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USA: Incentives Needed to Drive EV Sales

Despite being in the midst of a financial apocalypse, California continues to find money to support the sale of electric vehicles. The California Air Resources Board just approved an additional $27 million in incentives to spur sales of hybrid and electric cars and trucks. The car rebates ($2,500 per vehicle) will put the price tag of the Leaf and Volt a bit closer to the price of comparable conventional models.

The high cost of being an early plug-in electric vehicle adopter has been one of the factors limiting vehicles thus far. As shown below, according to Pike Research’s consumer survey data, the optimal price point for selling a PEV where consumers would feel that they were neither too cheap nor too expensive is $23,750, which is $10,000-$15,000 or so less than current PEV price tags. It will likely take a few years to get there, once the cost of lithium ion batteries (which can add as much as $10,000 to the cost of a vehicle) goes down appreciably. According to DOE Secretary Steven Chu, that could take up to 10 years.


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