Incentives

There are 5 technology adoption stages.

"Innovators" which consists of 2.5% and these are people that are more commonly known as the "bleeding edge"  They are the "stand in line for 4 days"  before launch kind of crowd.  They base their purchase decisions on marketing hype, Scientific Journals and color brousures.


Then we have the "Early Adopters" or 13.5% of the population and these are the  "cutting edge" crowd.  They buy based on internet research,  test driving events,  and word of mouth from their more adventurous acquaintances and co-workers.

Then we have the "Early Majority" and "Late Majority"  both consisting of about 34% of the population and finally the "Laggards"  the remaining 16%.

EVs will prove to be the go to technology  as described in my "What He Said" entry but how fast?  With EVs being so right, it should be pretty quick right?  Well, yes and no.

The Technology Adoption Curve although well defined, is not guaranteed. It also has a "Chasm" which is a barrier that must be overcome and it sits between "Early Adopters" and the "Early Majority" and this Chasm usually means failure for the weaker new technologies that fail to find a market.  With EVs being so right, they will overcome this barrier but this could delay mainstream adoption by years.

Recently this was demonstrated in Wind Energy.  Wind has been enjoying rapid steady growth with current incentives but the incentive is only good for 5 years.  The first incentive also good for 5 years was allowed to lapsed and had to be reintroduced. This caused great uncertainty for businesses and investment strategists and subsequently a hiccup in the growth curve.   Compare the Wind Energy Incentives to incentives currently being enjoyed by the fossil fuel industry whose incentives are actually written into the tax code. Without a deadline looming in the background, long term investment strategies allows a much more relaxed flow of money into the technology.

Now, big strides have been made by the Obama Administration to reduce fossil fuel subsidies but some still remain. Since the whole point of subsidies is to help the technology be successful, there is no reason to continue to prop up an industry that rakes in Billions of dollars in profit almost daily.  So, lets write some incentives into the tax code and when Wind, Solar, etc. become profitable machines, then and only then we can go back and rewrite the laws.

The other thing I have touched on previously and it does bear repeating is the current tax credit of up to $7500 for purchasing a plug in vehicle.  It is generally accepted that without this incentives, EVs are priced out of the mainstream market.  But EV sales are still sluggish despite the incentives and one of the big reasons why is that that $7500 tax credit is too restrictive.  A large segment of the population is left out in the cold and that is retired persons.  They have a reduced income along with the reduced tax liability but at the same time; many also have reduced transportation needs. They are far less likely to want to do a 500 mile car trip. They are more likely to only want to drive locally and the thought of  refueling their vehicle from the comfort of their garage is very appealing to them.

So the EV tax credit should be an instant rebate for purchases which is essentially how it is handled for leases.  The $7500 tax credit is treated as a down payment so it reduces the capitalized cost of the lease. Then the leasing company simply applies for and receives the $7500 directly from Uncle Sam.