UPDATE: U.S. Administration Outlines Rebates For Electric Cars

The Obama administration outlined a rebate Tuesday that would be available to buyers of electric cars at the point of sale, reducing the sticker price by up to $7,500.

The U.S. Department of Energy said the proposal involves turning an existing tax credit for electric vehicles into a rebate that would be available to buyers immediately rather than making the discount available only after filing a tax return.

Shares of Tesla Motors, Inc. (TSLA), the electric car maker backed by Toyota Motor Corp. (TM, 7203.TO) jumped more than 6% Tuesday, to $24.49. Battery maker A123 Systems, Inc. (AONE) also saw shares jump more than 6%, to $9.92.

Some details of the proposal, including when rebates would be available and whether the rebates would be capped, remained unclear. David Sandalow, DOE's assistant secretary for policy and international affairs, said details would have to be worked out in Congress.

Companies like General Motors Inc. (GM) and Nissan Motor Co. Ltd. (NSANY, 7201.TO) that already have electric cars on the market are in good position to take advantage of the government incentive, particularly if Congress places a cap on the rebates, said Jesse Torpak, an auto analyst for TrueCar.com.

Torpak said the point-of-sale benefit made the cars more attractive for lease as well as purchase by lowering monthly payments.

"That's the kind of math you need to bring electric vehicles to the masses," Torpak said.

In a little more than two years, Tesla Motors has sold about 1,600 cars worldwide.

In the U.S., the Nissan Leaf and GM's Chevrolet Volt, which just went on sale in December, are only beginning to trickle into the market. GM has sold 647 Volts over the past two months in the U.S. Nissan has delivered 97 Leafs over that period.

Sandalow said the administration's proposal was part of a strategy to support electric vehicle manufacturing. In a statement, he said more electric vehicles on the road "represents a key component of our strategy to reduce America's dependence on foreign oil and ensure that the U.S. leads the world in the growing electric vehicle manufacturing industry."

The administration announced the rebate initiative last month.

President Barack Obama has set a goal of putting one million electrical vehicles on the road by 2015. A DOE report released Tuesday said that goal is ambitious, but achievable.

DOE also said the administration will propose giving grants to 30 communities to invest in infrastructure for electrical vehicles. In addition, the agency said the president's upcoming budget proposal will include further investments in research and development for electric vehicle components, including batteries.

-By Ryan Tracy, Dow Jones Newswires; 202-862-9245; ryan.tracy@dowjones.com

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