Bloomberg says buyers, not automakers, should get more federal funding for plug-in vehicles

The U.S. government would be more effective at spurring plug-in vehicle sales if it provided more financial incentives to consumers instead of automakers. At least, that's the opinion in a Bloomberg News editorial.

Saying that finding alternatives to gasoline "a worthy public goal," Bloomberg says the government should expand purchasing incentives beyond the $7,500 it provides for buyers of some plug-ins and hybrids. President Obama has said he wants 1 million plug-in vehicles to be on U.S. roads by 2015; the Corporate Average Fuel Economy (CAFE) standards he proposed last year would mandate about a 70 percent fuel economy improvement by 2025. Bloomberg figures the government should hand out money to buyers, not companies, to encourage sales:

Providing loans to companies that can get their own financing in the capital markets is a questionable way to reach [the goal]. A better use of government money would be to encourage consumer demand – by continuing, and expanding, tax credits or other incentives for people who buy vehicles that use little or no gas.

During the past three years, U.S. Treasury Department's Federal Financing Bank has made more than $8 billion in loans at about a 1 percent interest rate to established automakers such as Ford and Nissan as well as advanced powertrain specialists like Fisker and Tesla, strictly for the purpose of developing electric-drive vehicles. Bloomberg called such a strategy "questionable." Such automaker loans are guaranteed by the U.S. Department of Energy.



Source: Autoblog Green