NSF: Infrastructure Subsidies, Not Tax Credits, Will Spur EV Sales

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“With more research and incentives, we can…become the first country to have a million electric vehicles on the road by 2015,” said President Barack Obama in the 2011 State of the Union address. Currently, the United States barely made it to a quarter of those sales, and it’s not due to a lack of research or incentives. According to a new study by the National Science Foundation, the investment of those incentives were pointed in the wrong direction, and never led to any increase in the infrastructure that gasoline has enjoyed since the 1920s.

As of late 2014, Americans have purchased little more than 250,000 fully electric vehicles since 2010, since they began to be fully supported by auto manufacturers doing business in the United States.

The targets set out by the administration, shown in the table below,  at once wildly overshot — and wildly undershot — the reality of the electric vehicle landscape in 2015.

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Fisker, for example, for all intents and purposes, no longer exists. Nissan was expected to be the sales leader with the Leaf at 25,000 units a year, ramping up to 100,000 per year last year. Nissan had a landmark year in Leaf sales in 2014, but fell short of the government’s sales projections by 70,000 cars.

Similarly, estimates on Chevrolet Volt sales were staggeringly incorrect, from the very first year of production. By year two, the government estimated that Volt sales would ramp from 15,000 the first year up to 120,000 cars per year every year thereafter. Chevrolet never managed to sell more than 1/5th that estimate in the last five years, and in 2014, that number fell to fewer than 20,000 cars.

Meanwhile, the government was plowing investment into companies that were ostensibly supposed to support 1.2 million electric cars by this year. Battery manufacturing and electric motor manufacturing sopped up $2 billion worth of grants.


(Image Credit: Thinkstock)

Secondarily, the Recovery Act provided generous tax incentives for consumers to purchase electric vehicles, both at the national and the state level. Tax credits of $2,500 to $7,500 per electric vehicle (depending on the battery capacity) and $4,000 per vehicle for electric conversions were thought to be on the verge of spurring an EV revolution. President Obama also proposed transforming the existing $7,500 EV tax credit into a more accessible and even more attractive rebate that consumers could apply right at the time of purchase.

Yet, as the National Science Foundation points out in a new study, we had a chicken and egg problem. Despite the Department of Energy noting that “infrastructure barriers must be addressed to achieve large-scale market introduction,” the DOE’s One Million Electric Vehicles By 2015 status report only vaguely indicates how 1.2 million proposed electric vehicles in the United States were going to be charged anywhere but at home.

Four years later, the DOE blames the high cost of electric vehicles for their lack of acceptance by American consumers. “While the market is growing quickly,” said the DOE’s  eputy Assistant Secretary for Transportation Rueben Sarkar, “additional cost reduction of electric vehicle technology is required to directly compete on a cost basis with conventional vehicles.”

But that completely ignores the fact that an American consumer can go to just about Nissan dealer in America and buy one of the most plentiful electric vehicles — a used Nissan Leaf — for anywhere between $12,000 and $15,000, making it very competitive with a similarly used Toyota Corolla.

The National Science Foundation’s study points out that instead, it’s the lack of infrastructure that’s holding Americans back from buying, and that’s an issue that any zero emissions technology will have to face, whether it’s electricity or hydrogen or some technology we haven’t discovered yet.

Lang Tong and Shanjun Li, researchers at Cornell University, suggest that consumers are much less willing to buy a car powered by a technology that doesn’t have readily available charging stations.  Li and Tong — whose research is part of the NSF-funded INSPIRE project — looked at electric vehicle sales in cities that offered more charging stations, and determined that a 10 percent increase in the number of stations per million people resulted in an 8 percent gain in market share of electric vehicles in that city.

“As one might expect, there is a strong dependency between the growth of electric vehicle market share and the available charging options,” Tong says.

On the other hand, Li notes that the U.S. Government’s tax policy toward electric vehicles artificially inflated what few sales those cars experienced. By Li’s calculation, 48.5 percent of electric vehicle sales were directly influenced by the tax incentive. As the tax incentive phases out, so does the interest in electric vehicles.

Since 2010, the United States government applied $10 billion toward tax incentives for electric vehicles that it instead could’ve invested in an electric vehicle charging network, which would have increased the average consumer’s interest in owning an electric car.  Tong, Li and their research colleagues suggest that the investment could’ve resulted 60,000 new charging stations, which might have resulted in five times more electric vehicles sold.

As 2025 approaches, electric vehicles play an ever-more important role in the fleet of cars sold in the United States reaching 54.5 miles per gallon. If we’re not set up with an infrastructure that makes their purchase a feasible opportunity for Americans, it’s going to get harder to reach that goal.


In an NSF Science360 radio interview, Lang Tong and Shanjun Lidiscuss factors that impact the sale and consumer adoption of electric vehicles.

Craig Fitzgerald

Craig Fitzgerald

Writer, editor, lousy guitar player, dad. Content Marketing and Publication Manager at BestRide.com.

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