means anyone upgrading from a hybrid or ICE engine gets a free upgrade to a PHEV.
- 5 years after that, hybrids are lumped into that banned category with ICE engines where a permit is needed. And now a BEV or alternate renewable energy source engine must be offered for no more than a similarly equipped PHEV (or equivalent) drivetrain vehicle. PHEVs no longer qualify for rebates.
- 5 years after the, the rebate program would be phased out completely.
Honestly, with this approach, rebates and deltas may actually be able to go lower to save on tax dollars.
Where hybrids are offered on multiple trim levels, the gap is already less than $5k in some cases. For instance, the Hyundai Sonata Hybrid is only $5100 more than the base model. And it is much better equipped than the base model. In fact, unsurprisingly, as the Hybrid is the Preferred trim, it is otherwise most similar to the Preferred trim in the base variant. And it is only about $1000 more expensive than that model.
So, it seems like Hyundai could make a Hybrid "Essential" variant, and even charge $2500 more and turn a tidy profit on the whole affair. And, if they can do that on the Sonata, it really doesn't seem like it would be infeasible to do so across the whole lineup. In fact, doing it across the entire lineup would like bring efficiencies from ramping up production of such engines and increase either their ability to bring the costs down or just line their pockets more.
Frankly... with that in mind it seems an awful lot to me like if the government simply offered a $1000 rebate on hybrids, and a further $1500 on ICE trade-ins for hybrid or first time car buyers, then give Hyundai a few years to retrofit hybrid engines across the lineup, and they could kill off their entire ICE lineup completely.
And, if Hyundai can do that, I find it hard to believe that others couldn't pull off the same feat.
Similarly, the Niro from Kia only has Hybrid, PHEV and BEV models. And the PHEV starts off in the EX trim. The Hybrid Niro in the EX trim is only $6k less. That is already, just $1k difference between those 2 trims from that proposed $5000 rebate to eliminate the gap. Given a few years, especially with Hybrids as the lowest common denominator across the board, and that gap should easily shrink.
And as I suggested on the current state of BEVs... The Niro BEV EX trim is more like $11k away from the PHEV, so that clearly needs some time. But, my plan allows for that.
This would allow forced adoption of vehicles based on battery tech on a wide scale. Which in turn would pump more consumer money into the market which would stoke both competition and development. And would have a much more immediate impact on national automotive carbon emissions.
Right now, automakers aren't competing against each other. They don't need too. Even if their vehicles aren't priced competitively or aren't as feature rich. The lack of availability means that they will sell out as well. A person will only wait so long on a Tesla Model 3 before they break and buy a Kona EV instead.
They are really just competing for the government rebate to further cement ensure those sales. And limited stock just ensures that emissions aren't going down at the rates that they could.
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