Senate Bill Deal to Expand EV Tax Credits (7/27/2022)

[DennisD]

If the tax credits are so critical to EV adoption, why is it that every single EV built gets sold right away or they are all on back order? That includes all the Tesla and GM EVs. The problem is not a lack of customers, it is a lack of capacity to build them.

I, for one would not have ordered an EV w/o the tax credit. While I realize that "mine" would have been sold to the next guy, I feel that this incentive is needed to spur more growth in this much needed field of powering vehicles.

While it is true that they can't meet the demand currently because of supply issues, I am sure that there are many out there just like me that would not pull the trigger unless it is incentivized. The supply chain will recover and we will have had a kickstart to this mode of fueling cars.

On a pure dollar to dollar cost, EV's (even with the high gas prices) aren't quite there yet to offset the higher cost compared to hybrids and other cars that get decent mileage. The incentives shave a little of the anxiety if you will, to purchase a "unique" car like the EV's.

I also invested in Solar Panels for my home. Once again, had there not been a tax credit on that, I would have not purchased them either.

For my tax year of 2022, I will save over 15K when it is all said and done with both the MME and my solar panels.

This helps spur the economy and it helps my pocketbook. Win-Win.

Just my two cents. (well actually 1,500,000 cents with the tax credits)

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[dbsb3233]

I, for one would not have ordered an EV w/o the tax credit.

Would you have if the MSRP were just $7500 less instead?

While it may not be that exact amount, pretty good chance the MSRP would be somewhere in that area when the tax credits end and are no longer artificially manipulating prices.

 

[ARK]

I, for one would not have ordered an EV w/o the tax credit. While I realize that "mine" would have been sold to the next guy, I feel that this incentive is needed to spur more growth in this much needed field of powering vehicles.

While it is true that they can't meet the demand currently because of supply issues, I am sure that there are many out there just like me that would not pull the trigger unless it is incentivized. The supply chain will recover and we will have had a kickstart to this mode of fueling cars.

On a pure dollar to dollar cost, EV's (even with the high gas prices) aren't quite there yet to offset the higher cost compared to hybrids and other cars that get decent mileage. The incentives shave a little of the anxiety if you will, to purchase a "unique" car like the EV's.

I also invested in Solar Panels for my home. Once again, had there not been a tax credit on that, I would have not purchased them either.

For my tax year of 2022, I will save over 15K when it is all said and done with both the MME and my solar panels.

This helps spur the economy and it helps my pocketbook. Win-Win.

Just my two cents. (well actually 1,500,000 cents with the tax credits)

The issue is manufacturers simply raise their prices when they know the incentive is available. This was seen with both Tesla and GM immediately cutting their costs as they lost the tax credit.

On top of this, putting purchase price aside for a second, do you agree that the exact same vehicle with an EV powertrain is overall a better vehicle for most people to drive/own because it provides better performance and is cheaper to operate? If so, the prices don't bear that out, the incentives make the cars too cheap.

Here are a couple of examples, where it is easy to compare, because the manufacturer sells the same car as an ICE and as an EV.

Hyundai Kona: The EV version starts in SEL trim and begins at $34,000. The ICE version of the SEL begins at $23,100. With the federal tax credit, the EV's price drops to $26,500. You are in Nebraska, your state has a $4,000 incentive. Factor that in, and the price drops to $22,500. So the better performing vehicle that will be much cheaper to operate will cost less than the ICE version?

BMW i4/430i Gran Coupe: They give it different names, but the BMW i4 e40 EV is basically an EV powertrain on a BMW 430i Gran Coupe. The 430i starts at $45,900. The i4 starts at $55,900, the federal tax credit brings it down to $48,400. Your state's Nebraska tax credit brings it down to $44,400. So same thing, if the i4 e40 is a better vehicle than the 430i Gran Coupe, why is the government using public money to make it cheaper than the inferior vehicle?

If you think EVs still require too many trade offs, the same holds true with plug-in hybrids which benefit from the federal tax credit and some state tax credits (but not Nebraska's).

Take for example the Ford Escape SE plug-in hybrid. It starts at $35,455. The regular non-hybrid ICE version starts at $28,520. The EV qualified for $6,843 in federal tax credits, bringing the plug in hybrid's price down to $28,612, just a hair more expensive than the normal version which is totally unable to operate on electricity.

So the government is spending public money on vehicle subsidies that (1) are largely just being captured by the manufacturer by gaming the pricing, and (2) to the extent some of it really is being passed on to consumers, it is making vehicles that are inherently better cheaper than their ICE equivalents. That's what people mean when they say the incentives go too far, or that if public money is going to be used for pushing EV adoption, it is better spent on something like building out the infrastructure.

 

[DennisD]

Would you have if the MSRP were just $7500 less instead?

While it may not be that exact amount, pretty good chance the MSRP would be somewhere in that area when the tax credits end and are no longer artificially manipulating prices.

Not sure why you are "speculating" that the price would go down once the tax credit would expire?

When the tax credit expired on the Tesla, how much did it go down?

I will give you a hint, it rhymes with beer oh.

With your logic, the MME's price should go down in 2023 by around $3,000 dollars.

Would you be willing to wager that it won't?

 

[DennisD]

Hyundai Kona: The EV version starts in SEL trim and begins at $34,000. The ICE version of the SEL begins at $23,100. With the federal tax credit, the EV's price drops to $26,500. You are in Nebraska, your state has a $4,000 incentive. Factor that in, and the price drops to $22,500. So the better performing vehicle that will be much cheaper to operate will cost less than the ICE version?

Thanks for proving my point. ?

No tax credit, almost zero savings.

I would have bought the ICE had it not included the tax credit.

 

[ARK]

Thanks for proving my point. ?

No tax credit, almost zero savings.

I would have bought the ICE had it not included the tax credit.

With no tax credit, pricing would be very different. Guess how much the Chevy Bolt, GM's equivalent to the Kona, costs? If you guessed something with a 3 in front of it like with the Kona EV, you'd be wrong. The Bolt starts at $25,600. That's point one.

Would you pay the same for an EV as an ICE? A little bit more for the EV given all the benefits? Incentives make the EV a little bit less than the ICE. That's point two.

 

[NJ_MachE]

Would you have if the MSRP were just $7500 less instead?

While it may not be that exact amount, pretty good chance the MSRP would be somewhere in that area when the tax credits end and are no longer artificially manipulating prices.

In New Jersey it was possible to get a MY21 or MY22 base Select for under 30k, tax free. This was before anything on the manufacturer side like the $2500 Ford Options incentive. That makes it cheaper than ICE's in it's class. No way it would have been marketed anywhere near that price sans incentives. I think it's quite obvious the manufacturer is not pocketing the entire benefit of a tax credit.

 

[DennisD]

With no tax credit, pricing would be very different. Guess how much the Chevy Bolt, GM's equivalent to the Kona, costs? If you guessed something with a 3 in front of it like with the Kona EV, you'd be wrong. The Bolt starts at $25,600. That's point one.

Would you pay the same for an EV as an ICE? A little bit more for the EV given all the benefits? Incentives make the EV a little bit less than the ICE. That's point two.

I know of no EV that drops their price when the tax credit expired.

Do you?

If the Bolt cost 26K, I would guess that if it were an ICE car, you would pay under 20K. See Nissan Versa at 17K.

If you build in a tax incentive, one would be more apt to gravitate to the EV version. Now I know that there would be people that buy it w/o a tax incentive, i.e. Tesla, but the vast majority aren't there yet. If we want to get to a net zero, we (the Govt.) need to make it more attractive to get to that point.

For those on the fence (me included) the tax incentive brought me over the finish line.

To curb climate change, we need to get away from ICE and move toward the alternatives.

A tax incentive is partly how we get there.

 

[BigMach-E]

In New Jersey it was possible to get a MY21 or MY22 base Select for under 30k, tax free. This was before anything on the manufacturer side like the $2500 Ford Options incentive. That makes it cheaper than ICE's in it's class. No way it would have been marketed anywhere near that price sans incentives. I think it's quite obvious the manufacturer is not pocketing the entire benefit of a tax credit.

How? If so, in Cali, I grossly overpaid for my MY21 Select AWD.

 

[NJ_MachE]

How? If so, in Cali, I grossly overpaid for my MY21 Select AWD.

Assuming enough federal tax liability, the $7,500 tax credit, plus $5,000 point of sale state rebate for EVs under 45k. NJ does not charge sales tax on any EVs. I'm also referring to the RWD version, for transparency's sake. If we want to throw in manufacturer discounts, we could add the $2,500 Ford Options rebate. The point is not that you overpaid. It is that the incentives encouraged people like me to buy when we otherwise wouldn't have (or would have at least waited). Because the buyer does get a financial benefit.

 

[dbsb3233]

In New Jersey it was possible to get a MY21 or MY22 base Select for under 30k, tax free. This was before anything on the manufacturer side like the $2500 Ford Options incentive. That makes it cheaper than ICE's in it's class. No way it would have been marketed anywhere near that price sans incentives. I think it's quite obvious the manufacturer is not pocketing the entire benefit of a tax credit.

Not the federal PLUS that huge NJ benefit too (especially the sales tax exemption). I just meant the federal credit. Ford wouldn't change the MSRP just in NJ.

 

[timbop]

Would you have if the MSRP were just $7500 less instead?

While it may not be that exact amount, pretty good chance the MSRP would be somewhere in that area when the tax credits end and are no longer artificially manipulating prices.

With no tax credit, pricing would be very different.

The COSTS for manufacturers to build the car don't change without the tax incentive. Ford touted how they were profitable on the Mach-E; I very seriously doubt there is a $7500 margin in there that Ford could do without. Ford MIGHT have lowered the price some without the tax incentive, but not $7500 worth. Which means they would have had to cut costs, making the car something different than what it is now - something like the Bolt EUV with its continued economy feel and 50kw charging. Ford did that before, and it took 10 years to sell 100,000 of them.

NO, in order to make them compelling cars that people want to buy they could not simply cut the price $7500.

 

[ARK]

I know of no EV that drops their price when the tax credit expired.

Do you?

If the Bolt cost 26K, I would guess that if it were an ICE car, you would pay under 20K. See Nissan Versa at 17K.

If you build in a tax incentive, one would be more apt to gravitate to the EV version. Now I know that there would be people that buy it w/o a tax incentive, i.e. Tesla, but the vast majority aren't there yet. If we want to get to a net zero, we (the Govt.) need to make it more attractive to get to that point.

For those on the fence (me included) the tax incentive brought me over the finish line.

To curb climate change, we need to get away from ICE and move toward the alternatives.

A tax incentive is partly how we get there.

Yes, Tesla cut prices a bit and GM started offering big incentives on the Bolt when those companies started to lose their tax credit eligibility.

 

[dbsb3233]

Not sure why you are "speculating" that the price would go down once the tax credit would expire?

When the tax credit expired on the Tesla, how much did it go down?

I will give you a hint, it rhymes with beer oh.

With your logic, the MME's price should go down in 2023 by around $3,000 dollars.

Would you be willing to wager that it won't?

They won't at the moment because the market is so high from demand being so much higher than supply. But I'm talking a normal situation. For instance, that's what happened with the Bolt. When GM ran out of credits, they offered big discounts on the Bolt. In fact at one point shortly after GM's expired, I was looking at them and Chevy was offering an $8500 off incentive, even bigger than the $7500 tax credit that went away.

If the federal tax credit ended for everyone, and this were a normal market, most EVs would normalize their prices (i.e. bring them down from the subsidy-inflated US MSRPs they have now). But of course there's other factors pushing and pulling on that too. There always is with pricing. Like supply & demand, staying in line with other competitors, etc.

 

[ARK]

The COSTS for manufacturers to build the car don't change without the tax incentive. Ford touted how they were profitable on the Mach-E; I very seriously doubt there is a $7500 margin in there that Ford could do without. Ford MIGHT have lowered the price some without the tax incentive, but not $7500 worth. Which means they would have had to cut costs, making the car something different than what it is now - something like the Bolt EUV with its continued economy feel and 50kw charging. Ford did that before, and it took 10 years to sell 100,000 of them.

NO, in order to make them compelling cars that people want to buy they could not simply cut the price $7500.

I'd agree that it seems unlikely that they have that much margin. Yet the reality also is that until/unless this law passes, they had to have a business plan where the Mach-E would survive without the federal tax credit. My point is more the amount of the tax credit is excessive, not that no kind of tax credit is needed. In many states, total EV incentives are in excess of $10,000, which seems much more than needed at this point.

It's not a perfect comparison, but what Ford calls the Premium trim on the Mach-E is known as the Titanium trim on other Fords. The Mach-E slots between the Escape and Edge in terms of size. There is an Escape Titanium and an Edge Titanium - both of these other SUVs are AWD in Titanium trim.

To make the price comparison, the Escape Titanium AWD starts at $37,305, the Edge Titanium AWD starts at $43,100, and the Mach-E Premium AWD starts at $51,800.

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