As a result, many manufacturers are  developing lithium-ion batteries because they have the potential to store  more energy and are typically smaller and lighter than batteries currently  in use. The federal government is also trying to reduce petroleum consumption in  federal fleet vehicles by requiring agencies to take several actions and by  setting a number of goals and requirements for federal agencies, as  follows:    Begin acquiring plug-in hybrid electric vehicles: Executive Order 13423  sets a goal for federal agencies operating fleets of 20 or more vehicles to  begin using plug-in hybrids when these vehicles become commercially  available and can be purchased at a cost reasonably comparable to  conventional vehicles based on life-cycle costs. The cost-effectiveness of plug-ins will be determined by the cost of  batteries and trends in the price of gasoline relative to the price of  electricity to charge the vehicles. Plug-ins Offer Environmental Benefits, but These Benefits Depend on Shifting to Lower- Emission Fuel Sources to Generate Electricity

Through their potential to make substantial reductions in oil consumption,  plug-ins could produce environmental benefits such as reducing  greenhouse gas emissions. In  addition, the construction of new nuclear plants can be controversial  because of public concern about safety. Several Factors Could Delay the Widespread Availability of Plug-in Vehicles, and the Federal Government Has Options to Provide Support

Manufacturers plan to introduce several types of plug-in vehicles over the  next 6 years. However, certain factors, such as the limitations of current  battery technology, could delay availability of plug-ins, and the current  financial situation could prevent consumers from purchasing plug-ins. Such technology, or  “smart charging infrastructure,” would likely need to include features that  allow consumers to indicate by what time the car needs to be charged and  a way to meter and bill consumers different prices for on- and off-peak  consumption. In addition to these issues, the recent spike and decline in gasoline prices  may make it more difficult to market plug-ins in that consumers may be  doubtful that they will recoup the high upfront costs of plug-ins through  fuel savings over the life of the vehicle. The Federal Government Has Encouraged the Development and Manufacture of Plug-in Vehicles, and Experts Identified Several Additional Options

The federal government has historically played a role in the research and  development of plug-in vehicle technology and has recently provided grant  funding for plug-in hybrid test fleets:    Funding for basic research to develop technology: DOE funds basic  research to develop battery technology for vehicles as well as other  components necessary for electric-powered vehicles. Cost and Other Factors, Including Federal Requirements, Could Hinder the Integration of Plug-in Vehicles into the Federal Fleet

Once plug-ins become commercially available, agencies will face  challenges related to cost, availability, planning, and federal requirements. Among the agencies we reviewed, the use of life-cycle cost analysis varied,  and according to FEDFLEET, an organization representing federal fleet  managers, most agencies do not use life-cycle costing when evaluating  which vehicles to purchase. Agencies Have Not Developed Plans to Incorporate Plug-ins Due to Uncertainties Surrounding Vehicle Performance and Infrastructure Needs

Almost all of the agency officials we interviewed stated they have not  developed plans for incorporating plug-ins into their fleets, in some cases  because of the uncertainties surrounding plug-ins. Incorporating Plug-ins into the Federal Fleet May Be at Odds with Other Federal Requirements

Agencies also face a challenge posed by the patchwork of existing federal  requirements that covers energy use and vehicle acquisitions. Because plug-ins are expected to rely on electricity from  federal facilities while charging, they could increase energy consumption,  particularly if plug-ins are used in large numbers. DOE has not provided guidance to agencies on this subject. Although, by making statutory  requirements, Congress signified the importance of acquiring alternative  fuel vehicles, using alternative fuel, decreasing petroleum use, decreasing  greenhouse gas emissions, and improving energy efficiency in facilities,  the requirements can be costly and are sometimes in conflict. As a result,  agencies are uncertain about setting priorities and struggle to meet the  overall intent of these requirements and goals. We also recommend that, once plug-in hybrids and all-electrics become  available to the federal government but are still in the early phases of  commercialization, the Administrator of GSA explore the possibility of  arranging pass-through leases of plug-in vehicles directly from vehicle  manufacturers or dealers—as is being done with DOD’s acquisition of  neighborhood electric vehicles—if doing so proves to be a cost-effective  means of reducing some of the risk agencies face associated with  acquiring new technology. We defined this set of  vehicles as “plug-ins” since they derive part or all of their energy from  plugging into an electricity source.
Why GAO Did This Study

The U.S. transportation sector relies almost exclusively on oil; as a result, it causes about a third of the nation's greenhouse gas emissions. Advanced technology vehicles powered by alternative fuels, such as electricity and ethanol, are one way to reduce oil consumption. The federal government set a goal for federal agencies to use plug-in hybrid electric vehicles--vehicles that run on both gasoline and batteries charged by connecting a plug into an electric power source--as they become available at a reasonable cost. This goal is on top of other requirements agencies must meet for conserving energy. In response to a request, GAO examined the (1) potential benefits of plug-ins, (2) factors affecting the availability of plug-ins, and (3) challenges to incorporating plug-ins into the federal fleet. GAO reviewed literature on plug-ins, federal legislation, and agency policies and interviewed federal officials, experts, and industry stakeholders, including auto and battery manufacturers.

What GAO Found

Increasing the use of plug-ins could result in environmental and other benefits, but realizing these benefits depends on several factors. Because plug-ins are powered at least in part by electricity, they could significantly reduce oil consumption and associated greenhouse gas emissions. For plug-ins to realize their full potential, electricity would need to be generated from lower-emission fuels such as nuclear and renewable energy rather than the fossil fuels--coal and natural gas--used most often to generate electricity today. However, new nuclear plants and renewable energy sources can be controversial and expensive. In addition, research suggests that for plug-ins to be cost-effective relative to gasoline vehicles the price of batteries must come down significantly and gasoline prices must be high relative to electricity. Auto manufacturers plan to introduce a range of plug-in models over the next 6 years, but several factors could delay widespread availability and affect the extent to which consumers are willing to purchase plug-ins. For example, limited battery manufacturing, relatively low gasoline prices, and declining vehicle sales could delay availability and discourage consumers. Other factors may emerge over the longer term if the use of plug-ins increases, including managing the impact on the electrical grid (the network linking the generation, transmission, and distribution of electricity) and increasing consumer access to public charging infrastructure needed to charge the vehicles. The federal government has supported plug-in-related research and initiated new programs to encourage manufacturing. Experts also identified options for providing additional federal support. To incorporate plug-ins into the federal fleet, agencies will face challenges related to cost, availability, planning, and federal requirements. Plug-ins are expected to have high upfront costs when they are first introduced. However, they could become comparable to gasoline vehicles over the life of ownership if certain factors change, such as a decrease in the cost of batteries and an increase in gasoline prices. Agencies vary in the extent to which they use life-cycle costing when evaluating which vehicle to purchase. Agencies also may find that plug-ins are not available to them, especially when the vehicles are initially introduced because the number available to the government may be limited. In addition, agencies have not made plans to incorporate plug-ins due to uncertainties about vehicle cost, performance, and infrastructure needs. Finally, agencies must meet a number of requirements covering energy use and vehicle acquisition--such as acquiring alternative fuel vehicles and reducing facility energy and petroleum consumption--but these sometimes conflict with one another. For example, plugging vehicles into federal facilities could reduce petroleum consumption but increase facility energy use. The federal government has not yet provided information to agencies on how to set priorities for these requirements or leverage different types of vehicles to do so. Without such information, agencies face challenges in making decisions about acquiring plug-ins that will meet the requirements, as well as maximize plug-ins' potential benefits and minimize costs.