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

[Mach1E]

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.

No question the credit in the last couple years HELPED us (Mach E buyers who could buy at x plan or MSRP).

But it’s clearly no longer needed for Tesla and I don’t think it’s needed in a few years to keep Ford EV sales going.

The old credit was perfect. Help a manufacturer sell 200k cars at a reasonable price.

But we don’t need this for the next decade. The ball is rolling. It doesn’t need any more help.

Oh, and here is your article:

https://amp.cnn.com/cnn/2019/01/02/business/tesla-price-cut/index.html


Tesla will cut prices to combat tax credit phase out
By Chris Isidore, CNN Business
Updated 2:40 PM EST, Wed January 02, 2019

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[yngwenli]

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.

Bolt only cut prices for 2023 due to idiotic pricing. Bolt had MSRP in the $35k prior and some, $40k prior to that. Almost no one paid those prices.

The Bolt just had to be priced at something people would buy in their portfolio. Bolts rarely sold at MSRP after the early years. They also announced the Equinox EV at $30k and the Blazer at $45k. The Bolt, as an old platform couldn't afford to be over the Equinox with all their fires and old platform.

In your thinking and all the dealer ADMs, Ford, without the tax credit will just charge market pricing for the MME which means higher MSRP then since demand outstrips supply.

It still boils down to supply/demand, and what the manufacturer can get away with pricing.

Some cars like the Toyota BZ4X/Subaru/Fisker (being a new maker and past failures) will have trouble tax credit or no tax credit I feel.

 

[yngwenli]

If we want to get to a net zero, we (the Govt.) need to make it more attractive to get to that point.

Ding Ding Ding...

Agreed. And this is why we have them. The Govt, like you say wants to drive people to actually pick the EV version so maybe instead of disagreeing with the tax credit in a pure economic sense, the government actually WANTS people to pay less vs. the ICE version since they don't WANT people to buy more (supposedly) ICE polluting vehicles.

105+ degrees in Oregon and floods right now in other parts of the US and fires in Yosemite, UK heat, etc...

 

[yngwenli]

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.

I think this still had more to do with supply/demand. Once Tesla realized people were still buying their cars, they had no trouble raising prices again far pass the tax credit price. Bolt, not so much.

It was simply the product was priced too high/low.

Tesla will continue raising prices until there is more of a balance.

 

[PEP of FL]

Bloomberg is reporting that Senator Manchin has agreed to expanding eligibility for the EV tax credit to manufacturers that have had it expire, i.e., Tesla and GM.

Notably, this would mean the 2023 Mach-E would also get some form of the tax credit, but I think made in America EVs would get more.

The details are to be worked out apparently, here is the full article:


Senate Deal Includes EV Tax Credits Sought by Tesla, Toyota

• EV backers argue credits are crucial to spur faster deployment
• Extension win for capped-out companies like GM, Tesla, Toyota

The charging port of a Chevrolet Bolt electric utility vehicle.
Photographer: Michael Nagle/Bloomberg
By
Keith Laing and
Ari Natter
July 27, 2022 at 4:47 PM PDT


A breakthrough deal between Senators Chuck Schumer and Joe Manchin includes the extension of a popular consumer tax credit for the purchase of electric vehicles, according to people familiar with the matter, a big win for EV-makers like General Motors Co., Tesla Inc. and Toyota Motor Co.

The credit will be included in a broader legislative package that revives key portions of President Joe Biden’s domestic political agenda and contains about $369 billion on climate and energy spending.

Read more: What’s in the Manchin-Schumer Deal on Taxes, Climate and Energy
EV supporters have argued the tax credits are necessary to spur development of the nascent plug-in car market, which is seen as crucial toward reducing the use of fossil fuels and achieving Biden’s ambitious climate goals. If passed, the package would help replenish existing tax credits that have already been exhausted for some automakers.

The two Senators have staked out starkly different positions on the viability of electric cars. Schumer has called for all cars that are manufactured in America to be electric by 2030, while Manchin has calling the idea of the federal government subsidizing EVs “ludicrous.”

Key details remain to be seen. In recent months, Manchin had been seeking stricter limits on the cost of eligible vehicles and for stricter limits on the income of those allowed to take advantage of the credit.

A prior Biden administration proposal allowed unionized carmakers to offer an additional $4,500 to EV car buyers, but the provision was opposed by Manchin after facing strong blowback from companies such Tesla and Toyota, who argued it would have given an unfair advantage to their Detroit-based rivals.

Carmakers sold a record 652,000 electric vehicles last year, but they made up only 4.4% of new car sales, according to an analysis by BloombergNEF. The percentage doubled from slightly over 2% in 2020. SUVs and pickup trucks comprised about 70% of total 2021 sales, according to Kelley Blue Book, showing the industry still has a long way to go before it comes close to achieving widespread adoption of EVs.

There is also an income limit placed on qualifying for the EV credit. Also, although not noted in this clipped article the used qualification is purchased from a licensed dealer only.

Here is a clip:

Federal tax credits for electric and hydrogen-fueled vehicles will be set at $7,500 for new vehicles and $4,000 for used ones, with new income limits for buyers. The income cutoffs for receiving the credit for new vehicle purchases are $150,000 for individuals and $300,000 for married couples; for used vehicle purchases the cutoffs are $75,000 for individuals and $150,000 for married couples. The bill also eliminates the 200,000-unit phase-out of credits for manufacturers — a threshold Tesla and General Motors had already hit — a key concern for automakers and EV buyers.

 

[yngwenli]

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.

I feel a lot of this also had to do with the MME being Ford's 1st brand defining (Mustang) EV made. They can't afford to have it fail honestly and they're far better off having a killer product that's completely sold out vs. an overpriced one that could've/might not have sold.

Price it say $10k more and there might be a lot less positive reviews. Look at some of the offerings from Toyota/Subaru or push a Rivian up to $90k and it looks a lot less attractive now.

Ford was probably ok with leaving $$ on the table to make sure it's a hit. Even now, with the launch of GM's Blazer, a lot of comments point out the pricing is way way high.

 

[Shelbeast]

Yup. $150k single or $300k joint filers.

or 175K for head of household. I will barely get it.

 

[Shelbeast]

There is also an income limit placed on qualifying for the EV credit. Also, although not noted in this clipped article the used qualification is purchased from a licensed dealer only.

Here is a clip:

Federal tax credits for electric and hydrogen-fueled vehicles will be set at $7,500 for new vehicles and $4,000 for used ones, with new income limits for buyers. The income cutoffs for receiving the credit for new vehicle purchases are $150,000 for individuals and $300,000 for married couples; for used vehicle purchases the cutoffs are $75,000 for individuals and $150,000 for married couples. The bill also eliminates the 200,000-unit phase-out of credits for manufacturers — a threshold Tesla and General Motors had already hit — a key concern for automakers and EV buyers.

or 175K for head of household.

 

[dbsb3233]

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.

It wasn't the MSRP, it was a manufacturer incentive. Manufacturers do that all the time (in a normal market, anyway). While Tesla actually changes their MSRPs every few months, legacy automakers usually keep the MSRP the same all year and make mid-year price adjustments with short-term incentives instead. It's usually called something like "Customer Cash" or just "Incentive".

 

[Mach1E]

I think this still had more to do with supply/demand. Once Tesla realized people were still buying their cars, they had no trouble raising prices again far pass the tax credit price. Bolt, not so much.

It was simply the product was priced too high/low.

Tesla will continue raising prices until there is more of a balance.

It will always come back to supply demand (the end price the consumer pays).

And the OLD tax credit helped the consumer. It helped offset the R&D of the manufacturers so they could sell their first 200k BEVs at a competitive price. And the consumers got to buy them at a competitive price.

Now, all this bill will result in is Tesla raising prices more and making more profit with little to no drop in prices for the consumer.

Would be faster to just have the government write a $100 billion check to the richest man on the planet……..

Ironic that the same people pushing this bill are trying to tax the billionaires MORE while at the same time lining the billionaires pockets.

 

[Mach1E]

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.

It’s also “crack dealer 101,” give people a taste and they come back.

Most Mach E buyers are first time EV people. And according to the threads here, not many going back to ICE.

But the startup costs and “nudge” has been done.

No need to keep giving crack away for free for the next decade. We are hooked. ?

 

[rcechinel]

If this passes, it will be really bad for Rivian. They would have had several years of credits left, but now all their vehicles over $80k won’t qualify at all. The same is true for the higher trims of the F-150 Lightning, but Ford was going to run out of credits after next year anyway.

Really good point. I may sell my Rivian shares because of it.

 

[dbsb3233]

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.

Yep, that's because the tax credits and manufacturer incentives have been the norm, so we feel like we're getting screwed if other people get them and we don't.

But we're fine going into Best Buy and buying a TV without them. Or a furniture store for bedroom set, etc. When they finally stop being the norm, we no longer would feel screwed vs what others are paying so it's ok then.

 

[rcechinel]

Yes and no. Rivian buyers fall into the higher income tax bracket and would possibly not be eligible.

And honestly, I'd still buy my $75K Rivian R1S order without the tax credit. The new price is $93K or something.

Is this revoking the current $7.5K credit? If yes, it definitely hurts Rivian, as the current $7.5K tax credit doesn't depend on income.

 

[generaltso]

Is this revoking the current $7.5K credit? If yes, it definitely hurts Rivian, as the current $7.5K tax credit doesn't depend on income.

Yes. Though there is a transition clause that allows you to claim the old credit instead if you have a binding order before 2023 that doesn't get delivered until 2023.

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