Frightening EV Credits

[TXR1S]

I was wrong, the 12,500 total credit is only for union built. 7,500 for non-union built.

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[Scott]

To those saying there should be no price or income caps: In a vacuum the argument makes sense. You want more EVs, so discount them all. However, if you approach the problem assuming there is a limited amount of money then you want the biggest bang for the taxpayer buck spent.

In general, the higher your income, and the higher the cost of the vehicle, the less impact the incentive has on the buyer's decision. Focusing incentives on the places it will most impact buyer decision and where it will make the most environmental impact makes sense.

That said, hard cut off points where you go right from big incentives to 0 incentives is terrible. there needs to be a phase out. Don't cut off the incentive for SUV's fully at 69k. Start at 60k and have it gradually fade out to 0 at 80k (or some other range). Big cliffs distort the market and consumer behavior.

I will +1 the down to union labor specific incentives: that has nothing to do with increasing EV adoption and is all about political gains.

 

[bd5400]

Either way, it looks like the R1S will completely excluded from the tax credit ?

I would imagine that Rivian will find a way to remove something from the base package to drive the MSRP down an additional $1k (assuming the base MSRP is all that matters).

 

[jjswan33]

(assuming the base MSRP is all that matters).

I hope this is the case. Current bill says MSRP and doesn’t specify how that is determined.

 

[Dbeglor]

What I think many are missing here is that these EV credits ultimately go to the companies, not consumers. They are subsidies for business investment. Look at Tesla when theirs burned off, they immediately dropped their prices. These credits allow companies to charge $7,500 (or whatever it will change to) more with no impact to demand.

This quite possibly could also be why Rivian is delaying non-employee orders, to know what the finalized incentives are and adjust pricing accordingly. It wouldn't shock me at all if they increased prices if the incentive goes up, or drops them if it goes down/away.

 

[bd5400]

I hope this is the case. Current bill says MSRP and doesn’t specify how that is determined.

I really hope so as well. As of now, the R1T with the adventure package, spare tire, and included paint/interior colors/wheels qualifies. Adding the Forest Edge interior, however, pushes the price up to $75k+. You would really need to love the Forest Edge interior to go for it if it means you would forfeit the tax credit you could otherwise qualify for.

 

[Scott]

What I think many are missing here is that these EV credits ultimately go to the companies, not consumers. They are subsidies for business investment. Look at Tesla when theirs burned off, they immediately dropped their prices. These credits allow companies to charge $7,500 (or whatever it will change to) more with no impact to demand.

This quite possibly could also be why Rivian is delaying non-employee orders, to know what the finalized incentives are and adjust pricing accordingly. It wouldn't shock me at all if they increased prices if the incentive goes up, or drops them if it goes down/away.

I 100% agree with this. In the world we have today where all decent cars have a wait list, most of the benefit of these credits go to manufactures, not buyers. That stinks, but at least it still subsidizes the development of EV technology by these companies

 

[jjswan33]

To those saying there should be no price or income caps: In a vacuum the argument makes sense. You want more EVs, so discount them all. However, if you approach the problem assuming there is a limited amount of money then you want the biggest bang for the taxpayer buck spent.

In general, the higher your income, and the higher the cost of the vehicle, the less impact the incentive has on the buyer's decision. Focusing incentives on the places it will most impact buyer decision and where it will make the most environmental impact makes sense.

That said, hard cut off points where you go right from big incentives to 0 incentives is terrible. there needs to be a phase out. Don't cut off the incentive for SUV's fully at 69k. Start at 60k and have it gradually fade out to 0 at 80k (or some other range). Big cliffs distort the market and consumer behavior.

I will +1 the down to union labor specific incentives: that has nothing to do with increasing EV adoption and is all about political gains.

The argument I would make is that is shouldn’t be both. I am not sure what purpose both has, if you make $150k a year and want to buy a $80k EV you get nothing.

I agree with you on the phase out idea.

 

[Scott]

The argument I would make is that is shouldn’t be both. I am not sure what purpose both has, if you make $150k a year and want to buy a $80k EV you get nothing.

I agree with you on the phase out idea.

In the current proposal it is basically just on car price. The income limits are so high as to impact nearly no one.

 

[Dbeglor]

In the current proposal it is basically just on car price. The income limits are so high as to impact nearly no one.

That's the conundrum I think, because to get to the cheap EV's, you have to subsidize the R&D and production on the expensive ones. And so, income limits impact the market that can currently afford EV's, and so by doing that, you may never get to where you intended to get in the first place.

It's also a tall ask to tell manufacturers that if they just make a cheap EV they'll benefit from the incentives. They'd have to risk a ton of money before they know whether it's feasible.

What would be interesting is if you could set up an escrow account, where that $7,500 incremental profit earned by selling an expensive EV is put into an account in the manufacturer's name that can only be drawn upon for future R&D on more mass market vehicles. That way it's not just profit that isn't put back toward the overall goal.

 

[endress14]

In the current proposal it is basically just on car price. The income limits are so high as to impact nearly no one.

Not true. I still want a tax credit even though I fall above the limit. It is just as important to me as anyone else.

 

[thrill]

...I will +1 the down to union labor specific incentives: that has nothing to do with increasing EV adoption and is all about political gains.

I don't see how the AGs of the right-to-work states don't already have a Constitutional challenge prepared.

 

[Scott]

Not true. I still want a tax credit even though I fall above the limit. It is just as important to me as anyone else.

I think the current proposed limit is 400k for an individual. That is the 99th percentile in the US. so it impacts very few people. Not no one, but very few. The vehicle price limits are the much more restrictive part of the proposal.

 

[jjswan33]

I really hope so as well. As of now, the R1T with the adventure package, spare tire, and included paint/interior colors/wheels qualifies. Adding the Forest Edge interior, however, pushes the price up to $75k+. You would really need to love the Forest Edge interior to go for it if it means you would forfeit the tax credit you could otherwise qualify for.

Right. I am sure we could buy the adventure accessories after purchase (possibly at a higher price) but hard to justify a paint color costing $9-10k.

 

[Longhorngirl]

I hope this is the case. Current bill says MSRP and doesn’t specify how that is determined.

If the MSRP is based on the lowest model trim, this means that the R1T would qualify since the Explore starts at $73k and the R1S missed the cutoff by $1k since the Explore version starts at $70k. This leaves me with a hard decision. Should I change my LE R1S to a LE R1T, if it means I get the tax credit. I just chatted with CS and confirmed that we can keep our LE and change models between the truck and SUV.

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