Pre-paying for plug-in hybrids, with rebates

The ambitious Felix Kramer: pre-paying for hybrids. (Credit: CalCars.org)

San Francisco's Felix Kramer founded the California Cars Initiative (also known as CalCars.org) on the simple premise of encouraging automakers to build plug-in hybrid cars. It seems intuitive now, but when Kramer first began talking about it the automakers were loudly proclaiming that plug-ins would never work, and the general public had never heard of them. As Edmunds reports, Kramer just might be "a genius who's ahead of his time," someone who "isn't afraid to think big." He's thinking big now, with an interesting idea to convince consumers to prepay $10,000 deposits for plug-in hybrids, then get the money back a few months later in the form of a 100 percent federal tax credit. He"s talking to the Obama transition team and to members of Congress about his plan. Under the existing tax credit passed into law as part of the industry bailout bill, vehicles would have to have a minimum of four-kilowatt-hour battery packs to qualify. That money is earmarked to provide up to a $7,500 credit to buyers of the first 250,000 plug-in hybrids. To get federal loan guarantees by next January under Kramer's plan, the carmakers would have to promise to have a plug-in on the market by 2010, with volumes of at least 10,000. His plan would continue, with credits starting at $10,000 but then gradually diminishing, until the end of 2012. Kramer envisions getting five million people lined up as pre-purchasers, which would generate $50 billion for carmakers. That's hugely ambitious, of course, but it's certainly a way to inject revenue into the failing auto industry. And if fleets (including government fleets) jump in that will be a big step forward. There's a certain parallel to the local food movement, which supports community-supported agriculture (CSAs), in which a group of people agree to pre-pay for a portion of an organic farmer's crop. "We're at a real crossroads," says Kramer, reached at his hotel in New York. "We have to do something more than we've done, and this is a very broad effort—it's telling automakers and policy advocates that here&quo;s a way to create mechanisms for really rapid transformation." Plans like this are in synch with the rapid ramp-up envisioned by author Thomas Friedman in his book Hot, Flat and Crowded. In a recent New York Times column, "The Real Generation X," Friedman wrote that in exchange for a bailout the automakers should commit to hybridize all cars and trucks within 36 months. "Big batteries that can store electricity for transportation and wind and solar generation are the indispensable enablers of the Energy Internet of the future," Friedman wrote. "Any Detroit bailout has to serve that goal." That's in sync with Kramer. "Electrification can be the vehicle for the transformation of the car industry," he says. He adds that one reason for slow vehicle sales today may be that, beyond the recession, consumers are worried that the fabulous new green cars in the pipeline will diminish the resale value of anything they buy today. So the carmakers have an incentive to speed the new models to market. Kramer says he's often asked if plug-ins are on the way, and he replies, "If they stay in business, they will. But we want them to arrive at the starting line with growing momentum." Carmakers are electrifying, but their plug-in and battery cars are still at least two to four years away. The Chevrolet Volt should be out by late 2010. Ford is pushing ahead with a battery van, and a Focus-sized sedan. Chrysler has committed to building one of several plug-in prototypes. The Renault-Nissan Alliance has made the largest production decisions for an EV sedan, but it won't reach retail customers until 2012. "At this rate, vehicles won't arrive soon enough to save the auto industry—let alone U.S. industrial leadership or the climate," Kramer says. He invokes the fact that Americans bought $17 billion in Liberty Bonds during World War I, and $185 billion in World War II War Bonds. If they could do it, he says, so can we.