justanyone's Journal: Idea: Gas Tax Feeds into Electric Vehicle Rebates

The Green Road Ownership Act of 2009
("GROW" Act)

1. Gas tax - 10% of price at the pump. Feeds into Electric Vehicle Subsidy Fund (EVSF) . Not a '10 cents per gallon' tax - a 10% of purchase price of gasoline tax. Thus indexes for rise and fall of gasoline prices.
a. Phase In Period Rates: Initial taxes rate would start at 2% and go up by 2% per year to a total of 10% in year 5.
b. Consumer visibility: Initially, average price goes from $4.00 to $4.08 per gallon. At 5 year timeframe, adjusted price is $4.40 per gallon.
c. Fund Income: 391 million gallons / day * 40 cents /gallon = $156M / day = $57B / year.

2. EVSF Rebates on purchase of new electric vehicles. Scaled by how many kilowatt-hours storage capacity are contained in the vehicle. So, hybrid carmakers get some subsity, all-electric or mostly-electric vehicles get more.
a. Fund Management: subsidies would be adjusted based on number of cars being sold and income, balancing income and outflow with a float of between 1 to 3 month's income.
b. Fund expenditures: 17 million cars purchased in the USA annually (2005 figures). $57B / 17M = $3,352 per car if everyone purchases all-electric vehicles.
c. Subsidy would be a one-time-only subsidy of purchase on a new vehicle or a conversion of an existing gasoline vehicle to electric drive. Vehicle VIN numbers would track already subsidized vehicles.
d. Vehicles purchased before enactment of this law would be eligible.
e. Subsidies can also be applied towards replacement of battery / electrical storage capacity, up to 50% of the purchase price of said capacity. Limit is one replacement per vehicle per every 3 years (most electric vehicle batteries apparently last at least 3 or 4 years).

Analysis:
1. All (or mostly-) electric vehicles are currently scarce but many are currently in pre-production phases.
2. Existing hybrid vehicle lines, with limited kilowatt-hour storage, would receive the first subsidies. Most of these are manufactured in the United States.
3. Current all-electric and hybrid owners would receive benefits for early adoption.
4. Since price to the consumer would significantly decrease, many existing cars would be replaced, creating high domestic demand for electric vehicles.
5. Global warming could be significantly helped by great reductions in number of gasoline powered vehicles.
6. As decreasing numbers of gasoline vehicles populate the roads, the tax would have less and less income, and the subsidy would effectively be automatically phased out.
7. No other country has such a program and it would encourage vast growth in US manufacturing capacity.
8. Many cars can be retrofitted with electric motors instead of gasoline at the expense of trunk space. This allows a cheaper alternative for low-income households.
9. Conversions generate another job for auto mechanics displaced by greater reliability of electric cars (no oil changes means fewer people needed for these low-end jobs).
10. Current 10-year lifetimes of gasoline powered cars implies phase out of gasoline powered vehicles in the space of the next 20 years.

National Policy Implications:
1. Reduction in petrochemical imports due to higher costs reducing demand.
2. Reduction in petrochemical imports due to greater electric use.
3. Cleaner air in crowded urban centers due to electric instead of gasoline use.
4. Overnight charging occurs during typically off-peak hours between 5 pm and 7 am, which is handled significantly by nuclear power generation capacity, which emits no CO2.
5. Larger production worldwide of electric storage capacity (may be battery or ultracapacitor, making no bets on technology) decreases cost per watt-hour to manufacture them (economics: "experience curve" effects).
6. Higher efficiency in economy at year 10+ due to decreased need to replace cars (cars depreciate slower due to electric motors having higher reliability and lower maintenance costs).
7. Reduced environmental damage caused by fewer retail gas stations having storage tanks.