Mach1E

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Quite the opposite.

You are going to have MORE entities looking to build a product to capture a tax credit market if you will. When that happens, quantities usually go HIGHER. (incentives) ;)

I think it is quite amusing that many on this forum suggest that tax credits will do little while at the same breath saying that people will only buy and manufacturing will only occur when there are tax credits involved?

Please enlighten me on which side of the fence you are on today?

Tesla is selling quite a few right now w/o the tax credits.

If more companies go into this market because of "incentives", more batteries etc. will be produced.

The Tesla's of the world will STILL not have a tax credit but the "lower" cost cars will find a niche and they will be the ones to use the non-China material and hopefully it will take off.

As of right now, we are getting it almost exclusively from China. This will open more doors if you will and it should be a catalyst to make more down the road if we can make our own.

To use your Oil comparison, Drill baby Drill. (in our own Country) Now replace the word oil with Batteries.
Seriously?

You think that cutting off the supplier of most of the worlds batteries will result in more batteries?

Not only will it significantly reduce the supply, it will significantly increase the cost. While I love the idea of “made in America,” there is a very simple reason why we import many things from other countries: cost.

“Drill baby drill,” doesn’t exactly work here.

We can get a fracking operation up and running in weeks. It will take years to get a mining and battery manufacturing operation going. And this law goes into effect in a few months.

Your reasoning makes as much sense as a multi-billion dollar spending bill to “reduce inflation.”

I don’t even know how to respond to your “fence” question because neither of those things are what I’m saying and they aren’t even in opposition.

I say credits will “do little” to reduce the price the consumer pays.

And the manufacturers will change where they get materials from to qualify for the credits. But again, that won’t help the consumer. It just allows the manufacturers to raise prices.

And not getting “inexpensive made in China” batteries will also RAISE the cost.

More inflation is the result. It’s pretty simple math.

Yes, we will EVENTUALLY get more batteries built here. But right now? We can’t even get enough to keep up with current demand. Cutting off China will make it worse.

What happened to oil prices when we cut off Russia? And we don’t even use Russian oil in the US.
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bp99

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Quite the opposite.

You are going to have MORE entities looking to build a product to capture a tax credit market if you will. When that happens, quantities usually go HIGHER. (incentives) ;)

I think it is quite amusing that many on this forum suggest that tax credits will do little while at the same breath saying that people will only buy and manufacturing will only occur when there are tax credits involved?

Please enlighten me on which side of the fence you are on today?

Tesla is selling quite a few right now w/o the tax credits.

If more companies go into this market because of "incentives", more batteries etc. will be produced.

The Tesla's of the world will STILL not have a tax credit but the "lower" cost cars will find a niche and they will be the ones to use the non-China material and hopefully it will take off.

As of right now, we are getting it almost exclusively from China. This will open more doors if you will and it should be a catalyst to make more down the road if we can make our own.

To use your Oil comparison, Drill baby Drill. (in our own Country) Now replace the word oil with Batteries.
Subsidies work when supply is not constrained for reasons other than demand (their purpose is to induce demand and thus market forces will increase supply to meet that demand). There are waiting lists for BEVs. Every BEV made is sold. There is no need to increase demand at this time.

Yes, there are people on here that would not have bought their Mach E without the tax credit. If they had not, someone else would have. You can see proof of that both in Tesla's sales (even with increased prices) and the used Mach E market (where there are no tax credits) prices.

The issue with BEVs is that they're already making as many as they can. They're already increasing manufacturing capacity as quickly as they can. New companies have already jumped in to the market. The limiting factor is not demand nor desire to fill that demand. The limiting factor is batteries and the materials they are made from. Without solving the battery issue (mainly mineral extraction and refining), providing subsidies increases demand of a product which cannot be produced to meet that demand. When demand is greater than supply, prices go up.

I've said it several time already. If Congress is serious about increasing BEV adoption, they need to address the environmental regulations which greatly hinder domestic mining and refining. They can do it without destroying the environment. They need to create a fast track permitting process and lock environmental groups out of NIMBY lawsuits which cost heaps in legal fees and push back start dates by years. Even with Tesla begging companies to do so and promising long term contracts, no one is doing so. We're now seeing Tesla and Ford adding LFP batteries which is a Chinese controlled (Intellectual Property) battery chemistry in order to up production. The real issue is well known, yet ignored.
 

DennisD

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Seriously?

You think that cutting off the supplier of most of the worlds batteries will result in more batteries?

Not only will it significantly reduce the supply, it will significantly increase the cost. While I love the idea of “made in America,” there is a very simple reason why we import many things from other countries: cost.

“Drill baby drill,” doesn’t exactly work here.

We can get a fracking operation up and running in weeks. It will take years to get a mining and battery manufacturing operation going. And this law goes into effect in a few months.

Your reasoning makes as much sense as a multi-billion dollar spending bill to “reduce inflation.”

I don’t even know how to respond to your “fence” question because neither of those things are what I’m saying and they aren’t even in opposition.

I say credits will “do little” to reduce the price the consumer pays.

And the manufacturers will change where they get materials from to qualify for the credits. But again, that won’t help the consumer. It just allows the manufacturers to raise prices.

And not getting “inexpensive made in China” batteries will also RAISE the cost.

More inflation is the result. It’s pretty simple math.

Yes, we will EVENTUALLY get more batteries built here. But right now? We can’t even get enough to keep up with current demand. Cutting off China will make it worse.

What happened to oil prices when we cut off Russia? And we don’t even use Russian oil in the US.
Please enlighten me on where in the Bill the supply chain was cut off from China? It may say it and I may have missed it? Not sure what you are referencing? They simply suggest that the tax credit doesn't apply if they use the material from China but they still could use them if they wish. (as in the current form I might add)

Most of the expensive EV's will not qualify. In those cases, I would assume that they could use the material etc. from anywhere they choose (including China) without penalty just like they are currently doing. Once again, I am not well versed on the new Bill but to my understanding, these are mere guidelines and not absolutes. When you suggest supply chain cut offs, that implies absolutes (like the oil you referenced)

Many of the auto companies said that their vehicles could not be manufactured when gas mileage requirements/standards were raised and kept going up. That didn't materialize. In fact, many took the Bull by the horns and increased even more than was required.

This is no different. Many auto manufacturers will adjust and all will be good. The language on the Bill may be tweaked as well with amendments. Once again, the Bill isn't even passed and many on this forum are suggesting that none will qualify. That won't happen IMO.

One last thing, when you lower drug prices inflation tends to point downward (if I am doing the math correctly).;) This is the part of the Bill that will/should help with inflationary costs.

Also, if more batteries are being produced via incentives, those costs should come down as well. The ole' supply and demand chain should ramp up and maintain inflation on that one as well. As of right now, China holds all of the cards.

You okay with that?
 
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Mach1E

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Please enlighten me on where in the Bill the supply chain was cut off from China? It may say it and I may have missed it? Not sure what you are referencing? They simply suggest that the tax credit doesn't apply if they use the material from China but they still could use them if they wish. (as in the current form I might add)

Most of the expensive EV's will not qualify. In those cases, I would assume that they could use the material etc. from anywhere they choose (including China) without penalty just like they are currently doing. Once again, I am not well versed on the new Bill but to my understanding, these are mere guidelines and not absolutes. When you suggest supply chain cut offs, that implies absolutes (like the oil you referenced)

Many of the auto companies said that their vehicles could not be manufactured when gas mileage requirements were in place and kept going up. That didn't materialize.

This is no different. Many auto manufacturers will adjust and all will be good. The language on the Bill may be tweaked as well with amendments. Once again, the Bill isn't even passed and many on this forum are suggesting that none will qualify. That won't happen IMO.

One last thing, when you lower drug prices inflation tends to point downward (if I am doing the math correctly).;) This is the part of the Bill that will/should help with inflationary costs.

Also, if more batteries are being produced via incentives, those costs should come down as well. The ole' supply and demand chain should ramp up and maintain inflation on that one as well. As of right now, China holds all of the cards.

You okay with that?
It’s not a mandate, it’s a cause and effect thing.

Sure, they could use material from China, but it will cost the consumer $7500 more.

(again, rising prices to the consumer).

And right now, for 2023, they won’t have a choice but to use Chinese parts as there isnt enough time to change.

Then for the next few years, if we do transition to US made……. It will cause significant supply chain disruption while we get mining and manufacturing facilities up to speed (equals less batteries and less cars built) equals less supply equals higher prices.

Sure, lower drug prices are in the bill. So if 5% of the bill reduces inflation and 95% increases….. it’s called a “inflation reduction bill???”

That’s like ordering a double quarter pounder with a large fries a large milk shake and a “Diet Coke” to lose weight. 🤔
 

jbooth

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What happened to oil prices when we cut off Russia? And we don’t even use Russian oil in the US.
Isn't the free market wonderful? Prices went higher elsewhere in the world and since oil was more valuable there, it would have been shipped out of the US had prices not risen here.
 


Mach1E

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Isn't the free market wonderful? Prices went higher elsewhere in the world and since oil was more valuable there, it would have been shipped out of the US had prices not risen here.
And that’s my point. Prices went higher.

When we stop using Chinese sourced batteries…….. prices will go higher.

And this helps the environment how exactly?

Smoke and mirrors. They tell us it’s to “help the environment,” but that’s just to distract us from the real goals.

It’s just another wish list spending/tax bill with an “environmental” and “lower inflation” label slapped on it.

Reminds me of something…….

 

jbooth

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And this helps the environment how exactly?
The studies of it I'd seen, and to be fair they clearly haven't had a lot of time to look at it, were estimating it'd return 4x benefits vs the cost. That's a pretty good rate of returning for forcing billion-dollar corporations to pay their share of taxes via a minimum tax finally.

I'm sure you know how to use google to go look them up if you like. They were all over the news the last few days. Warning: you won't find them on Fox News.

Its cool how you ignore everything in the bill about improving the housing stock -- insulation, air sealing, energy efficient heat pumps -- all of that is gold. Not only is it energy efficient, but it lowers consumer's monthly bills. And pays local, small business folks, to do the work, because there's no CCP overlord showing up in a beat up (or too shiny) pickup truck to do the job.
 

AZBill

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The tax credits are getting completely wiped out by inflation, here are the price increases for the Lightning in 2023, I am sure the Mach E will be getting something similar:

Ford Mustang Mach-E Senate Bill Deal to Expand EV Tax Credits (7/27/2022) 1660054598325


And all the extended range versions will not qualify for the credits at all.
 

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Sure, they could use material from China, but it will cost the consumer $7500 more.
Pretty sure you were one of those arguing throughout the thread that the consumer never gets any of the benefits of the tax credit- that it's all gobbled up by the manufacturer. If that's the case, any tax credit ineligible cars would actually be cheaper.

So which is it?
 

Caulk-E

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The battery composition stuff doesn't start until 2024. So the Mach-e will be eligible next year for the full 7500 if you fit the income restriction
https://www.democrats.senate.gov/imo/media/doc/inflation_reduction_act_of_2022.pdf

This bill, if passed, will go into effect in January of 2023. The bill requires 40% of the minerals in the batteries to be mined or processed in North America or a free trade country *in 2023, not 2024.* Please refer to page 387. In 2024, the minerals percentage increases to 50% page 387, line 9.
 

Mach1E

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The studies of it I'd seen, and to be fair they clearly haven't had a lot of time to look at it, were estimating it'd return 4x benefits vs the cost. That's a pretty good rate of returning for forcing billion-dollar corporations to pay their share of taxes via a minimum tax finally.

I'm sure you know how to use google to go look them up if you like. They were all over the news the last few days. Warning: you won't find them on Fox News.

Its cool how you ignore everything in the bill about improving the housing stock -- insulation, air sealing, energy efficient heat pumps -- all of that is gold. Not only is it energy efficient, but it lowers consumer's monthly bills. And pays local, small business folks, to do the work, because there's no CCP overlord showing up in a beat up (or too shiny) pickup truck to do the job.
Not ignoring those things.

Just not arguing against them. For a few reasons:
1. I’m not against those parts of the bill (except to point out that they won’t lower inflation either, but I like them in general).
2. This is a car forum, so talking about the car portions just make more sense here
 

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I enjoy reading everyone’s thoughts on this subject. My thought is the demand for EV’S outstrips supply and will remain that way for quite some time. From what I have read sales for EV’S that no longer qualify for tax incentives are still selling just as well. I believe the tax incentive will have little to no effect on sales. Sure some people are making choices based on getting back $7,500 but many are also paying ADM which basically wipes out the savings over MSRP. Time will tell on this issue. I purchased my GT without even knowing about the tax incentive but will be glad to receive the $7,500 next year. Need it to get an e-MTB as it is getting harder to get my old bones up the hills!
 

Mach1E

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Pretty sure you were one of those arguing throughout the thread that the consumer never gets any of the benefits of the tax credit- that it's all gobbled up by the manufacturer. If that's the case, any tax credit ineligible cars would actually be cheaper.

So which is it?
This isn’t an either or situation.

Both will be more expensive or at the very least unchanged in price as a result of this bill.

I see a few possible scenarios

1. Credit eligible car- manufacturing costs go up by “building in USA.” Manufacturers raise MSRP, some people get a credit. Result? Definite Higher prices for high income people, undetermined for low income (depends on the cost and MSRP increase)

2. Credit ineligible car- where ALL models ineligible- no change. Chinese batteries and same price.

3. Used to be eligible cars (Rivian etc )- $7500 price increase, continued use of Chinese batteries.

4. Some models eligible (based on $55k limit, like Mach E). Will be hard to source batteries from different locations if all built in same plant. So some would be scenario 1, some scenario 3.

So most cases? Price goes up. And at best, price unchanged.
 

dbsb3233

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And that’s my point. Prices went higher.

When we stop using Chinese sourced batteries…….. prices will go higher.
Yep. Just like oil. It costs far more in some places to extract than others. Sometimes it's 2000' down in the middle of a desert near a pipeline, and only costs $30/bbl to extract. Other times it's 10,000' down in an ocean, and costs $60/bbl to extract. The same basic dynamic applies to other minerals. The costs are low in some places, high in other. By default, the market fills the void with the cheaper sources first. Just like anyone else, they tend to buy where they get the best price (the low-hanging fruit).

Legislate the low cost sources out, and they have to buy from higher cost sources instead. It's just like how the "organic" produce at the grocery store is twice the price of the regular stuff.

The end result here will be pushing EV costs up (i.e. higher inflation). The taxpayer subsidies don't lower the cost, they just rearrange who's paying for it (the customer + taxpayers).
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