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Plug-in Federal Credit Phase-out

Discussion in 'Chevrolet Volt' started by iplug, Oct 5, 2015.

  1. iplug

    iplug Senior Member

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    In some ways a good problem to have, showing success of PHEV/BEVs. But what will happen to this market when auto manufacturers hit their federal phase-out point initiating at 200k vehicles per manufacturer?

    I posted this new thread here as GM will likely be one of the first to hit this target in the non-luxury segment where the federal tax credit is a large portion lopped off the purchase/lease price.

    For those unfamiliar:

    Qualified Plug-In Electric Drive Motor Vehicle Credit (IRC 30D) Phase Out
    The qualified plug-in electric drive motor vehicle credit phases out for a manufacturer’s vehicles over the one-year period beginning with the second calendar quarter after the calendar quarter in which at least 200,000 qualifying vehicles manufactured by that manufacturer have been sold for use in the United States (determined on a cumulative basis for sales after December 31, 2009) (“phase-out period”). Qualifying vehicles manufactured by that manufacturer are eligible for 50 percent of the credit if acquired in the first two quarters of the phase-out period and 25 percent of the credit if acquired in the third or fourth quarter of the phase-out period. Vehicles manufactured by that manufacturer are not eligible for a credit if acquired after the phase-out period.
    ​
    Looks like GM is coming up on 100k soon and with the Bolt scheduled to start production next year, it is very likely that GM will hit phase-out during then Gen 2 Volt and Gen 1 Bolt production cycles.

    Will costs drop sufficiently to cover the evaporation of a $7,500 tax credit?
     
    #1 iplug, Oct 5, 2015
  2. wjtracy

    wjtracy Senior Member

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    OK I see you are saying non-luxury (non Tesla) market.

    Most of the cost is the battery which looks like everyone going with LG Chem in Korea, which I guess means Nissan may shut US production? But due to strength of dollar (vs. Korea I am not sure) cost will come down if everyone is importing batts (except Tesla).

    But how fast can LG CHem make Li batts if everyone is using their batts in the future? Maybe Bolt works as advertized but not so many out there to allow going thru 200k cars in short term. You are envisioning EV's flying off the shelf with LG batts, but how many can fly if batt is single source?
     
    #2 wjtracy, Oct 5, 2015
  3. bisco

    bisco cookie crumbler

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    good question, or will congress extent? tough call with the election looming and the 'fragile economy'.
     
    #3 bisco, Oct 5, 2015
  4. iplug

    iplug Senior Member

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    Yes, mostly referring to the non-Tesla market.

    Volt 2.0 sales would not have to double Volt 1.0 sales for GM to hit 200k vehicles before the end of the production cycle. The Bolt would only move up that date.

    Understandably PHEV/BEV sales have softened up in the last year with the next generation of Volt and Leaf around the corner. But Tesla seems to be the only continuously shining spot in the PHEV/BEV world.
     
    #4 iplug, Oct 5, 2015
  5. bisco

    bisco cookie crumbler

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    totally different market. people with money to burn.
     
    #5 bisco, Oct 5, 2015
  6. Sergiospl

    Sergiospl Senior Member

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    Who Wants To Be Annoyed? I-Team Finds EV Incentive Money Is Wasted, Plug-Ins For Wealthy People Headed To Cocktail Parties – Video
     
    #6 Sergiospl, Oct 8, 2015
    Last edited: Oct 8, 2015
  7. JimN

    JimN Let the games begin!

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    #7 JimN, Oct 8, 2015
  8. fotomoto

    fotomoto Senior Member

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    I said this before when the tax credit for EVSE's was scheduled to run out: Prices will drop. And sure enough they did. Low end prices for level II EVSE's during the credit were about $700 now they are under $400. I realize other market factors (more competitors, increase in market size, etc) had a hand too.
     
    #8 fotomoto, Oct 8, 2015
  9. Trollbait

    Trollbait It's a D&D thing

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    Which the credit helped to foster.
     
    #9 Trollbait, Oct 14, 2015
  10. Jeff N

    Jeff N The answer is 0042

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    LG Chem has a battery cell factory in Michigan that supplies GM and also Ford for the Focus EV.
     
    #10 Jeff N, Oct 14, 2015
  11. dbcassidy

    dbcassidy Toyota Hybrid Nation, 8 Million Strong

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    Not true, many folks that I know driving the Prius didn't care about the tax credits, they, like me, bought the car. Legacy, reliability, Toyota engineering, vision, and a well thought out marketing and sales approach keeps it number 1.

    That can not be said of the Volt, with all the credit offered, taxpayer bailout, from 2012 to current, Volts' year end sales numbers keep sliding downward.

    DBCassidy
     
    #11 dbcassidy, Oct 14, 2015
  12. wjtracy

    wjtracy Senior Member

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    Prius was off and running by the time the credits came in...and they went fast as not many vehicles were allowed. It was really designed to help other companies catch up with Toyota on hybrids...when that did not work, US decided to focus on plug-ins since Toyota was not ahead there and others could play that game.
     
    #12 wjtracy, Oct 14, 2015
  13. Trollbait

    Trollbait It's a D&D thing

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    Replying to someone that bought a gen2 before the credits.
    Also replying to a post that is a reply to a post about the EVSE credit ending. Without it, and the traction battery credit, to help defray the cost, less companies likely wouldn't have taken the risk to enter the market, and then we wouldn't have gotten cost reductions due to "other market factors (more competitors, increase in market size, etc)."

    The hybrid credit in the US may have been too small or short to really impact manufacturers decision on hybrids. But there was also a gas price spike, cash for clunkers, raising CAFE, etc. to help push them along. The gen2 Prius was already a hot seller before them.

    And so is the Gen3 Prius sales.
     
    #13 Trollbait, Oct 15, 2015
  14. dbcassidy

    dbcassidy Toyota Hybrid Nation, 8 Million Strong

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    Better hope the Bolt and Malibu take off. The Volt is dying.

    DBCassidy
     
    #14 dbcassidy, Oct 16, 2015
  15. iplug

    iplug Senior Member

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    GM is nearing the half-way point to the federal tax credit rapid phaseout with about 85k vehicles sold in the U.S. as of October:

    GM Sells Its 100,000th Volt in October - HybridCars.com

    It will be interesting to see what happens to sales in the next very few years when GM will likely hit the 200k sales wall and the $7.5k federal incentive rapidly evaporates. If Georgia is any indication of what happens when these incentives dry up, it will look pretty bad (yes, these are BEVs, but the demographics are likely similar):

    Georgia Electric-Car Sales Plummet After Incentive Replaced By Tax
     
    #15 iplug, Nov 5, 2015
    Last edited: Nov 5, 2015
  16. El Dobro

    El Dobro A Member

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    Almost like waiting to see what happens when the federal incentives stop for solar installations.
     
    #16 El Dobro, Nov 6, 2015
  17. Zythryn

    Zythryn Senior Member

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    You will get something similar, but less pronounced.
    Before the incentives expire their will be a bit of a sales surge.
    Immediately after there will be a dip (since those considering it rushed) and then a continued (but slower) rise.

    Now, if the government simultaneously adds an overly sized annual fee, as they did in Georgia, the dip in sales will be greater.
    I expect at least a couple of years if not three for GM, Nissan and Tesla at about two to two and a half.
     
    #17 Zythryn, Nov 6, 2015
  18. iplug

    iplug Senior Member

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    Yes, with a 30% federal tax credit, this should show up as a rush to install before expiration then both a significant immediate and more drawn out lull thereafter.

    With a $100k Tesla, a few thousand in State incentives are enough to accelerate some sales prior to expiration, but as a relatively small percentage of the overall cost of the vehicle, sales should pick back up markedly faster than a Volt or Leaf. I would predict a farther spread with Tesla vs. Volt or Leaf.

    The Volt or Leaf, OTOH, where the incentives move well into the double digits of the percent cost of the vehicle, can expect very large sales losses more on the order of many years.

    As for the fee, that was a kick in the pants, but small compared to the withdrawal of the incentives.
     
    #18 iplug, Nov 6, 2015
  19. dbcassidy

    dbcassidy Toyota Hybrid Nation, 8 Million Strong

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    I take that your main reason to buying a vehicle would be:" can I get tax credits for this vehicle"?

    DBCassidy
     
    #19 dbcassidy, Nov 7, 2015
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