Global Incentives and Model III

[Bgarret]

I wanted to start a new thread that builds on some of the excellent work that GerardF did in the European thread. After reading his analysis of incentives for the Netherlands and the potential impact on Model III demand, I think it would be helpful to aggregate incentives as it relates to Model III demand. A quick summary, that begs for individuals in different countries to augment:

Netherlands (From Gerard): Market Size - 314k Leased, 135k Private

For ICE: 22-25% taxed for 40,000 Euro ICE car, leading to a tax of approx. Euro 5,244/yr for equivalent leased ICE.
For Model III: 4% Tax/yr or Euro 79/mo.

Over 5 years, total tax savings of 21,488 Euro. Estimated Gas Savings over 5 years - 5,000 Euros.

Apples to Apples Comparison:

BMW 3 series:

Purchase: 40,000 Euro + Tax 21,488 Euro + Gas 5,000 Euro= Total Cost of ownership, 5 years: 66,488 Euro

Model III:

Purchase: 40,000 Euro + Tax 4,700 Euro + "Fuel" (unknown) = 44,700 Euro + Electricity

Difference - 20,000 Euro or 4,000 Euro/yr.

US - about 8,000,000 cars addressable market 2014 $25k - 40k.(est).

Federal Subsidy (first 75,000 or more depending on politics) - $7500
State Subsidies: 9 states with 84.5 Million people (about 1/4 of population) from $1,500 - $6,000.

BMW 3 series: Purchase: $35,000 Gas & Maintenance 5 years: $10,0000=$45,000
Model III: Purchase: $25,000-$27,500, Gas & Maintenance 5 years: $5,200= $30-32,500.

Difference - $15,000.00 or $3,000/yr.

China:

EV's avoid a 10% tax and can be used every day, vs. every other day for ICE cars.

50% tax (from utilization)

There are others - I've looked at other European nations, and Germany is considering a 5,000 Euro benefit to encourage EV adoption.

Here's the thing. If battery technology is $180/kwh and trends toward cost parity at $100-125/kwh, without incentives, then with incentives, we are approaching cost parity with ICE with current incentives.

The total cars sold worldwide was approximately 75 million in 2015.....it would not be surprising if the demand for Model III approached 750,000/yr very soon after unveiling, leading Tesla to look for capital ad partnerships to expand gigafactories, production and distribution in both Europe and Asia to meet demand.

Let me know any additional breakdowns of incentives and impacts...thanks GerardF for your contributions.

 

[Bgarret]

Here is a first pass at working some of the math of incentives and impact on electric car adoption in 5 cities around the world. Why?

Because many people are anticipating a time when electric cars reach cost parity with ICE vehicles. With the production of the Model III and the existing incentives in place, EVs, specifically the Model III, have a significant cost advantage to ICE cars both on the initial purchase and 3 & 5 year cost of ownership. If the Model III is priced 30-100% less than ICE cars, is safer, looks better, has better performance, has better brand recognition/cache and is perceived as being better for the environment, then we may be underestimating the potential for Model III demand globally.

Or maybe not. Let me know what you think.

 

[jhm]

This is a nice concept for a thread. It's great to hold this information in a central location. There may be some good sources that survey gasoline and electricity prices by nation. Of course gasoline prices vary over time but you can use say 2015 average as a baseline. The variable stuff relates mostly to the price of oil, which is nearly a global price, but refining, distribution and marketing cost vary nationally and may be more stable.

 

[Gerardf]

It is starting :

A car leasing company is trying to enlist customers to reserve 1,000 Tesla Model 3’s

 

[Cattledog]

Here is a first pass at working some of the math of incentives and impact on electric car adoption in 5 cities around the world. Why?

Because many people are anticipating a time when electric cars reach cost parity with ICE vehicles. With the production of the Model III and the existing incentives in place, EVs, specifically the Model III, have a significant cost advantage to ICE cars both on the initial purchase and 3 & 5 year cost of ownership. If the Model III is priced 30-100% less than ICE cars, is safer, looks better, has better performance, has better brand recognition/cache and is perceived as being better for the environment, then we may be underestimating the potential for Model III demand globally.

Or maybe not. Let me know what you think.

Nice chart. I am not sure why you have Annual Taxes/Fees/Gas for a Prius in some cities but not others and nothing for the Model 3. Though nominal, there is a 'fuel' charge for electricity.

 

[Bgarret]

Nice chart. I am not sure why you have Annual Taxes/Fees/Gas for a Prius in some cities but not others and nothing for the Model 3. Though nominal, there is a 'fuel' charge for electricity.

Prius $ in that category all relate to taxes. In many of the cities/countries EVs qualify for subsidies and the Prius does not. I only added $600 to BMW for the estimated differential in gas and maintenance over Model III and Prius...I left those 2 at parity for gas/maintenance/electric costs - which I thought was conservative.

 

[jhm]

Tax office ruling provides big boost for electric vehicles in Australia

Upto AU$2200/year tax deduction for business use.

 

[CaptainKirk]

I've been giving the incentives a lot of thought lately. In Ontario, Canada, the incentives can be found here: Electric vehicles incentive program

Model 3 based on what we can surmise on speculation will basically be eligible for $14000 in EV rebate from the Ontario Government as follows:
- Battery capacity from 5 to 16kWh = $10000
- Battery capacity exceeding 16kWh = $3000 bonus
- Vehicle with five or more seats = $1000

The constraint is that the purchase incentives are not to exceed 30% of MSRP. This means that sweet spot of the minimum MSRP for Model 3 is CDN $46666.67. Given current exchange rates, a $35000 USD base price means we are hovering extremely close to this sweet spot.

I am hoping (fingers crossed really hard) that the Ontario government will not cancel this program before Model 3 ships in Ontario. My fear is that this program will undoubtedly be axed when Ontarians take advantage of this program en masse, so it's really a race to place deposits before March 31st. The best I can do is take a half day off work, but it's worth a try!

Edit: grammar and mis-typed incentive value.

 

[Bgarret]

I've been giving the incentives a lot of thought lately. In Ontario, Canada, the incentives can be found here: Electric vehicles incentive program

Model 3 based on what we can surmise on speculation will basically be eligible for $14000 in EV rebate from the Ontario Government as follows:
- Battery capacity from 5 to 16kWh = $10000
- Battery capacity exceeding 16kWh = $3000 bonus
- Vehicle with five or more seats = $1000

The constraint is that the purchase incentives are not to exceed 30% of MSRP. This means that sweet spot of the minimum MSRP for Model 3 is CDN $46666.67. Given current exchange rates, a $35000 USD base price means we are hovering extremely close to this sweet spot.

I am hoping (fingers crossed really hard) that the Ontario government will not cancel this program before Model 3 ships in Ontario. My fear is that this program will undoubtedly be axed when Ontarians take advantage of this program en masse, so it's really a race to place deposits before March 31st. The best I can do is take a half day off work, but it's worth a try!

Edit: grammar and mis-typed incentive value.

Captain. Thanks for the info. I think this is a good example of some of the moral hazard that governments may run into. There will be some howling if affluent Model S owners get $14,000 in EV tax incentives, but then the same incentives are snatched away from lower income EV adopters that want a Model III. Could leave the government of Ontario in a bit of a bind.

 

[CaptainKirk]

Captain. Thanks for the info. I think this is a good example of some of the moral hazard that governments may run into. There will be some howling if affluent Model S owners get $14,000 in EV tax incentives, but then the same incentives are snatched away from lower income EV adopters that want a Model III. Could leave the government of Ontario in a bit of a bind.

Oh, I also forgot to add the upper bound of the EV rebate. Model S owners do not qualify for the full $14K because the MSRP also has to be below $75000 CDN. As of today, Model S owners only qualify for $3000 because that's the max allowable once the MSRP cap is exceeded.

Thus, the sweet spot for Model 3 is for the base model starting at CDN $46666.67 and capping out at $75000 for the fully maxed out version in Ontario.

 

[Muaddid]

8000$ rebate (not tax credit) for an electric car in Quebec... for now... our government likes to change half the programs every budget so who knows what it’ll look like in 2 years when they start delivering the 3...

 

[Fallenone]

In big cities in China, Tesla owners are enjoying little if any monetary incentives. But they can obtain a licence plate a lot easier than ICE cars. For example, in Beijing it's a lottery system and the average wait time to win the right of having a licence plate is about 5 years or more, Tesla like other alternative energy cars are exempted from the lottery system and can get one right away as of now. Also, as way to combat air pollution, ICE cars usually face restrictions to be on the road and owners can't drive them every day. Your ICE car will not be allowed to be on the road one day Mon-Fri based on the last digit of the licence plate. Tesla is not restricted by this like other EV. For S and X owners, I think these two policies are even more effective than monetary incentives. And if Tesla can have a factory partnered with a local manufacturer to get rid of the 25% import duty, Model 3 won't need additional incentives like rebates to sell (provided charging questions and range anxiety is much better alleviated).

 

[Bgarret]

Interesting push by Mitsubishi to get some level of incentives in Australia - and also listing some of the incentives in other countries. Also interesting in that the incentives they list in some countries are only those for registration, not ongoing incentives based on tax regimes or commuting tax. I'm working on a spreadsheet listing incentives, price points and vehicles purchased per year by country...

Mitsubishi slams electric-car tax proposal - motoring.com.au

 

[neroden]

Because many people are anticipating a time when electric cars reach cost parity with ICE vehicles.

I want to give you an immediate piece of advice: the question is cost parity with *each class* of ICE vehicles.

Model 3 reaches price parity with a lot of ICE vehicles... but it may be a while before a 200+-mile-range BEV reaches price parity with a Nissan Versa. (At that point, it's all over.)

The market is heavily segmented and it's worth looking at the segments separately. For an extreme example, nobody is making a BEV pickup truck yet, at all.