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

[SWO]

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.

Yep, there were huge incentives ("cash on the hood") for the Bolt after GM's credits expired.

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[dbsb3233]

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.

Yeah I'm sure Ford accounted for the $7500 credit in the US being in place when they designed and priced the car. The tax credit looked likely to be in place for the Mach-E for the first 2 years. A new model (especially their first truly viable BEV) is likely to cost more initially.

But by year 3 it's a little different matter. Unit costs likely come down some by then as better economies of scale are reached. At least in a normal market. Everything is jacked right now, and prices on everything are high (look at how many price increases Tesla has been getting away with).

If the old tax credits expired without a replacement, and this was a more normal market, Ford would have to look a competitors like the ID.4 and the EV6 that would still have they $7500 credits next year and decide where they needed to price the Mach-E to remain competitive. But demand (and inflation) is so high in the current market vs supply that the issue is not one of dropping prices, but how much to increase them, yet still remain competitive. They can practically name their price right now and get away with it (like Tesla).

 

[yngwenli]

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)

I think it also just feels "bad" if you don't get the incentives that everyone else did earlier. Like you, I know I would've probably considered something else maybe without the incentive. That $7.5k is a lot of $$ when you consider that the MSRP is around $45k - $50k for some of us (not buying maxed out GTPEs).

There are also state incentives often as well making it about 20% of the cost (over $10k with fuel rebate if you qualify in CA). No matter how many people state that people buying $50k+ cars don't need a tax rebate, I think a lot of $$ minded/savers care a lot about these rebates.

Same for solar.

I'm too cheap to even get the ER or AWD since I'd rather spend that $5k or $6k on something else, but everyone has their own priorities/needs/wants.

 

[DennisD]

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.

https://www.caranddriver.com/news/a30234650/tesla-price-increase/

Please show me your evidence? The article above proves my point.

MSRP and rebates are two different animals. Both drive car sales but I am not finding your assertion that Tesla cut their prices?

 

[DennisD]

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.

https://www.reuters.com/article/us-...as-u-s-tax-credit-for-evs-drops-idUSKCN1R92QI

Most cars (both EV and ICE) usually enjoy incentives i.e. rebates from time to time through specials, but I can't find where the MSRP has dropped once the tax incentives expired on the Bolt or any other EV.

Please prove your assertion that in fact the MSRP had or will drop once incentives expire.

I am rather enjoying all of the people on this forum proving my point. If you have an incentive either through a tax credit or rebate from a manufacturer, one is more likely to purchase an EV.

This is EXACTLY what the Gov't. program is trying to do.

I personally think this is a good thing in helping to save the environment.

 

[Regulus7]

I bet Ford did some of the lobbying for the $4k used car rebate considering how many MachEs have been purchased using OPTIONS and the fact that residuals are likely to be around $25k. This suggests somewhat of a benefit for pricing for MachEs coming off OPTIONS in 2024-2026 don't you all think? Insofar as they should hold their value at or above stated residuals?

 

[TGIF]

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.

If the US Government eliminated all the tax breaks and preferential treatments it gives big oil, I’ll be much closer to being okay with eliminating EV incentives. For 2020 it was estimated at $5.9 Trillion of direct subsidies and uncaptured costs of damages to health and the environment.

Why are we eating our young with regard to incentives? There is real damage occurring every minute and we must use every tool we can find to mitigate it.

 

[Mach1E]

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?

Do you remember last year how much Tesla RAISED the price of the model Y the instant they thought the $7500 would be reinstated?

It rhymes with $9000.

There is a direct relationship between the tax credits and the prices the manufacturers set.

 

[Mach1E]

If the US Government eliminated all the tax breaks and preferential treatments it gives big oil, I’ll be much closer to being okay with eliminating EV incentives. For 2020 it was estimated at $5.9 Trillion of direct subsidies and uncaptured costs of damages to health and the environment.

Why are we eating our young with regard to incentives? There is real damage occurring every minute and we must use every tool we can find to mitigate it.

Because even EV drivers need big oil. Heck, just google how many of our car components are built out of oil based products.

It’s how your plastics are built.
It’s how you fly across the country.
It’s how your Amazon orders get delivered.
It’s how you heat and cool your house.
It helps keep the economy going.

As you can see with the impact oil prices have has on the economy so far this year, it’s still a “necessary evil.”

We do need to continue to do more to help the environmental impact we make.

But when it comes to spending $$, it’s a lot cheaper to learn to live with the damage than to try to prevent it.

We will have a better chance saving lives giving people access to air conditioning for a heat wave than trying to prevent a heat wave. But that’s a whole discussion altogether.

 

[DennisD]

Do you remember last year how much Tesla RAISED the price of the model Y the instant they thought the $7500 would be reinstated?

It rhymes with $9000.

There is a direct relationship between the tax credits and the prices the manufacturers set.

Do you remember how much they dropped their price when they found out the bill stalled?

If the relationship is direct, please prove your point by posting links like I did.

Not sure if you are aware of inflation across the board.

ALL things have raised prices in the last year.

 

[bostondan77]

This is how the rebates should be done, if they are going to be done at all. Target an affordable car for the masses and not subsidize a toy for somebody that can afford it.

At the same time, some of us pay hundreds of thousands in taxes each year to help pay for these initiatives. Can’t even throw us a bone here .

 

[DennisD]

If the US Government eliminated all the tax breaks and preferential treatments it gives big oil, I’ll be much closer to being okay with eliminating EV incentives. For 2020 it was estimated at $5.9 Trillion of direct subsidies and uncaptured costs of damages to health and the environment.

Why are we eating our young with regard to incentives? There is real damage occurring every minute and we must use every tool we can find to mitigate it.

The long term Climate damage is what I am most concerned with.

I agree that tax breaks to "Big Oil" doesn't help our future but rather hurts in the long run.

 

[Mach1E]

Do you remember how much they dropped their price when they found out the bill stalled?

If the relationship is direct, please prove your point by posting links like I did.

Not sure if you are aware of inflation across the board.

ALL things have raised prices in the last year.

Mach E went up a few grand. Tesla went up $9k.

It’s not a coincidence.

What impact do you think the $4k used car credit will have on used BEV prices?

You think the car dealers will pass that “savings” on to the consumer or do you think they’ll sell a car that should sell for $20k in a free market for $24k (less a $4k government credit)?

No article needed to prove the point of what impact a $7500 federal rebate has on free market prices. Just need to have taken a macroeconomics 101 course at some point in your life.

If the supply/demand price of a Mach E is $50,000. Whether the government gives a $7500 credit on a $57500 MSRP or the manufacturer gives a $7500 rebate or the dealership gives a $7500 discount……… the market and the consumer will all still end up at $50,000.

That’s literally the most basic principal in economics.

Now, of course that’s in a normal supply/demand market. We will get back there eventually. And this bill doesn’t expire until 2032.

I really don’t think we need the government money and market manipulation now. And definitely not 5-10 years from now!

Total waste of money. The money just ends up giving more profits to the manufacturers (who don’t need it) and the consumer still ends up paying the same “market price” in the end.

 

[DennisD]

Mach E went up a few grand. Tesla went up $9k.

It’s not a coincidence.

What impact do you think the $4k used car credit will have on used BEV prices?

You think the car dealers will pass that “savings” on to the consumer or do you think they’ll sell a car that should sell for $20k in a free market for $24k (less a $4k government credit)?

No article needed to prove the point of what impact a $7500 federal rebate has on free market prices. Just need to have taken a macroeconomics 101 course at some point in your life.

If the supply/demand price of a Mach E is $50,000. Whether the government gives a $7500 credit on a $57500 MSRP or the manufacturer gives a $7500 rebate or the dealership gives a $7500 discount……… the market and the consumer will all still end up at $50,000.

That’s literally the most basic principal in economics.

Now, of course that’s in a normal supply/demand market. We will get back there eventually. And this bill doesn’t expire until 2032.

I really don’t think we need the government money and market manipulation now. And definitely not 5-10 years from now!

Total waste of money. The money just ends up giving more profits to the manufacturers (who don’t need it) and the consumer still ends up paying the same “market price” in the end.

I, along with many others would have not purchased an EV without the tax credit.

Incentives can be abused, I get that but with alternative sources of energy, a startup cost needs to be passed on to the the consumer for the Company to survive. If the consumer doesn't want to pay for that because the "old" way is cheaper, they will stay on the fence and not invest in the future. That is human nature 101.

The tax credit (for many) is that nudge, if you will to draw them to their side and the market dictates it from there.

I see it as an investment in our future and not a waste of money.

 

[yngwenli]

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.

What you say is true, and maybe that's why we're all here, but the bottom line is the manufacturer still selling all those EVs they make easily? If they are, then they will certainly be raising prices as Ford has done and Tesla has done many times over.

All of us also assume the 2023 MME will increase in prices next year as well even with the originally supposed drop in tax credits due to competition (Tesla) raising prices and manufacturing costs. Kia/Hyundai are still pretty impossible to find it sounds like and everyone who bought one seems to have to pay a mark up and they don't seem to be ordered so Ford can certainly raise it up to that ADM.

The market still determines their price and outside of the folks on this and other EV forums, EVs still aren't shopped by a large amount of people for whatever reason, even though I feel that is massively changing now. Apartment renters and poor charging infra being one (rural).

I agree that at this point in the game, with EVs pretty much all sold out and some folks paying an ADM, most people probably don't 'need' the tax credit to buy it, but it certainly factored in our purchase decision due to the factors you state (MME SR RWD around $40k after all incentives).

Would we have bought this at $55k without any rebates? We probably would have went with maybe a different brand I'm guessing.

Not sure where I saw it, but read someone's opinion that the whole point of gov regulation for these EV tax incentives is to drive consumer behavior towards EVs (like taxes on cigarettes, etc) so the point was to make EVs more attractive.

Whether the manufacturer will cut the pricing really simply just boils down to supply/demand. Bolt cut prices, Tesla raised prices. Everyone else is sorta in the middle depending on their product pricing power.

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