Featured Others losing the Federal Tax Credit after Tesla

Ladies and gentlemen, I introduce to you the king of non sequiturs.

 

I guess if I'm dining from that menu, I say phase 'em all out. Tax credits are big, unwieldy instruments fraught with unintended consequences. I think this one mostly sort of worked, and that's good enough. Put down the chainsaw, the patient's cataracts are better now, a second pass isn't going to help.

 

You know quite well how that relates to the use of tax-credits.

 

...my prediction is Congress will works towards extended tax credits, or mandates for CAFE credits, or whatever is needed to encourage the plug-in market. Not that I favor that, but I do not favor E10 ethanol madates either.

 

Lets face it, two things have worked very well

1) The American and Chinese subsidies incubated the technology
2) Tesla proved that big Auto was wrong about plug-in vehicles

Between the North American (US + Canadian) and Chinese market there were 19.3M and 24.7M cars sold respectively out of about 90M cars in 2017. This year about 2% will be plug-ins in these markets.

Subsidies in the two largest car markets for plug-ins probably are not needed much longer. It is unfair to the leaders to continue to subsidize the laggards for a long time. In the leaders are Tesla and GM, and they are going to be phasing out subsidies. Probably the most productive thing would be

A) higher oil tax to continue the market and help pay for roads
B) A phase out for other car companies, say 1 or 2 years after tesla.

Any longer and tesla gets a big disadvantage as Toyota or VW could just wait, prime a factory, and pump out subsidized cars 3 years from now making it hard for gm and tesla to compete for a year.

 

i think Trollbait's incentives / credits / tax brakes complete "stop" includes those doled out to big oil (for decades & decades). The end result being higher costs for fossil fuel - likely driving more to plugins than government incentives ever could. Of course the Koch brothers will assure that will never happen so that's crazy talk.
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There is already a plug in benefit for CAFE. Each one sold counts as 1.2 to 1.7 cars(going from memory) for the purpose of calculating the company's fleet average.

We need to that or tax it just to keep people buying the more efficient cars.

 

It should be interesting to see what will happen in the used vehicle market once these credits expire. Some of these vehicles currently have pretty stunning rates of depreciation ( vs. MSRP before credits ).

 

I am guessing some movement, but not a lot while other manufacturers are still getting the credits.
Once all the credits are gone, depreciation in EVs will be the same, or less than traditional vehicles (especially if the oil subsidies are ended).

 

And remain very serviceable. Great bargains.

Bob Wilson

 

I still think this bit is yet to be proven. I'm optimistic in general but it's very tough to predict how a car will handle when it is 10-15 years old.

 

Well, for one thing, they drop in "value" by at least the value of the tax credit the moment they are driven off a lot. Prius Prime loses $4500 in value as soon as it is sold, since there is no tax credit on a resale. The Volt loses $7,500. A $35K Volt immediately becomes $27.5K as soon as it is sold, plus the "normal" depreciation for driving it off the lot. I'd expect a Volt to lose 30-40% of its sale price in the first year because of this.

So in reality the tax credit does little overall for someone who will drive a vehicle for only 3-5 years and sell it or trade it in, since they will eat all the depreciation caused by the tax credit. But it does make them more affordable for someone who is going to drive them for many years, for basically the expected lifetime of the vehicle.

 

That's low-volume thinking, certainly not product-cycle in any regard.

In other words, don't let the cycle repeat by simply extending. Any automaker can rollout a design not capable of achieving & sustaining profitable sales.

What should the goal be? You know, actual accountability...

 

Well, the only difference between a BEV and traditional car is the motor, its gear box, and battery replacing the engine, transmission, and fuel system. We know from industrial use that motors with gear boxes have a long service life; longer than an engine. They have simpler maintenance requirements, making it harder to mess that up. The engine and transmission simply have more places where something can go wrong.

The battery is the unknown part, but the data is showing they can have a long life if they have proper thermal management. Since batteries are still improving, future ones will be even better. Upgrading an old BEV to new battery tech can be much easier than putting an improved engine or transmission into a modern car.

In general a BEV will be easier to maintain and last longer. That might not hold true to specific models though. Coolant leaks into the battery would be bad for a model's life, for example. Then location plays a part in any vehicle's lifespan.

 

I tend to agree that the simpler mechanical components of an electric car stand to do well over time.

I'm more worried about software-driven stuff. Bugs that don't get detected because they don't occur until a certain offset from the start (think Y2K) or bugs that can't be fixed because the code is proprietary and the company has arbitrarily terminated support.

To be fair these problems can occur in traditional cars too, but I'm nervous about them taking center stage on aging electrics.

 

10yrs average miles? at 12K miles a year? 120K miles and beyond? Mileage accumulation has already been graphed;
Tesla battery degradation at less than 10% after over 160,000 miles, according to latest data | Electrek

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the Nissan Leaf has a stunning rate of depreciation because it has a stunningly poor thermal management system on its battery, causing it to literally destroy its own traction pack from heat. Heat is the great enemy of a battery. What's really horrible is the newer models packed their cells even closer together, & early evidence already shows they are degrading even faster than the paltry little tiny battery that they first came out with - because they are not liquid cooled. The newest one has greater range, but because the battery gets so hot so quick, and no real way to cool itself - if it is quick charged just one time, it will be too hot to Quick Charge at the completion of that refuel.
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These have already happened to traditional cars and hybrids.

The balancing of emissions, fuel economy, reliability, and performance in an engine requires more sensors and lines of code than they ever will for an electric motor, and it will just increase with time. Electronic valve timing is already starting to filter into the consumer market. What makes a motor reliable mechanically, makes them reliable on the software side too.

 

Yep...there are some incredible deals out there. Kind of feel bad for the original owners though!

 

Totally agree...once the tax credits end it seems like depreciation will be similar to any other vehicle. However, I wonder if the manufacturers will lower MSRP 's accordingly to 'compensate' for the loss of the credit. Will be interesting to see what happens.