Report: EV Programs Will Cost $7.5 Billion

Federal grants to promote electric vehicles and tax credits to consumers who buy them will cost $7.5 billion by 2019 and have little or no short-term impact on overall fuel consumption, according to the Congressional Budget Office.

The report says total government spending from 2009 through 2019 will consist of $2 billion for tax credits, $2.4 billion in grants to battery makers and suppliers and $3.1 billion for loans to carmakers under the government's Advanced Technologies Vehicles Manufacturing program.

The CBO analysis estimates that such programs will cost the government $3-$7 per gallon of gasoline saved by EV use. It also figures the actual lifetime cost of a current-generation EV or plug-in hybrid is more than $12,000 greater than a traditional hybrid or comparably performing conventional vehicle. Current tax credits cover a maximum $7,500 per EV.

Boosting EV sales would improve a company's corporate average fuel economy. But the CBO report predicts that, in the short term, carmakers will simply offset the gain by selling more of their less-efficient but more profitable gasoline-powered vehicles.