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Obama Aims To Increase Electric Car Subsidies To $10,000 Per Vehicle

Tesla Model S and Roadster

The Obama Administration’s proposed budget seeks to lift electric car subsidies to $10,000, and to change the current $7,500 tax credit into rebate at point of purchase.

Republican opponents have criticized the proposal on the basis that it’s a tax credit for the rich, as plug-in cars are typically bought by the wealthy. Further, if 10,000 electric cars are sold a year, that would mean $100 million a year in taxpayer dollars. Obama said in his 2012 State of the Union address that he wants to raise taxes for the rich.

A counter argument to the criticism is that the strategy of increased subsidies is aiming to try and get as many electric cars on U.S. roads as possible at these crucial early stages of electric vehicle development, so that an economy of scale and innovation can bring prices down quickly. Also, the subsidy can always be taken off as soon as a critical mass is reached (not that they have been for fossil fuel subsidies, by the way).

The Obama Administration is aiming to help get a million electric vehicles on U.S. roads by 2015, as stated in his 2011 State of the Union address There is a long way to go before that happens. Having said that, typically, when a technology (or anything) starts to grow exponentially, large numbers can be reached pretty quickly. There are countless examples of this in action, from the uptake of mobile phones, to the rise and rise of the world wide web – not to mention greenhouse gas emissions.

Existing electric cars, the Chevy Volt and Nissan Leaf , Tesla Roadster, and new Mitsubishi i, have sold about 20,000 cars combined, so that makes it about 980,000 to go to reach the million by 2015. It seems like a helluva lot to go, and it is, but if electric car numbers double every year for just 4 years, that would indeed make over a 1 million electric cars on the road by 2015.  So it’s not inconcevable that the target could be reached, or a least nearly, if exponential growth proceeds from here on.

No doubt there will be quite a few new electric models to choose from in the coming years, too. The $10,000 subsidy could be great news for the likes of Tesla, which is going into production of it’s all-electric Model S sedan this year, and new falcon-winged Model X SUV next year.

It’ll be interesting to see if electric car numbers double in the next year. If they do, the target is on track. Do you think it will happen, and would a $10,000 rebate make it more likely you would consider buying an electric car?

Image: Tesla Motors, Inc.

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