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Transportation Government Power The Almighty Buck United States

Tesla Will Be First Automaker To Lose the Federal Tax Credit For Electric Cars (theverge.com) 329

Tesla has confirmed to Jalopnik that its 200,000th vehicle has been delivered this month, meaning the full $7,500 federal tax credit for electric cars will slowly be phased out. Tesla is the first automaker to reach this mark. "GM is close, too, while Nissan, Ford, and others still have a ways to go," notes The Verge. From the report: Tesla customers who take delivery of their cars -- regardless of whether it's a Model S, X, or 3 -- between now and December 31st, 2018, will still be eligible for the full $7,500 credit from the IRS. Customers who take delivery of their cars between January 1st and June 30th, 2019, will only be eligible for a $3,750 credit. And customers who take delivery of their cars between July 1st and December 31st, 2019, will be offered just $1,875. After that, the incentive is dead.

Put in place early on in the Obama administration, the tax credit was seen as a tool that could be used to encourage customers to buy plug-in electric or hybrid vehicles. This would simultaneously help advance the president's climate and clean energy goals while offering consumers a bit of a break while the cost of battery technology slowly came down. It was also meant to encourage manufacturers to push for greater advancements in that technology. The dollar amount was technically flexible; it was essentially a $2,500 credit with room to increase up to $7,500 depending on the battery capacity of the car being sold. The better the battery in a company's car, the better the rebate their buyers would get.

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Tesla Will Be First Automaker To Lose the Federal Tax Credit For Electric Cars

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  • by ClarkMills ( 515300 ) on Sunday July 15, 2018 @01:49PM (#56952452)

    The way the thing is set up at the moment, as soon as a automaker hits 200,000 cars the subsidy decay clock begins for that automaker. Other manufacturers can amble up to the line and then take their swill from the trough at their leisure knowing their slice is reserved.

    A better way would have been to have a larger shared trough of subsidy $ that is gobbled up and gone when it's gone. That would have accelerated EV manufacture as it would encourage more rapid adoption and penalise the slackards.

    • Rapid might not be in the best strategic interests though. The goal was to help get battery prices lower (and presumably increase production volume. It might be a factor for Porsche, but for other manufacturers the car volume is simply too high for it to make a dent.

    • by Ecuador ( 740021 )

      Well, Tesla was way ahead. The large automakers who have more power in DC would not like a common pool, even though it would be the best for the consumer & competition in general.

    • by Rei ( 128717 )

      The situation is going to just be silly soon. Next up, GM is going to hit it. Then Nissan, then Ford. So the US will be subsidizing its foreign competition.

    • EV sales aren't being driven by the market though. They're being driven by California's ZEV mandate [ucsusa.org], which requires a certain percentage of each automaker's sales be EVs (or they buy credits from an automaker who exceeds their quota). If they fail, they're banned from selling cars in California. And since about a dozen states automatically adopt California's guidelines, they'd end up banned from selling cars from about a third of the U.S. by population. Nobody wants to be cut off from a third of the U.S
    • by argStyopa ( 232550 ) on Sunday July 15, 2018 @02:55PM (#56952710) Journal

      Or maybe the best way could have been the free market with no subsidies for anyone?

      Don't get me wrong, I'm appalled at the conventional auto company bailouts as well, and would just prefer that the federal government basically entirely got out of the business of picking winners and losers.

      • by kenh ( 9056 )

        Imagine if GM had been allowed to go bankrupt, so that Tesla could step in, buy a couple auto plants, and build EVs in volume quicker.

      • Do you know that US Coast Guard is the one regulating oil tanker traffic in the Persian Gulf and providing escorts against Somalian pirates? Should we levy a tax on oil companies for that service provided au gratis by my tax dollar?
      • Unfortunately, the free market does not at this point in time have a mechanism that makes a person pay for the pollution they produce with their car. So subsidies for technologies that pollute less are basically just a fix because 'breathable air' is not part of the market.

    • by m00sh ( 2538182 )

      The way the thing is set up at the moment, as soon as a automaker hits 200,000 cars the subsidy decay clock begins for that automaker. Other manufacturers can amble up to the line and then take their swill from the trough at their leisure knowing their slice is reserved.

      A better way would have been to have a larger shared trough of subsidy $ that is gobbled up and gone when it's gone. That would have accelerated EV manufacture as it would encourage more rapid adoption and penalise the slackards.

      Unless a company then just decides to make it's business model the exploitation of these tax breaks.

      A bigger problem with the tax break was it was a tax rebate. So, if you didn't pay more than $7500 in federal tax (excluding SS and MC), you won't get the full amount. So, essentially you could fully utilize the tax break if your income was about $100,000 or more (assuming you maximized all your other tax breaks).

      • Another way to utilize the tax rebate is to lease a vehicle. The lessor gets the tax rebate and uses it to reduce the price of the lease.

  • ... 35k magical car with a 7500 rebate.

    Too good to be true I guess.

    • Eh, in what way? A $35000 235 mile range car with a $7500 rebate already exists - the Chevy Bolt.

      • by Rei ( 128717 )

        What exactly is the point of the range when it's so poor at recharging by comparison?

        Well, to it's credit, it's better than the new Leaf....

      • Bought a Ford C-Max Energi last year, $30K purchase price before taxes, but received a $4,500 federal tax rebate. The electric range isn't awesome but its enough for daily commute, and the combined electric + gas range is over 500 miles. Drives nicely too.

    • by Rei ( 128717 )

      Hard to say. SR is expected around the end of the year. Not clear whether it'll be before or after the New Year. Regardless, people will get the half credit.

      Also, point of interest: this whole discussion only applies to the US.

      • Already got my money back. Elon is getting a little nutty, and I figured I better get it while it was still there.

  • Subsidies exist to convince people to buy something they need convincing to own.

    That was every electric car before the Tesla. If you couldn't get a $7k rebate, there was no reason to put up with the nonsense like super limited range or performance.

    Tesla, to my mind, built the first electric car that is simply desirable to own outright - as such the rebate was merely a nice bonus, but no rebate will hardly slow sales. That's because the styling is good (well the Model 3 is anyway, I don't like the styling

  • Here in Ontario , the newly elected Progressive Conservative government cancelled any tax incentives for electric cars [www.cbc.ca], starting September. But that is only when you buy the car through a dealer. If you buy the car directly (like all Teslas are), the incentives are cancelled immediately, leaving those who ordered Teslas on the hook for C$14,000 more.

    The PC government also cancelled a large wind project, with hefty penalties expected, and cancelled the carbon trading system, which provided C$100 million for schools. No tax credits for retrofitting homes for more power efficiency (insulation, windows, furnaces, ...etc.)

    • The PC government also cancelled a large wind project, with hefty penalties expected, and cancelled the carbon trading system, which provided C$100 million for schools

      Wow, 100 million for absolutely nothing,, not ripped from the pocketbooks of anyone, no sir, it was totally free!

      No tax credits for retrofitting homes for more power efficiency (insulation, windows, furnaces, ...etc.)

      I'm doing that with no credits because it saves me money. More power efficient windows and furnaces have an inherent value beca

      • by kbahey ( 102895 )

        The PC government also cancelled a large wind project, with hefty penalties expected, and cancelled the carbon trading system, which provided C$100 million for schools

        Wow, 100 million for absolutely nothing,, not ripped from the pocketbooks of anyone, no sir, it was totally free!

        Oh really? So where will schools get the 100 million from now?

        Answer: no where. Ford did not even have the decency to come up with a costed budget at election time, and he is just axing stuff based on ideology, not on any logic.

        Here

  • The people that want them can afford them and would buy them without the government subsidy.

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