Tax Credit Update

Previously I posted a story about GEM stating their vehicles qualified for a federal plug-in electric vehicle tax credit. I have since checked on other manufacturers such as Tomberlin, Columbia ParCar and Wheego and they are also claiming their LSVs qualify for the tax credit as well. Columbia ParCar’s website has some good information on the subject. LSVs are apparently eligible for two tax credits in 2009, the larger EESA or plug-in tax credit and the smaller ARRA LSV tax credit, but taxpayers can only claim one for a given vehicle. The EESA tax credit should provide a significant boost to sales of LSVs for the remainder of 2009.

GEM Electric Vehicles Now Qualify For Plug-In Tax Credit

Global Electric Motorcars (GEM) recently announced that GEM vehicles

…have been certified to the Internal Revenue Service (IRS) for the Qualified Plug-In Electric Drive Motor Vehicle Credit, part of the Emergency Economic Stabilization Act of 2008.

The credit is available for new vehicles purchased in 2009 and applies to models from 2007, 2008 or 2009.  The tax credits by model are as follows:

GEM e2 – $3,751.00
GEM e4 – $3,751.00
GEM e6 – $3,751.00 (with 12-volt batteries)
GEM e6 – $5,002.00 (with 8-volt batteries)
GEM eS – $3,751.00
GEM eL – $3,751.00
GEM eL XD – $5,002.00

It appears that the GEM may also still be eligible for the separate LSV tax credit (10% of price up to $2,500). I will try to confirm this. Learn more:  GEM

Comment: This is a major change in the market as the tax credit will cut the cost of the GEMs significantly, some models in half, for commercial customers looking for utility vehicles and for individuals looking purchasing for personal transportation. For the latter, the vehicles will now be on par or close to the cost of golf cars.  It will be interesting to see if other LSV/NEV manufacturers become certified for the tax credit.  Other manufacturers could be at a distinct disadvantage if they do not qualify for the tax credit as well.  Originally LSVs qualified for the plug-in tax credit then they were excluded and given a separate tax credit. – Marc Cesare

What’s Cooking On The STOV

Highlighting some of the many applications for small, task-oriented vehicles

Border Patrol: A sheriff’s office in Maine recently used a Department of Homeland Security grant to purchase a Yamaha Rhino to patrol the border with Canada. The vehicle is used to monitor remote border entrances for illegal drug trafficking and other activity and replaces the use of ATVs. The latter required officers to travel in pairs for safety reasons since the vehicles were not as stable. The grant is part of Homeland Security’s Stonegarden Operation which is sending $60 million to local law enforcement in border states to supplement federal border protection efforts. The funds are for both equipment and payroll. Learn more: Morningsentinel.mainetoday.com

NEV Tourist Rentals: An Austin, TX entrepreneur has recently launched E-Cars of Austin to provide NEVs around the city for tourists to rent. The rental fleet currently consists of six GEMs that will be placed in various downtown locations and will be available to rent for $30 for one hour or $50 for two hours. The plan is to eventually have two vehicles at each of 10 downtown hotels. Learn more: AustinBusinessJournal

Meter Reading: Silver City, NM has purchased two LSV utility trucks from Miles Electric Vehicles for use by the town’s meter readers.  The meter readers travel around 24,000 miles each year.  Town officials expect to save on maintenance and operating costs over the years compared to the current vehicles being used.  Learn more:  Silver City Sun News

Chrylser Wants To Sharply Reduce The Number Of GEM Dealers

Chrysler will argue in bankruptcy court next week that it should be able to eliminate 64 of 150 GEM dealers.  This represents just over 40% of the GEM dealerships.  According to Chrysler management 26 of the dealers are already closed or winding down operations and many others have only sold a “handful” of vehicles in the past two years. Learn more:  Freep.com

Comment: This development is not too surprising. In recent weeks I  have interviewed a number of NEV dealers for an upcoming study and some of them, not just GEM dealers, have shutdown or put their operations on hold.  The economy has a large part to do with their difficulties as well as misjudging the interest in these vehicles for personal transportation. MC

Aurora, IL: STOV Market Segment Example

NEV Replacing Full-size Vehicle

The parks and recreation department in Aurora, IL has just purchased two NEVs from GEM to replace full-sized vehicles.  The vehicles are being used for maintenance in a park and a zoo. Learn more

Comment: This is an excellent example of where a full-sized vehicle is overkill but a utility vehicle can be highly efficient performing the necessary tasks.  In this case it also an example of market segments where end-users (often parks departments) are switching from gas-powered to and electric powered vehicles. mcesare

Utility Vehicle Trends

Here is a short story about the North Carolina Parks Department replacing some of their current vehicles with GEMs configured with flatbed trucks. What I find interesting about story is it that illustrates three trends in the small, task-oriented vehicle market. One is that a portion of the ATV market is being lost to utility vehicles like the GEM or more rugged vehicles like the Yamaha Rhino, John Deere Gator, Polaris Ranger, etc. Another is that these vehicles are also replacing full-size pick-up trucks which are just overkill in some of their current applications. The third, but not as prevalent trend, is the addition of solar panels to electric powered utility or personal transportation vehicles as well as golf cars.

GEM Loses Luster With Army In Europe

After a six month trial the US Army has decided not to use GEMs at garrisons across Europe.

GEM on test with US Army

During the trial three vehicles were tested at US Army garrison Grafenwohr in Germany. The vehicles were used for trash site inspection, mail delivery and housing area checks. According to Stars and Stripes,

Last week, Grafenwohr’s director of public works, Tom Hays, said the cars failed to impress.

“They broke down too often and didn’t have enough range,” he said of the cars made in the States by a Chrysler subsidiary.

Other comments by Hays suggest that the primary problem is with the vehicle’s limited range, about 30 miles. The article notes that these test trial results does not preclude the Army from revisiting the use of electric vehicles in the future.

More in Stars and Stripes

Transport Canada Crash Test Video Continues Battle Against LSVs

Transport Canada posted video footage from recent crash tests of the ZENN and what appears to be a GEM model to bolster their contention that LSVs represent a safety problem when mixing with regular vehicles on public roads. Transport Canada states that:

A low-speed vehicle may look like a car, but it is not a car. It is not required to meet the large number of safety standards (up to 40) that a regular passenger car must meet. The low speed vehicle class was originally intended for controlled low speed environments, like gated communities, where the risk of a LSV entering into a collision with a faster motor vehicle would be lower than on public roads. Transport Canada’s crash test results to date confirm that low speed vehicles provide a substantially lower level of occupant protection than conventional passenger cars.

According to The Gazette in Montreal, ZENN’s CEO Ian Clifford responded

Releasing these images without the statistical frame of reference is somewhat irresponsible on Transport Canada’s part. …Our assessment is that low-speed vehicles are among the safest vehicles on the road. I drive our vehicles all the time. I drive the vehicles with my children in them.

I contacted GEM to confirm if it is indeed a GEM model in the video and get their response to the testing but have not heard back from them, perhaps after the holiday.

Plug-In Tax Credit To Boost NEV Sales?

As part of the recently passed H.R. 1424, the Emergency Economic Stabilization Act, consumers of plug-in electric vehicles can qualify for a tax credit of $2,500 to $7,500. I have recently spoken with a number of NEV manufacturers to get their thoughts on the legislation and as a group they are cautiously optimistic about the tax credit applying to NEVs. According to Kara Saltness of Miles Electric Vehicles the tax credit originally targeted highway speed vehicles but it appears that NEVs will qualify and that sentiment is supported by a press release from U.S. Representative Earl Pomeroy of North Dakota, home of GEM vehicles.

“Congress has taken an important step in encouraging the use of energy efficient vehicles by creating a $2,500 tax credit for plug-in electric drive vehicles like those manufactured by Global Electric Motorcars,”

According to the NEV manufacturers I spoke with the details are still currently being worked out by the government such as, who will qualify, consumers or businesses, likely both is the sentiment, and whether golf carts will be specifically excluded.

Qualifying electric vehicles must be a plug-in and be powered by a battery pack with a minimum of 4 KW of capacity. The credit would increase by $417 from $2,500 for each KW above 4KW. Most of GEMs models have a 4KW battery pack and others have 6 KW. Similarly Dynasty and Miles Automotive believe their vehicles will qualify for the tax credit as well. This could create a significant boost to the NEV market since the $2,500 tax credit translates into a sizable cost deduction for these vehicles. For example, based on prices listed on GEM’s website the tax credit would mean a discount of anywhere from 20% to 37% off the price of a GEM, depending on the model. Dynasty is currently planning on introducing a lithium ion battery pack for their vehicle in the middle of next year and this tax credit would essentially cover the extra cost of that battery, according to general manager Danny Epp.

According to the US Senate’s summary of the bill, the tax credit is slated to start in 2009 and

“…taxpayers may claim the full amount of the allowable credit up to the end of the first calendar quarter after the quarter in which the total number of qualified plug-in electric drive vehicles sold in the U.S. exceeds 250,000.”

This means that NEV manufacturers will be competing against manufacturers of full-size and highway speed vehicle manufacturers for a sizable but limited number of credits. However, for 2009 and even 2010 there may not be much competition for the NEVs since not many full-size plug-in electric vehicles are expected to be available.

Regulatory & Government Related News Update

The following is an update on some of the regulatory and government related news affecting the NEV market that has occurred from the beginning of the year.

California aims to increase NEV credits – The California Air Resources Board announced and took comments on changes to their ZEV program. One of the proposed changes is to increase the credits for NEVs from 0.15 to 0.3 per vehicles “…to reflect the vehicle’s positive environmental benefits but limited functionality compared with full function battery or fuel cell EVs.” Regulators are calling for as few as 27,500 no-emission vehicles to be introduced between 2012 and 2017, compared with 75,000 in the existing mandate.

The following synopsis is from my interview with a program manager: The proposal will be reviewed within a year or less and other changes may move partial ZEV vehicles into the low emission program and hybrids into the green house gas program which will push vehicles in these programs down to the emission levels of these type of vehicles respectively. The idea is to leave the ZEV program as an incubator for new technologies with the goal of bringing these technologies to market quickly. The inclination is to make these requirements more stringent to speed up bringing technology to the market. This begs the question of where NEVs will fit since their technology is not new and a viable market has been established.

Arizona drafts zero emission vehicle mandates – In January of this year state environmental officials in Arizona released draft rules that would mandate that 11 percent of each company’s vehicles sold in Arizona beginning in the 2011 model year have zero emissions. The percentage would increase to 16 percent by 2018. Other options for meeting the standards include selling more partial zero emission vehicles or purchasing zero emission vehicle credits from other manufacturers. Currently NEVs are the primary zero emission vehicles operating on the roads.

Alternative fuel vehicle rebates – California is offering rebates of up to $5,000 to residents who purchase alternative fuel vehicles. $1.62 million in rebates are scheduled to be granted statewide by California Center for Sustainable Energy, an independent nonprofit organization based in San Diego. Owners of Vectrix electric motorcycles may qualify for up to $1,500 and Global Electric Motorcars owners may receive $950 and $1,300.

According to the California Air Resources Board website the 2008 model year Miles ZX40S AD and ZX40ST neighborhood electric vehicles have been added to the list of vehicles eligible for rebates under the Alternative Fuel Vehicle Incentive Program (also known as Fueling Alternatives). They will be available for a $1,500 rebate, Other models from GEM, Zap and ZENN are also available for rebates ranging from $950 to $1,500. See the following list for more information.

New car buyers in the state of Washington are going to get a break on their sales taxes when they buy some vehicles that run on alternative fuels. The tax break (9.3 percent in the Seattle area) covers vehicles that run on natural gas, propane and hydrogen, as well as “neighborhood electric vehicles” or “medium speed vehicles” (street legal, but can’t go faster than 35 mph).

Chrysler, maker of the GEM, and Vectrix, an electric scooter manufacturer, are both trying to get their vehicles covered by a new tax credit for plug-in electric cars. The legislation now covers “regular” sized passenger vehicles which are eligible for a $3,000 tax credit when purchased. Chrysler and Vectrix are pushing for a $1,500 credit for “urban commuter vehicles”. The legislation is part of a larger bill covering renewable energy and other tax credits that may be passed in the coming months.

Current NEV manufacturers listed as GSA suppliers – NEV manufacturers listed on the General Services Administration supplier list include GEM, ZENN, Columbia Parcar and Classic Golf Car