Proposed U.S. $12,500 tax credit . . . BUT

[whitex]

Generally I agree with your sentiments but for those quoted above. As a matter of sound policy it makes sense to only offer credits where they are likely to serve their primary purpose—in this case replacing ICE vehicles with EVs. Those earning very high incomes are less likely to alter their decision to purchase an EV or specific EV model at the level of credits under consideration than those earning modest incomes. The elasticity of demand being more flexible for the former than the latter. As much as I would enjoy the credit I can certainly understand why a Taycan would be excluded.

A interesting point, but I wish we some hard numbers to quantify this. You'd have to start with what is "very high income", what percentage of EV's above say $50K are bought by this group and what percentage of that would buy the same cat anyways.

Anecdotally, me personally I bought four Model S since 2013, but probably would have bought none, had it not been for the incentives. Not making it up, I still remember justifying to myself and my wife how the incentives help offset the risk of trying out an EV, in case the purchase doesn't work out for us (insufficient range, reliability, etc). It also helped motivate me knowing I get to keep some of the taxes I pay the government, which after living in WA state for a while I realized will do anything, not matter how unethical, to grab as much money as they can get away with while providing loopholes for their own and/or companies with rich lobbies, but that's a very long tangent to this topic.

I've also been participating in Tesla communities since 2013, and I have to tell you, many people who bought Model S'es back then would not have bought one. Surprisingly, Toyota was the most common brand of what Model S buyers were coming from, with many of them spending more than twice what they have ever spent on a car before (after rebate). Before you come back with "look, Tesla doesn't qualify for incentives today and they still sell out more car than they can produce", well, that would be an argument for no incentives for anyone since no more sales would be generated as they are supply limited already.

Then there is argument that incentivizing only cheaper EV's limits the innovation, as it will incentivize short range, short lifespan EV's. The cheaper the EV, the less people will care. Heck, if you could sell an EV for $12,500 and get a rebate $12,500, you'd probably still sell all you can produce even if it only had 60 miles of range per charge and died after a year (zero maintenance disposable EV).

Bottom line, all arguments for or against are anecdotal and highly influenced by preconceived notions different people have about the subject, even the definition of "rich people" is never consistent (typically people think of anyone who makes twice as much as they do as rich, but don't consider themselves rich because there are people out there making half). So, given no hard data, I still say we should not be tying such arguments to the incentives.

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[Jrkennedy37]

Then there is argument that incentivizing only cheaper EV's limits the innovation, as it will incentivize short range, short lifespan EV's. The cheaper the EV, the less people will care. Heck, if you could sell an EV for $12,500 and get a rebate $12,500, you'd probably still sell all you can produce even if it only had 60 miles of range per charge and died after a year (zero maintenance disposable EV).
.

Have you heard of Kandi? It’s not far off these stats and available in the US for sub-$10k (after $7500 rebate)

 

[whitex]

Have you heard of Kandi? It’s not far off these stats and available in the US for sub-$10k (after $7500 rebate)

$10K is still 10,000 time more than $1
There are plenty of people who will take a free or even sub $1,000 EV, but will balk at $9,000.

 

[Jhenson29]

Those earning very high incomes are less likely to alter their decision to purchase an EV or specific EV model at the level of credits under consideration than those earning modest incomes.

Is there data to back up that statement or is it just how you feel? Sincerely asking. I’ve never seen any data on it.

The tax credit incentivized myself and my wife. I’m not sure if we qualify for “very high income”, but we could afford a Taycan, so there’s at least that. And it wasn’t “barely” or “marginal”, so it’s not like we couldn’t afford it without the credit.

I can honestly say I don’t know if we would have purchased one without it. It’s possible. But it was definitely part of our discussion. Anecdotal, but I share none-the-less.

In any case, anytime this argument is brought up, I always think that the number of very high income people is small, so the cost to include them would also be small, relatively, while the cost to exclude them might be that they don’t support the programs.

And I’ve mentioned the positive transaction utility the credit serves several times before in other posts, which AFAIK, doesn’t have an income cap.

 

[Jrkennedy37]

$10K is still 10,000 time more than $1
There are plenty of people who will take a free or even sub $1,000 EV, but will balk at $9,000.

Curious what sales numbers look like. The marketing approach seems to hinge on the $7500 tax credit - four figures for a car reminds me of the daewoo days.

 

[Jhenson29]

Have you heard of Kandi? It’s not far off these stats and available in the US for sub-$10k (after $7500 rebate)

Their website says top speed of 25-35mph. I think we’re taking about golf carts instead of cars at that point…?

 

[madeyong]

I have not researched this at all so this is just a personal view (and I have no interest in debating the politics of the issue), but I have always felt like the primary purpose of the Federal credit was NOT to benefit the EV consumer but instead to benefit the EV manufacturer, with the overall goal of reducing the amount of ICE cars on the road.

The rebates simply make it easier for the manufacturers to sell EVs and that in turn incentivizes traditional ICE manufacturers and other EV startups to invest in the R&D and other required capital needed to make the leap into the product line.

With that purpose in mind, the 200,000 limit before phase out of the rebate made total sense. Once a Tesla/GM, etc. passes that threshold they have ramped up sufficiently, established their market and no longer “need the help” to continue to put out their EVs.

If you view the program this way then stripping the rebates from high income earners or from high dollar EVs is counterintuitive. You want to get as many manufacturers motivated to produce as many EVs as possible. That’s what’s needed to make a dent in the greenhouse debate. Indeed, some of the least environmentally friendly ICE cars are in the luxury market. Limiting the credit in the manner being proposed just turns this into a consumer focused tax cut and shifts the primary focus from expansion of the EV market to access to the EV market. Just my $0.02.

 

[Superrat]

Sorry Mike I may not moderator but I am a moderate from CA
The idiot PPrior from Florida started with his stupid climate change comment.

 

[kort]

Sorry Mike I may not moderator but I am a moderate from CA
The idiot PPrior from Florida started with his stupid climate change comment.

a moderate you say? so being a moderate entails making an insulting remark because someone voiced an opinion you don't agree with? that isn't very moderate.

this idiot from FLA concurs with the remark you are so uncomfortable with.

 

[Jrkennedy37]

Their website says top speed of 25-35mph. I think we’re taking about golf carts instead of cars at that point…?

Lol, didn’t realize you need the upgraded model to hit highway speeds. With state incentives it can cost as little as $6k. There’s a lot full of them down the street from me in Dallas, which is the only reason I heard of them.

Would be hard to stomach the MSRP without the tax credits, though I guess it falls well within the proposed thresholds for eligible vehicles. Considering the upgraded model is $27k, it’s not exactly competitive with the features of other $27k ICEs or PHEVs in the market and demonstrates the type of vehicles that are incentivized with limits on MSRP. Will it sell? That’s what I’m most curious about.

 

[WilderAZ]

Is there data to back up that statement or is it just how you feel? Sincerely asking. I’ve never seen any data on it.

The tax credit incentivized myself and my wife. I’m not sure if we qualify for “very high income”, but we could afford a Taycan, so there’s at least that. And it wasn’t “barely” or “marginal”, so it’s not like we couldn’t afford it without the credit.

I can honestly say I don’t know if we would have purchased one without it. It’s possible. But it was definitely part of our discussion. Anecdotal, but I share none-the-less.

In any case, anytime this argument is brought up, I always think that the number of very high income people is small, so the cost to include them would also be small, relatively, while the cost to exclude them might be that they don’t support the programs.

And I’ve mentioned the positive transaction utility the credit serves several times before in other posts, which AFAIK, doesn’t have an income cap.

Yes, elasticity of demand is well researched and understood. The CBO, congressional staffers, and executive branch divisions will all have calculated the likely impact under multiple scenarios. I do not have access to the specifics but one could make a FOIA request. Consider an extreme example by comparing the likely impact of a $7,500 tax credit on a hypothetical $10,000 car versus a $1 million car. Where do you intuitively believe the credit will have the greater impact on unit sales? Consider the same for low and high income earners. Whose behavior is more likely to be altered?

Like you, I fall somewhere in between. The credit was certainly an inducement. It probably was not a deciding factor. I have not seen chatter in this forum from buyers cancelling their orders because they are unlikely to receive a credit on their 2022 deliveries. Annoyance yes, cancellations none.

 

[Jhenson29]

Yes, elasticity of demand is well researched and understood. The CBO, congressional staffers, and executive branch divisions will all have calculated the likely impact under multiple scenarios. I do not have access to the specifics but one could make a FOIA request.

My apologies. I asked “is there data”, but what I meant was “do you have data”.

You’re making a claim and basing it on data you suspect exists to support it? Just clarifying.

Consider an extreme example by comparing the likely impact of a $7,500 tax credit on a hypothetical $10,000 car versus a $1 million car. Where do you intuitively believe the credit will have the greater impact on unit sales? Consider the same for low and high income earners. Whose behavior is more likely to be altered?

I agree that since the credit is a fixed amount and not relative to the vehicle, its benefit’s utility decreases as the vehicle price increases. There’s data to back that broader idea up generally.

But the number of cars as a percent of total cars sold will tend to decrease as the vehicle price increases as well. How many $1M cars were sold last year in the US? What is the costs to include $1M electric vehicles in the credit?

Regardless, while I’m sure it’s diminished in the $100k-$200k range, I wouldn’t dismiss it. And, again, consider relative vehicle sales and cost of inclusion.

I have not seen chatter in this forum from buyers cancelling their orders because they are unlikely to receive a credit on their 2022 deliveries. Annoyance yes, cancellations none.

Perhaps not, but we also don’t know how many of those people’s initial interest was influenced by the credit, whether or not they cancel if the credit is removed.

It’s also a small subset of buyers that are possibly more enthusiastic than the general population of Taycan buyers since they joined and participated in a Taycan forum.

 

[Jrkennedy37]

I’ll raise my hand and say the $7500 is a factor. Spec’d a CT4 to $107,530 to stay in the budget (plus $31) including the federal tax credit. It’s a material percentage of the vehicle cost. It’s not slated to be delivered this year and I don’t like the fact we’d be paying full price for a year old vehicle, so we requested deposit back and are sticking with my wife’s diesel X5 which is extremely fuel efficient in its own way.

Not buying a new car might be more environmentally friendly (overall) compared to trading in for a new EV, but that’s an entirely different debate that I haven’t prepared for.

 

[kort]

FWIW: there is no tax credit currently available for any tesla as they have sold way more than the 200k car allocation permitted under the program.

as for saving money, who doesn't like spending less? Until I sold my property in NJ I would buy my EVs in NJ because the state incentive is no sales taxes are due on EV cars sold and registered in NJ.

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