High costs underpower electric vehicle surge
As state leaders push more drivers to buy electrified vehicles, their most powerful incentive is tied up before the Oregon Supreme Court.
Oregon was one of nine Northeast and West Coast states that released a Multi-State Zero Emission Vehicle Action Plan for 2018-2021 on June 20. It recommends 80 market-enabling actions to rapidly increase mainstream consumer adoption of zero-emission vehicles.
Even before that, the state has long encouraged the use of electrified vehicles. Gov. Kate Brown has even announced a goal of increasing the number of all-electric vehicles on the roads from about 16,000 by the end of 2017 to 50,000 by the end of 2020.
But a generous instant-rebate program approved by the 2017 Oregon Legislature was challenged before the Oregon Supreme Court. The funding source — a .5 percent tax on new-vehicle sales — was intended to raise over $12 million a year, enough for over 4,000 annual rebates. But the American Automobile Association (AAA) and the Oregon Trucking Association argued the revenue from such a tax can only be spent on road projects. Although the court heard oral arguments in March, it has not yet issued a ruling, or said when it will.
Because of the uncertainty, the state has only received around 550 applications so far, a mere fraction of what it had hoped to fund.
"If the court approves the funding source, we'll publicize the program a lot because we're very excited about it. If the court rules against it, the Legislature will have to decide what to do next," said Rachel Sakata, rules coordinator for the Oregon Department of Environmental Quality, which administers the program.
The importance of such financial incentives was revealed last Monday when the Pacific Northwest Automotive Writers Association named the 2018 Chevy Bolt the Northwest Affordable Battery-Electric Vehicle of the Year. The group chose the Bolt after a day-long comparison of 18 current electrified vehicles the previous week. They included all-electric vehicles, hybrids that add electric motors to gas engines to improve mileage, and plug-in hybrids that will go a certain distance on electricity alone when fully charged before switching over to hybrid power.
The sixth-annual Drive Revolution was held on June 21 at the Pearson Air Museum in Vancouver.
The Bolt is an engineering marvel. A compact hatchback, it will go up to 238 miles on a full charge of electricity. When it was released last year, Chevy was credited with beating Tesla to the market with the first affordable all-electric car with a range of more than 200 miles.
But affordable is a relative term. The Bolt begins at $36,620, which is far more than comparably equipped gas-only compact cars produced by other manufacturers. In fact, all electrified vehicles cost more than their traditional counterparts, primarily because of research costs and the high price of large battery packs.
The price difference helps explain why all-electric vehicles accounted for just about 1 percent of all nationwide new car sales last year. Hybrids and plug-in hybrids aren't selling much better.
Advocates says prices will fall and sales will grow because of pending breakthroughs in battery technologies and economies of scale as production increases. But until then they argue that financial incentives are still important, which is why the state authorized up to $5,000 for the purchase or lease of new and used electrified vehicles, depending on battery size and household incomes. But the delay in funding the rebates is undermining Oregon's electrified vehicle sales goals.
Rebates intended to support greenhouse goals
Oregon is pushing electrified vehicles to help meet its ambitious greenhouse gas reduction goals to fight climate change.
According to the state, transportation is responsible for more than 30 percent of Oregon's energy consumption and over 35 percent of our greenhouse gas emissions. But electrified vehicles produce far fewer emissions — especially all-electric vehicles in the Northwest, where the energy mix to recharge the batteries includes clean hydroelectric and other renewable sources, along with coal and natural gas.
The state has been a national leader in the sale of electrified vehicles. Nissan chose Oregon along with California to release the Leaf — the first mass-produced all-electric car — in large part because of the state's environmental reputation. Portland-based PGE and Portland State University partnered with Nissan on the release, creating an electrified vehicle research program that included a collection of charging stations at PSU dubbed Electric Avenue. It has since been relocated outside PGE headquarters at the World Trade Center on Southwest First Avenue and Salmon Street.
The state and PGE have also supported the installation of additional public charging stations in the region and along the West Coast to encourage people to buy electric vehicles. Range anxiety — the fear of running out of electricity on the road — is another major reason why people don't buy them.
Congress has also encouraged people to buy electric vehicles by offering a tax credit of up to $7,500 on the purchase of new ones. Although potentially sizable, it is fully available only to people who owe that much in federal taxes for the year they make the purchase.
The Oregon Legislature went further in 2017 with the instant rebate program — but its fate is unclear.
Advocates say incentives still needed
Although the Multi-State Zero Emission Vehicle Action Plan announced on June 20 has many recommendations for encouraging the purchase of electrified vehicles — including more public charging stations and public relations campaigns — none is likely to be as effective as financial incentives. This is especially true as long as gas prices are relatively low, which increases the amount of time it takes for higher-priced electrified vehicles to pay for themselves.
In fact, the price differences can be startling. According to numerous reports, the cheapest new car sold in America these days is the 2018 Nissan Versa, a subcompact sedan that starts at $11,900. But the cheapest electric car is the Smart ForTwo coupe, costing more than twice as much at $23,900, not including federal and state incentives.
More direct comparisons are also revealing. The 2017 Volkswagen e-Golf tested by the auto writers starts at $30,495. The gas-only version starts at $19,895. Federal and state financial incentives could all but eliminate that difference — but only if they are available and could be fully used.
Because their battery packs are smaller, the price differences between hybrids, plug-in hybrids and their gas-only counterparts are not as great, however.
For example, the auto writers tested a new compact hybrid from Honda called the Insight. It is based on the current Civic, starts at $22,830 and is EPA rated at 55 miles per gallon in town and 49 on the highway. The base 2019 Civic starts at $18,940 and is EPA rated at 28 mpg city and 40 highway. The initial cost difference could be more than eliminated with the federal tax credit and state refund — and the gas savings will increase over time.
The price difference for plug-in hybrids is greater because of the additional batteries that provide the electricity-only power.
For example, the plug-in version of the 2018 Chrysler Pacifica minivan starts at $39,395, while the gas-only version starts at $26,995. The credit and rebate could close that gap considerably. And the gas savings could be substantial. The plug-in version can go up to 33 miles on electricity alone— more than most drivers travel every day. After that, it switches over to conventional hybrid mode, where it averages 32 mpg, 10 more than the gas-only version.
Fuel savings like that help explain while the auto writers named the 2018 Chrysler Pacific both the Northwest Green Vehicle of the Year and the Best Family-Sized Plug-In Hybrid.