Best Way to Honor the Intent of the Tax Credit?

[deonb]

And that doubles every ten years...

Does it really double, or does it add 100wh/kg every 10 years? Sure the Roadster was at 117wh/kg, and we might be at 230wh/kg in 2 years.

But keep in mind a 115wh/kg battery was already possible in 1993 - it was just expensive. The problem is that we don't currently have in our hand a 460wh/kg battery that we just don't know how to produce yet. Bit different than the situation we faced in the past.

But yeah, coming back - I do think we'll get to a 130kWh battery within the next 20 years or so and at that point the case for BEV is done and HFC in cars is dead. Beyond that... I'm not so sure.

Once again, I stick to what JB Straubel says. I believe that Tesla Motors keeps their major improvements in battery technology locked behind closed doors, in testing, with the intent to release them with each new generation of vehicles.

That is a bit optimistic. Tesla has never released a battery chemistry that wasn't on the market before. They test different chemistry for sure to look for longevity, but in the end it's like "oh, cool - they picked that one". I don't believe they have a secret chemistry that nobody knows about. At least, that's not how they've ever done things in the past.

 

[EaglesPDX]

Hybrid technology has gone as far as it can, without also exempting them from air quality controls.

Ford Fusion EV/Hybrid (20 miles EV, 38 mpg gasoline/hybrid), using average commuters 50 mile per day round trip commute would get 65 mpg daily. So hybrids can make a big contribution to the goal of reducing oil use. Getting to just 50% reduction on oil use saves the US close to $1T per year ($300B oil trade debt and $600B of military budget) in addition to cutting greenhouse gases.

Increasing the EV capability of the hybrids will further reduce it so, for those who won't buy full EV for time/range issues, hybrids are a big help to meeting our national goals. Increasing and extending the tax credit form of subsidy is something we should do. Doing it similar to earned income tax credit for lower income people is a good idea also.

 

[EaglesPDX]

Scientists don't run the country. Believers do. Unless you think Al Gore is going to stage a military coup, scientific fact makes absolutely zero difference to public policy.

I think scientists have done a good job of educating the public, that and actual events, have lead to a change in public perception.

Record 65% Blame Human Activity for Rising Temperatures

That finding relates to another record broken in the new poll -- the 65% of Americans now saying increases in the Earth's temperature over the last century are primarily attributable to human activities rather than natural causes. This represents a striking 10-percentage-point increase in the past year and is four points above the previous high of 61% in 2007.

If you're waiting for government to make a proactive stance on this, well, then you won't even have to worry about global warming since you'll die of CO2 asphyxiation first.

Government already has takes a proactive stance. Loans to help Tesla get started are one example. Tax credit subsidy to people who buy EV's are another example. US government agencies from NASA to NOAA to Academy of Sciences are all educating the public. Increased fuel efficiency standards. Pollution standards. Appliance efficiency standards. Government policy to end coal use and promote solar, wind, geothermal and other sustainable power sources.

saving the world part to the captains of industry. Elon is doing this exactly right - people just need to stay out of his way.

History tells a different story. Musk will tell you that government support is essential for his Solar City, Tesla and SpaceX projects. We need to increase the government support from regulation to subsidies.

 

[Red Sage]

The ball was already rolling at that point. The initial military buildup and protection of the Gulf in the first place was set in place by Reagan in 1984 after he saw the following presentation on the potential for Oil Disruption in the Gulf:

http://www.wpainc.com/Archive/Reagan Administration/WFM Papers from Reagan Archives/Iran-Iraq/Presentation on Gulf Oil Disruption 5-22-84.pdf

It's worth a read, if you've never read it before. (May have to tilt your head or rotate the presentation ).

Oh, that's what you meant. Meh. The Summary reads as if it were written by Vice President Bush. The US learned 'Gunboat Diplomacy' from the UK. They always had guys sailing in circles around The Persian Gulf and Indian Ocean back then. My point was that for all the sabre-rattling, the US didn't ever put boots on the ground (officially) until President Bush was in office. Before then, it was just a bunch of 'advisors' (AKA CIA dudes) teaching 'freedom fighters' (AKA future terrorists) how to raise hell, and stuff.

 

[deonb]

Oh, that's what you meant. Meh. The Summary reads as if it were written by Vice President Bush. The US learned 'Gunboat Diplomacy' from the UK. They always had guys sailing in circles around The Persian Gulf and Indian Ocean back then. My point was that for all the sabre-rattling, the US didn't ever put boots on the ground (officially) until President Bush was in office. Before then, it was just a bunch of 'advisors' (AKA CIA dudes) teaching 'freedom fighters' (AKA future terrorists) how to raise hell, and stuff.

But Reagan specifically decided after that that Kuwait was an ally and need to be protected. Instead of saying - oh it's probably not a good idea to base the U.S's economic policy on the happenings in the Middle East.

If the U.S. isolated itself back in the 80's and said: "No more oil imports or exports", it would have made very little difference to the U.S. economy (only 3% imports at the time), and Iraq's actions would be treated with stern dirty looks instead - ala today's North Korea policy.

As it was, Bush was pulled into the first war almost by treaty. Well, not quite, but Kuwait got used to the U.S. defending it, and we relied on Kuwait to power our Toyota Cressida's.

 

[Red Sage]

Ford Fusion EV/Hybrid (20 miles EV, 38 mpg gasoline/hybrid), using average commuters 50 mile per day round trip commute would get 65 mpg daily.

The Ford Fusion Energi is a nice car. It still doesn't go as far as it should. I doubt it actually sells as many units as even the Chevrolet Volt, which has a good bit more fully electric range, and still trails the Toyota Prius in overall range. Heck, according to Inside EVs, they both trail the Tesla Model S in sales this year.

So hybrids can make a big contribution to the goal of reducing oil use.

Their contribution can and should be bigger. As it is, they just manage to improve modern vehicles, which are overweight and oversized, to the rough fuel economy that was possible in smaller vehicles two or three decades ago. 25 years ago it seemed that companies such as Honda were on a path to build cars with 70+ MPG within 10-to-15 years. Adding hybrid technology to those designs would have put those over 100 MPG. Instead, the techniques Honda used to build a Midsize car that simultaneously met the CARB Zero Harmful Emissions, EPA CAFE, and NHTSA Crash Test standards were all made illegal. The result is that unless you have a hybrid, or a dangerously small three wheeler vehicle (AKA Weirdmobile), nothing with a gasoline motor has a hope of exceeding 50 MPG.

Increasing the EV capability of the hybrids will further reduce it so, for those who won't buy full EV for time/range issues, hybrids are a big help to meeting our national goals.

If someone were to build a Midsize plugin hybrid with a real, usable 100 mile fully electric range, and a 15 gallon fuel tank, all would be well. No one does it because they know it would outsell everything else on the planet. And, as is always the case, once anyone gets a car with any fully electric range, all they want is MORE fully electric range.

Increasing and extending the tax credit form of subsidy is something we should do.

Dude. Still NOT a subsidy.

Doing it similar to earned income tax credit for lower income people is a good idea also.

There were 18 traditional automobile manufacturers that sold at least 300,000 units in the United States during 2015. That is well over 5.4 million cars, and nearly 17.5 million new vehicles were sold that year. Yet not even 1% of that amount, 116,099 cars (or 0.66%), were plugins of any type. And if you count only the fully electric vehicles, it is well under that amount.

So, how's this for an idea... Those companies that are actually building a substantial number of electric vehicles, anything over 5% of their fleet... Get to extend their eligible vehicle count by the number of plugins that each other company falls below 5% each year. That way, you know the program has worked when only a minority of manufacturers is below 5%.

So, for instance... The Chrysler Brand moved 324,846 vehicles last year. If maybe 0.6% of those were EVs, that would come to 1,949 compliance cars... If they had built 5% of their cars as fully electric/plugin hybrid, that would have been 16,242 cars. That is a difference of 14,293 cars. Since Tesla Motors is the only company that offered more than 5% of their cars as plugins, they would be allowed to have 14,293 of the cars they sold in the US to --NOT -- count toward the 200,000 limit per manufacturer. Heck, even if the cutoff were only 1% or 2%, it would effectively extend Tesla's eligibility by a wide margin. Naturally, as each company met the threshold, the pool of 'extra' eligible cars would be diminished, split between those that met the mark.

 

[EaglesPDX]

As it was, Bush was pulled into the first war almost by treaty. Well, not quite, but Kuwait got used to the U.S. defending it, and we relied on Kuwait to power our Toyota Cressida's.

1. Reagan/Bush were supporters of Saddam (war on Iran) and Bin Laden (war against Russians in Afghanistan)
2. Reagan/Bush ran massive deficits building up US military specifically for Middle East oil war. Pentagon's No. 1 rated strategic threat to US.
3. Bush I gave ally Saddam green light to invade Kuwait.
4. Bush I double crosses ex-ally Saddam and US occupies Kuwait and Saudi with military built for that purpose.
5. Cheney takes $40M payoff from Halliburton, sets US to invade Iraq as pay back which takes focus off al-Queda and results in 911. See Richard Clarke testimony before Congress about anti-terrorisn resources redirected to Iraq vs. known threat of al-Qaeda prior to 911.
6. Cheney than uses 911 as excuse to invade Iraq for non-existent WMD. Iraq oil is supposed to pay for it but it all goes South.

25 years later oil wars continue, US military spending of $1.3T per year is 70% of US discretionary budget, $600B of that for oil war attrition.

It is that $600B in yearly spending and the terrorism that US devastation of Middle East generates that we can end by eliminating US oil imports via converting US cars from gasoline to EV.

The $300B year in oil trade deficit would also be eliminated for huge economic and national security boost to US.

Those are the economic and national security benefits of subsidizing EV's in the US to replace gasoline vehicles. Can't happen fast enough which is why increasing and extending the EV tax credit subsidies is policy US should follow. It is part of current presidential election.

 

[EaglesPDX]

The Ford Fusion Energi is a nice car. It still doesn't go as far as it should. I doubt it actually sells as many units as even the Chevrolet Volt, which has a good bit more fully electric range, and still trails the Toyota Prius in overall range. Their contribution can and should be bigger.

Yes. A reason to increase the tax credit subsidy for plug in hybrids and EVs.

What is a 'Subsidy' A subsidy is a benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy is usually given to remove some type of burden and is often considered to be in the interest of the public.

, how's this for an idea... Those companies that are actually building a substantial number of electric vehicles, anything over 5% of their fleet... Get to extend their eligible vehicle count by the number of plugins that each other company falls below 5% each year. That way, you know the program has worked when only a minority of manufacturers is below 5%

Keep in simple. Double the tax credit subsidy. Extend it indefinitely. Allow it to carryover until used. Add it to earned income tax credits subsidy for those who qualify. Corporate tax breaks based on number of plug in hybrids and EV's sold. Tesla would pay zero corporate taxes. Immediate depreciation write off for all plug in/EV R&D and manufacturing capital equipment. This makes all the subsidies for EV's (and other zero emissions vehicles) predictable for business and consumers.

Goal is replacing all US passenger vehicles with EV's.

 

[ImEric]

Sometimes incentives are abused, or gamed, which does not seem right. Is manufacturing and delivering as many cars as possible inside the credit window abusive?

The $7500 EV tax credit is there to create low cost production capacity of EVs, with the goal of competitive pricing after the incentive goes away. The behavior most consistent with that goal is to build a factory that can satisfy the entire demand inside the full rebate window. This maximizes production capability and efficiency, and is the best path to a "when we are all done" price that is as low as the credit incentivized price, say $26,000 dollars.

The goal of the program is a Model 3 that is profitably sold for $26,000 without incentives. Tesla is not supposed to just close up shop when the incentives expire. Manufacturing efficiencies are supposed to have improved to where $26,000 is the market price - cars move at that price without government help.

Tesla should be planning price reductions to match the incentive phase out schedule.

With that in mind, it is in Tesla's and the public's best interest to deliver as many cars as possible in the 2 quarter window of the $35,000 price point. They make $9K more per car than they do after they honor the price reductions implicit in the bill.

This says they produce 400,000 cars in 6 months. Then lower the price. It sounds like Henry Ford.

Does this sound right to you?

You assume that the incentive is meant only to drive down prices. I think that the actual stated intent of the incentive is to spur adoption of zero-emission vehicles. It's been doing that. People who otherwise wouldn't have bought an EV bought an EV. People who bought Teslas probably spent more than they otherwise would've spent on them, meaning that Tesla had more money to spend on developing the Model X, the Model 3 and the charging infrastructure much more quickly.

If the Federal government wants to increase EV sales as quickly and as soon as possible, then Tesla pumping out more cars faster fits right in line with that goal. This is an example of a government program working just as it was designed. Lots of people want to be first in line for the 3 to get that extra 7500-13000 off, and Tesla is going to make it happen because there is an economic incentive to getting as many of those pre-orders filled as quickly as possible. I stood in line for the 3 partially because I didn't want to be left out of the incentive. Normally, I would want to wait at least about 6-10 months before buying a new model.

 

[ImEric]

Run a credit check on the 400,000.
They can't pay without the $7,500 credit.
They mean well, and they are rooting for Tesla.

The observed demand is at $26,000 for a 3. [It is a "with the tax credit" demand]
Don't kid yourselves. The price needs to be $26K to keep the factory running.

The Model S outsells other cars in its class. Not just in the US, but even in Germany now. Why shouldn't the Model 3 be able to hold a similar appeal? And remember, $35k for a BMW 3 series is more expensive than $35k for a Model 3 when you factor in the cost of fuel. It might actually be more akin to buying a $28k car already. It is my assumption that, while the tax incentive plays into peoples' decisions, it is not the deciding factor for whether or not they get the car. For instance, as I've already stated, the incentive moves my timetable up 6 months (I've been waiting about 10 years for this already, so I would've been willing to wait 6 more months without the tax credit). The other thing that the tax credit does is incentivize me to get more bells and whistles than I otherwise would've gotten. But it is by no means the deciding factor for me (or anyone else I know who's getting one... just a bonus that makes us get a more expensive one, or get it slightly earlier).

 

[alseTrick]

Personally, I would rather the government stay out of it. Sorry, but I just don't trust them most of the time. The incentives were great and served a purpose, but EVs are now getting viable and compelling in direct competition with their ICE competitors. The technology is only going forward and the prices are only going to come down so lets let the common market work its magic and before you know it people will be asking themselves why they ever considered an ICE vehicle in the past.

Dan

The government is already in it and rightfully so.

I think we can ALL agree that there wouldn't be an EV revolution going on now without government loans and tax credits. Tesla probably would've crashed and burned long ago, and the long-time automakers would still be focused on 15mpg SUVs and trucks (oh wait, they're STILL focused on those).

I much prefer the government "guiding", "incentivizing" or "regulating" industry rather than letting industry go all laissez faire on the consumer. We've seen repeatedly how things turn out when industries dictate the terms they want at the expense of the federal government and its citizens.

That said, the government - at least in this scenario - only needs to be the spark that ignites the EV fire. I'm not sure if there is an actual fire burning yet, or just some hot embers. I think it'd probably be best to expand the tax credits to 500,000 or 1,000,000. And I'm not saying that because it'll ensure I receive the full $7,500 on my Model 3. But say 15 carmakers (however many there are) all reach 1,000,000 sales in the next 10 years. That's 15,000,000 cars (obvi). That would only be around 5% of the current number of vehicles in the US. I obviously don't know what the critical mass is to make a transition to EV/alternative fuel inevitable, but it has to be larger than 1% of the total marketplace, right? Because as of now that's what the 200,000 car figure will create.

Regardless, I'd never propose government intervention on 100% of sales. It's not that that's too much government "intervention" (which it may or may not be). It's that there is NO NEED for government intervention when nearing 100% marketplace saturation. That's just wasted federal tax dollars.

 

[alseTrick]

Well #1 isn't going to get you anywhere with half the electorate not believing in it. And the ones who DO believe in it, don't vote.

Is that true?

Because generally speaking, Democrats believe in manmade global warming and Republicans don't. For a constituency that doesn't vote, the Democrats have won 5 of the last 6 popular votes for President.

 

[deonb]

Is that true?

Because generally speaking, Democrats believe in manmade global warming and Republicans don't. For a constituency that doesn't vote, the Democrats have won 5 of the last 6 popular votes for President.

I meant young people.

 

[Red Sage]

Yes. A reason to increase the tax credit subsidy for plug in hybrids and EVs.

That is no reason for Ford, Honda, Nissan, Toyota, Hyundai, or Kia to create plug-in hybrids. They do so because of CAFE and CARB regulations. Those regulations allow them to get away with building an extreme minority of the cars they sell as Zero Emissions Vehicles, while getting a maximum benefit from offering those compliance cars. That is the part of the system that needs to be turned upside down. Traditional automobile manufacturers must be forced to build an increasing majority of their cars as ZEVs -- not to receive Subsidies -- so much as to avoid harsh Penalties. THAT will work.

What is a 'Subsidy' A subsidy is a benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy is usually given to remove some type of burden and is often considered to be in the interest of the public.

I keep coming real close to giving your posts a 'Like'... But then you fill them with the word 'subsidy'... A cash payment may be a subsidy. A tax reduction is not.

Keep in simple. Double the tax credit subsidy. Extend it indefinitely. Allow it to carryover until used. Add it to earned income tax credits subsidy for those who qualify.

Still not quite simple enough. No tax credit. No rebate. No waiting. No income restrictions. A direct reduction in the cost of the car to the Consumer. Make it an actual subsidy. That would do the trick.

Corporate tax breaks based on number of plug in hybrids and EV's sold. Tesla would pay zero corporate taxes. Immediate depreciation write off for all plug in/EV R&D and manufacturing capital equipment. This makes all the subsidies for EV's (and other zero emissions vehicles) predictable for business and consumers.

Goal is replacing all US passenger vehicles with EV's.

I Am Not A CPA... So I have no idea of the affect of these proposals.

 

[alseTrick]

I meant young people.

Ok. Younger people are less reliable voters than older. That's true. But not your other comment, I don't think.

But I'm not sure what that has to do with "believing" in manmade global warming though. It's not like asking whether someone believes in unicorns, the loch ness monster, leprechauns, werewolves, vampires, or whatever. There is actual scientific evidence that it exists and it's agreed upon by nearly all scientists who study it.

 

[EaglesPDX]

That is no reason for Ford, Honda, Nissan, Toyota, Hyundai, or Kia to create plug-in hybrids. They do so because of CAFE and CARB regulations. Those regulations allow them to get away with building an extreme minority of the cars they sell as Zero Emissions Vehicles, while getting a maximum benefit from offering those compliance cars. That is the part of the system that needs to be turned upside down. Traditional automobile manufacturers must be forced to build an increasing majority of their cars as ZEVs -- not to receive Subsidies -- so much as to avoid harsh Penalties. THAT will work.

Fuel efficiency, emissions regs are excellent means to an end. If GM can build a zero-emissions car that runs on something other than electricity, that is the goal. The Federal Tax credit is not actually for EV's but for zero emissions. It is working but not fast enough so take what is working and increase it. Increase the subsidies for zero emissions with mfg's and consumers.

I keep coming real close to giving your posts a 'Like'... But then you fill them with the word 'subsidy'... A cash payment may be a subsidy. A tax reduction is not.

Chuckle...that's why I posted the definition of a subsidy above which included a tax reduction. Subsidies come in many forms from tax credits to direct payments to loans to land grants, it is economic assistance to achieve a goal.

 

[Dan Detweiler]

For us EV fans, yes. The federal tax credits are a plus. What I am saying though is that we are a very, very small minority (about a half a percent according to last year's new car sales). What we want to happen is to have that number up around 50% or more. That is not going to happen until the products stand alone all by themselves. Elon himself even said that if a technology is going to compete with the established products it is going to have to be better than what is available...and not a little better, it will have to be a lot better. Those are his words, not mine. The special perks, as nay sayers see them, like tax incentives, etc. are just driving a bigger wedge between the two factions.

In the long run I think these types of programs continuing going forward will only hinder the acceptance of EV vehicles by the masses not speed them up. I think they are to the point of being counterproductive.

Of course, many will disagree. Especially on this forum which, by its nature, is preaching to the choir. But...it is a very, very small choir when looked at globally.

As always, submitted with the utmost respect for those with a different view. Just my $.02.

Dan

 

[cpa]

I am going to go out on a limb here by stating that Tesla has lost money every year since it was incorporated in the early part of the millennium. Tesla's corporate income tax returns for those years will show losses each and every year. Businesses (and that includes individuals who are self-employed) can elect to "carryforward" income tax "net operating losses" (NOL) for twenty years. Then they expire as worthless.

NOLs are used to offset a current year's profit, effectively wiping out any federal income tax due when Tesla starts becoming profitable. Corporate alternative minimum tax rules only allow 90% of AMTI to be offset by NOL carryforwards, so when Tesla begins to show "taxable income before NOL deduction," Tesla will be paying something via the AMT. However, AMT paid in this scenario will generate an AMT credit against future regular tax once Tesla exhausts its NOL carryforwards.

This is a long-winded explanation to say that 15 years or so of tax losses will more than offset future taxable income for many more years once Tesla turns the corner.

You can see the federal NOL carryforwards for yourself in the notes to Tesla's financial statements, as they are a mandatory item for disclosure.

Corporate tax breaks based on number of plug in hybrids and EV's sold. Tesla would pay zero corporate taxes. Immediate depreciation write off for all plug in/EV R&D and manufacturing capital equipment. This makes all the subsidies for EV's (and other zero emissions vehicles) predictable for business and consumers.

 

[deonb]

3. Bush I gave ally Saddam green light to invade Kuwait.
4. Bush I double crosses ex-ally Saddam and US occupies Kuwait and Saudi with military built for that purpose.

Sigh. This again. Telling someone that you're not allied with someone else is not the same as giving them a "green light" to invade them.

Cuba is not a U.S. ally either. Did I just give you a "green light" to invade Cuba?

Look, I'm no fan of Bush. 1 or 2. Nor Reagan. But I am a fan of history and accurate facts.

 

[jgs]

New Sometimes incentives are abused, or gamed, which does not seem right. Is manufacturing and delivering as many cars as possible inside the credit window abusive?

No. In other fields it's called "being tax-efficient". It's good sense.

Does this sound right to you?

No.

The observed demand is at $26,000 for a 3. [It is a "with the tax credit" demand]

Without a lot more data, you can't show the majority of those buyers have $7500 in tax liability to allow them to take advantage of the credit. Item, there is a tax credit. Item, there is demand. But is item one responsible for item two? As we have all heard about a million times now, correlation is not causation.