Sponsored

Potential Change to $7,500 EV Tax Credit

ajdelange

Well-Known Member
First Name
A. J.
Joined
Aug 1, 2019
Threads
9
Messages
2,883
Reaction score
2,317
Location
Virginia/Quebec
Vehicles
Tesla XLR+2019, Lexus, Landcruiser, R1T
Occupation
EE Retired
The purpose of tax credits is to incentivize adoption by people who couldn't otherwise afford it, not to reward you for having expensive tastes.
Nope. The purpose of the tax incentive is to allow the manufacturer to charge premium prices soothing the customer with the reassurance that he will recover the money from Uncle Sam. This, of course, means higher profit margin for the manufacturer and the presumption is that he will put this into R&D, plant expansion etc. resulting, ultimately, in a vehicle than can be sold at a more modest price without breaking the OEM. Thus the intent is exactly opposite of what you assume: incentivize rich people to pay the premium price. The theory is that eventually the government's layout will prove to be a good investment as the company will survive to produce decent cars for the rest of us at a price we can afford. The benefit of the original plan is to the OEM. $7500 is chump change to a 1%-er.

If you continue the discount past the point where more reasonably priced cars are available that's just another handout to the people buying the cars. They accrue most of the benefit, of course, but presumably society as a whole eventually benefits too.
Sponsored

 
  • Like
Reactions: Don

nfrank

Well-Known Member
First Name
Nathan
Joined
Sep 30, 2019
Threads
15
Messages
349
Reaction score
498
Location
Bay Area, CA
Vehicles
F-150
Do we know if there's an income limit on the rebate?
 

SeaGeo

Well-Known Member
First Name
Brice
Joined
Jan 12, 2021
Threads
47
Messages
5,235
Reaction score
9,677
Location
Seattle
Vehicles
Xc60 T8
Occupation
Engineer
Totally agree. I'd actually prefer to see the limit closer to $50k than $80k - this should be rewarding entry-level EV buyers and pushing prices down.

$65k+ EVs have defined the market long enough, we're well past the point where the halo effect of more performance cars and luxury SUVs is a necessary driver of adoption.
Taking a slightly different tact here. If we want to increase EV adoption to reduce gas consumption, it makes sense to target less fuel efficient vehicles (trucks). Trucks need larger batteries, and will therefore cost more.

Personally, I think I'd suggest from a policy standpoint to have a different cutoff that's a facilitates replacing more "gas guzzlers" than smaller cars. Swapping a Mach e in for a RAV4 doesn't do nearly as much as swapped a Rivian in for a Tacoma. That could be done by reducing the incentive as a function of ICE consumption per vehicle category, or simply having a different cap for cars and trucks and SUVs.
 

kylealden

Well-Known Member
First Name
Kyle
Joined
Feb 25, 2021
Threads
20
Messages
1,393
Reaction score
4,254
Location
Seattle
Vehicles
Rivian R1T LE, Tesla Model Y, Zero DSR/X, '69 CJ5
Occupation
Product Management
Nope. The purpose of the tax incentive is to allow the manufacturer to charge premium prices soothing the customer with the reassurance that he will recover the money from Uncle Sam. This, of course, means higher profit margin for the manufacturer and the presumption is that he will put this into R&D, plant expansion etc. resulting, ultimately, in a vehicle than can be sold at a more modest price without breaking the OEM. Thus the intent is exactly opposite of what you assume: incentivize rich people to pay the premium price. The theory is that eventually the government's layout will prove to be a good investment as the company will survive to produce decent cars for the rest of us at a price we can afford. The benefit of the original plan is to the OEM. $7500 is chump change to a 1%-er.

If you continue the discount past the point where more reasonably priced cars are available that's just another handout to the people buying the cars. They accrue most of the benefit, of course, but presumably society as a whole eventually benefits too.
This is just "incentivize adoption by people who couldn't otherwise afford it" with more steps.

But crucially, in 2021, there are no existential barriers to OEMs making profitable EVs - Tesla and GM are existence proof, since they're selling competitive EVs post-credit. It is appropriate to shift the incentive to encourage more affordable EVs, which is the actual market gap at present.

Do we know if there's an income limit on the rebate?
I don't think there is at present. There's sort of a reverse income limit in that it's a credit rather than a rebate, so you need to have at least $7500 in liability to qualify. It would make more sense to structure it as a rebate and include price caps (and maybe income caps), but that would never fly.
 

CommodoreAmiga

Well-Known Member
Joined
Dec 30, 2020
Threads
39
Messages
4,104
Reaction score
7,706
Location
INACTIVE
Vehicles
INACTIVE
Taking a slightly different tact here. If we want to increase EV adoption to reduce gas consumption, it makes sense to target less fuel efficient vehicles (trucks). Trucks need larger batteries, and will therefore cost more.

Personally, I think I'd suggest from a policy standpoint to have a different cutoff that's a facilitates replacing more "gas guzzlers" than smaller cars. Swapping a Mach e in for a RAV4 doesn't do nearly as much as swapped a Rivian in for a Tacoma. That could be done by reducing the incentive as a function of ICE consumption per vehicle category, or simply having a different cap for cars and trucks and SUVs.
This makes sense.

I've been quite frustrated that it's taken THIS long to get any action on trucks. Toyota, for example, should have released a hybrid Tacoma at least a decade ago... Yet they still don't have any public plans for one.

Trucks, the vehicles that benefit most from electrification, should be incentivized the most.
 

Sponsored

kylealden

Well-Known Member
First Name
Kyle
Joined
Feb 25, 2021
Threads
20
Messages
1,393
Reaction score
4,254
Location
Seattle
Vehicles
Rivian R1T LE, Tesla Model Y, Zero DSR/X, '69 CJ5
Occupation
Product Management
Taking a slightly different tact here. If we want to increase EV adoption to reduce gas consumption, it makes sense to target less fuel efficient vehicles (trucks). Trucks need larger batteries, and will therefore cost more.
This is a great point, although the F150 is a strong counterpoint - many/most configurations will be under $80k and it is likely to do more to offset real-world emissions than any other single vehicle.
 

Mjhirsch78

Well-Known Member
First Name
Matt
Joined
Aug 29, 2019
Threads
6
Messages
505
Reaction score
1,212
Location
Union, Washington
Vehicles
Honda Odyssey became an R1T: MAGIC!
Occupation
Teacher
purchase accessories "at delivery" as a separate charge.
I like this approach. There are still some other decisions to make if this current form sticks (though that seems unlikely based on how legislation works).
 

Gshenderson

Well-Known Member
First Name
Greg
Joined
Sep 28, 2019
Threads
13
Messages
1,229
Reaction score
2,767
Location
Park City, UT / Kemmerer, WY
Vehicles
2015 Tesla S 85D, 2019 4Runner TRD Offroad, R1T
I think Tesla did something like this for a little while, but what Rivian can do is sell me a "Max Pack Equipped " package for no markup over the 300 mile pack. Then charge me $10,000 once I get home for a software unlock of the extra capacity.

Maybe to deter people from automatically ordering the "Max Pack Equipped" package, just mark it up $1,000 and make the software an extra $9,000.
I thought of this as well, but given the cost and shortage of batteries, I don’t think it’s a viable feature to manage via software lock upgrade. It would take a big chunk of the profit margin out of the initial transaction with no guarantee people would eventually pay to unlock it. My gut says many folks who are getting the max pack don’t really need it, but are instead buying insurance against range anxiety (and that’s OK). But once they buy it and use it for 6 months and realize they don’t need it, they probably aren’t going to pay another $10k at that point to get it.
 
  • Like
Reactions: Don

azbill

Well-Known Member
First Name
Bill
Joined
Jun 8, 2020
Threads
14
Messages
1,261
Reaction score
1,559
Location
Arizona
Vehicles
R1T, Mach E, Hummer EV SUT
Occupation
Engineer
American taxpayers being legislated to subsidize unionized shops doesn't seem quite right.
Almost nothing we subsidize is quite right. Especially when only 51% of the people pay any income tax at all.

But in the end the budget is so far above the taxes raised that they just print money, create inflation, and then everyone pays anyway.
 

SeaGeo

Well-Known Member
First Name
Brice
Joined
Jan 12, 2021
Threads
47
Messages
5,235
Reaction score
9,677
Location
Seattle
Vehicles
Xc60 T8
Occupation
Engineer
This is a great point, although the F150 is a strong counterpoint - many/most configurations will be under $80k and it is likely to do more to offset real-world emissions than any other single vehicle.
yep. Just pointing out that say... 40k or 50k may not be realistic when the average fullsize ICE is probably 60k (just guesstimating).
 

Sponsored

kylealden

Well-Known Member
First Name
Kyle
Joined
Feb 25, 2021
Threads
20
Messages
1,393
Reaction score
4,254
Location
Seattle
Vehicles
Rivian R1T LE, Tesla Model Y, Zero DSR/X, '69 CJ5
Occupation
Product Management
Why do it by price of vehicle? shouldn’t it be by income?? Surgeon making $1M vs contractor at $125k.
Because you want to incentivize the industry to produce more affordable vehicles.
 

thrill

Well-Known Member
First Name
billy
Joined
Jan 14, 2020
Threads
19
Messages
768
Reaction score
1,538
Location
South Carolina
Vehicles
i3s, (r1t)
Because you want to incentivize the industry to produce more affordable vehicles.
Vehicles become more affordable through scale. Achieving scale requires some sort of risk reduction and price sensitivity reduction. Capping incentives based on vehicle price or income does not contribute to either one of those.
 

Oaktree

Member
Joined
May 4, 2021
Threads
0
Messages
5
Reaction score
6
Location
Annapolis
Vehicles
Trackhawk
Because you want to incentivize the industry to produce more affordable vehicles.
That argument could be used for anything produced. Housing, food, etc...completely arbitrary. It think the entire policy is stupid.
 

kylealden

Well-Known Member
First Name
Kyle
Joined
Feb 25, 2021
Threads
20
Messages
1,393
Reaction score
4,254
Location
Seattle
Vehicles
Rivian R1T LE, Tesla Model Y, Zero DSR/X, '69 CJ5
Occupation
Product Management
That argument could be used for anything produced. Housing, food, etc...completely arbitrary. It think the entire policy is stupid.
Well, yeah. This sort of thing happens all the time - FHA loans for houses below a certain price; SNAP assistance only being available for certain categories of food; etc.

If you object to government incentives as a policy principle, that's fine, but that's probably a separate and not particularly productive discussion ?
Sponsored

 
 




Top