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Plug-In Hybrid Costs to Stay High, Benefits Modest

Are hundreds of billions in taxpayer subsidies really needed?

by on Dec.22, 2009

Even a small battery pack adds $3,300 in cost.

Costs of plug-in hybrid electric cars are high — largely due to their lithium-ion batteries — and unlikely to decrease drastically in the near future, claims a new report from the National Research Council.

Costs to manufacture plug-in hybrid electric vehicles in 2010 similar to the Chevrolet Volt are estimated to be as much as $18,000 more than for an equivalent conventional vehicle, $14,000 for the battery pack alone. And the cost estimates in the report are incremental manufacturing costs. They do include engineering and overhead costs, or the profits that automakers will try to pass on to customers.

Although a mile driven on electricity is cheaper than one driven on gasoline, it will likely take several decades before the upfront costs decline enough to be offset by lifetime fuel savings.

Subsidies in the tens to hundreds of billions of dollars over that period will be needed if plug-ins are to achieve rapid penetration of the U.S. automotive market.

Worse, even with these efforts, plug-in hybrid electric vehicles are not expected to reduce oil consumption significantly or carbon emissions before 2030.

Research!

The report looks at plug-ins that can operate on electricity for 10 or 40 miles. A theoretical PHEV-10 is similar to the existing Toyota Prius, but with a larger battery. The PHEV-40 is similar to the Chevrolet Volt since it has a larger motor and a much larger battery than the PHEV-10 to get 40 miles of electric range.

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