The New CAFE Standards

While the tighter CAFE standards will have a minimal effect on spurring the development of new technologies, other measures in the new federal energy law could stimulate more transformative, long-term change. Genevieve Cullen, vice president of the Electric Drive Transportation Association, in Washington, DC, points to the law's support for research on, and demonstration and manufacturing of, electric-vehicle technologies such as lithium batteries and advanced motors. The law authorizes, for example, $450 million in grants to companies and state and local governments to demonstrate the use of plug-in hybrid vehicles, and up to $25 billion for direct loans to support manufacturing. "Congress needs to now provide the money for these programs," says Cullen, referring to the separate process in which funds are appropriated for each fiscal year.

A hoped-for $3,000-to-$5,000-per-vehicle tax credit for buyers of plug-in hybrids could have further stimulated demand for advanced vehicles but was struck from the bill at the last minute, along with a tax hike for oil producers that would have funded it. Therese Langer, transportation program director for the American Council for an Energy-Efficient Economy, a Washington-based think tank, says that thanks to the high cost of batteries, the tax credit would probably have only cut in half the incremental cost of a plug-in vehicle. "That's really nice for someone who's prepared to shell out thousands of bucks for a plug-in," she says, "but it's not going to cause plug-ins to make a dent in total vehicle sales."

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