Tuesday, July 15, 2008

You don't have to subsidize it just because it's green

While listening to NPR/MPR (I never know which one owns whatever show I'm listening to at any given moment, but it was on 91.1), I learned that Minneapolis was one of six cities selected (by Hymotion, I assume) to have a local Hymotion installation partner. Apparently, Minneapolis was selected after Mayor R.T. Rybak lobbied for Minneapolis:
Originally, they wouldn’t have been able to. Minneapolis was not on the list of six cities selected to be test sites for the technology. But when Rybak caught wind of this, he said he stepped in and told the manufacturer that he may be the only mayor in the country who drives a plug-in hybrid, that it therefore made sense for the technology to come here.

Based on this paragraph, the narrative features a green company (Hymotion) responding sensibly to a request by a plug-in hybrid-driving mayor to market their new technology in the city over which he presides. Everybody gets along, and everybody's happy. Even the "evil corporation" comes off looking good.

But further down in the article I saw this:
The operations aren’t cheap, costing about $10,000. But the state is offering help in the form of a grant program meant to expand the use of plug-in technology. It’s expected to lower the cost by about a third, state Rep. Frank Hornstein (DFL-60B) said.

“This is really the cheapest and environmentally best response to high gas prices,” Hornstein said.

Ahhh...might one of the reasons that oh-so-benevolent Hymotion chose Minneapolis as one of its first six cities be the generous subsidy codified by Rep. Hornstein? The plot thickens...

In any case, it appears that "orders [at the Minneapolis dealer] are booked full through December" (according to Hymotion customer service representative Jim Strong). Is this because a bunch of well-informed hybrid owners are banking on the $3,000 subsidy, or would interest be just as strong without the subsidy? Alas, we'll never know, but from Hymotion's perspective a subsidy certainly won't hurt demand.

My guess is that removing the subsidy wouldn't decrease interest substantially. If you can afford $7,000 to modify what is likely a fairly new car, you can afford $10,000 to do the same. So the subsidy seems essentially like a $3,000 gift to people who already own hybrid cars...in other words, upper and upper-middle class people who don't need it.

One final twist to this fun story: Rep. Hornstein owns a hybrid car [PDF] (search for "hybrid"), which apparently he auctions off the use of.

It looks like the Hornsteins owns a Honda Civic Hybrid; although Hymotion currently only makes kits for 2004-2008 Priuses, it wouldn't surprise me if the next model Hymotion goes after is the Honda Civic Hybrid.

Image from Flickr user kqedquest available under a Creative Cmmons license

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