Featured Will killing the Federal EV tax credit kill the EV market?

it would definitely put a damper on things. my bigger concern would be manufacturers putting them on the back burner. that is what happened with wind and solar, and it has taken much longer than it should have.

 

The Federal incentive tapers off after 200,000 units which means the latter Model 3 owners won't see it. I suppose someone could find a scoreboard for the different manufacturers but it was never supposed to last forever. Meanwhile, there are other incentives that would (should) continue.

The reason why I posted this is I live in a fly-over state. I'm trying to figure out a good argument to send my Congress-critters but I keep running into the Federal credit ending anyway.

Bob Wilson

 

Without bothering to look up numbers, Tesla, GM, and Nissan are the companies closest to using up their credit allotment. So the federal tax credit will influence sales for the others for years still.

Then again, why should we award the slackers for waiting while the pioneering companies helped push the technology forward?

There are worse things in the proposed tax bills for me to be concerned with than this. Plug in sales will slow without it in the US, but CARB will keep them going. Then this won't effect plug in sales in the rest of the world.

 

One nice thing is the removal of the tax credit is not in the senate bill. The other thing is I think it should expire, but not next year. The tax credit has done most of its job. Making the last year 2019 makes sense. Those that invested because of the tax credits or would have anyway - Nissan, GM, Tesla will have maxed out at least the full credits, and most of the partials by then. The slackers don't really deserve it.

One reason wind and solar had slow adoption was the technology was too expensive, and these costs needed to be brought down. In the case of the model 3, the technology is there to make these things profitable today with current technology. Sales in the US might be lower and growth slower without credits, but there is a big market in europe and china as well. Tesla, BYD, Nissan, Mercedes, and BMW are investing in plug-ins no matter what the US policies are.

For wind, the slowness in adoption was not price when technology got here around 1999, but regulation. There had to be a way to pay for the upfront investment, and various PUCs and state regulators acted against it. Still wind grew quickly in many markets.

For solar there was a hype cycle in the 70s and 80s, that never materialized. Really pouring more money into it at that time would have been wasted. In 1991, NREL was established and that is where the tech really started getting attention. Still high costs really meant this was a R&D type thing. I don't know if the US has been moving slow or at the right speed since then. Grid improvements were needed and regulatory changes to get adoption, not solar investment.

 

Here's what's selling Plug-Ins, besides consumer preference (which is probably not strong enough yet)-
> Fed Credits
> State Credits
> Ca. mandates
> HOV Privileges (mostly Ca.)

I view it like Ca. Green HOV Stickers, which were supposed to end at 40000 end 2019. Yes it would be a severe blow, so these incentives will need to be kept alive indefinitely to sustain the market, and not too much doubt in my mind the Dems will extend it, if they get a chance (and there will be *some* bipartisan support of that too- Michigan etc). You heard it here first.

 

i wonder how many model 3 reservations would get cancelled without the credit?

 

Less than half would get the credit even if it continued as planned. So absolute worse case would be half, if every single one of the people that thought they were in the first 200,000 Model 3 orders canceled.
I think the loss of tax credit will hurt S orders more than 3s.

 

+1

There are about 450,000 deposits (not orders yet). I doubt they would actually kill the credit in 2018, its more likely 2019, but I don't think that many of the deposits would be able to get the full tax credit. Tesla likely will hit 200,000 in the US in Q1/2018 or Q2/2018 which would mean full tax credit through june or september, tesla can make us customers wait to get the credit for longer. If its Q1 and they are making 5000/week then that is 65,000 cars. Then 130,000 cars at $3750 (I doubt they will speed up to 10,000/week) plus maybe 30,000 cars through q1 bringing us to 95K at full credit, 130K at half credit and 225K pushed out to 2019 likely with no credit. If its Q2 then they may have built ahead lets say 20,000 model 3s in q1, 130,000 more in q2 and q3, with 65K at half credit. Now we have 150,000 at full credit 65,000 at half credit and 235K pushed out to 2019 with no or half credit or less.

I believe that many of these 235K would not wait, but if the car is good enough others will buy in at a price in 2019. Would 200,000-250,000 buy a model 3 at higher prices if there is no federal tax credit in 2018? I think its likely. Tesla has stimulated demand. States like california still will be poping incentives. There may be fewer upgraded high profit margin cars though. The model S becomes less attractive in the US and those sales would be hit. Tesla's stock would go down. A full plant in China 3 years from now would likely be delayed as well as expendatures to raise production from 5000/week to 10,000/week. Who knows maybe manufacturing challenges are easier than I think, and they could produce all the cars they say, then it definitely would hurt.

Tesla is doing an apple type strategy to stimulate desirability. The model 3 sounds as if it may be even better than tesla is talking about, but they haven't let the car mags review it. This weekend they are letting institutional investors drive it. They seem to really like it. Barron's said they think the market is much larger than the sports sedan market (bmw 3 class, merceds c class, lexus es and is, audi a4, etc) and might pull people from their camrys and accords. On said they see manufacturing problems and panel gaps. All seem to love how it drives. Opinions on the big screen are mixed, but they all think its better than they expected. Maybe tesla needs to put in a rain sensor and a heads up display, something they probably have designed and could add it if that is what it takes for demand. The analyst that talked about the panel gaps got told by telsa they were ahead of where they were with the model X at this time. Its probably true. Shooting for 5000/week instead of 10,000/week gives them more time to fix these problems for the next model 3 shipped.

The loss of the credit does probably many lower bolt, leaf, i3, and volt sales in 2018 if it happens. On the prime I'm not sure. Its still a good value proposition especially in states like california and texas where state incentives don't care about battery pack size.

 

I agree with your numbers, I was mainly trying to show that even with absolute worst numbers, as well as assuming Tesla ramps up at just the right time, the sales won’t disappear.

 

Would a Model S buyer make more use of the tax credit, sure. But that buyer may also be in the income strata where they can just buy the car they want. If comparing a Mercedes or BMW or Porsche, even without the tax credit the S is affordable.

 

I don't mind at all if they kill the EV subsidy,



so long as they kill every coal, gas, oil, ethanol, and dealership subsidy first!


Of course we all know that will never happen, especially with the current admini$tration (and I use that term loosely)

 

i can afford a prime, but might add no tax credit to my list of likes and dislikes. but if it's going to be a plug in, they all get the black mark.
we have had some members buy a prime because the price was so close to the lift back.

 

Are you saying your next car will not be a plugin?

 

i should have been more clear, there's no turning back. hoping the next one won't even have an engine of terror.

 

The person who kept referring to it as a "stinker" is no longer here. Are you going to leave us too?
Think of all the poor 12 V batteries that will suffer!

 

i believe bev's still have a 12v to get things started. if i leave you, it will be for a shallow grave.

 

I meant if you left, there would be nobody to tell users in trouble to change their 12V battery.

 

i will confer the honor on a worthy successor. (it won't be the lady from florida)