TMC is an independent, primarily volunteer organization that relies on ad revenue to cover its operating costs. Please consider whitelisting TMC on your ad blocker and becoming a Supporting Member. For more info: Support TMC
Start a Discussionhttps://teslamotorsclub.com/tmc/tags/

Is there any state incentive for MS in WA?

Discussion in 'Model S' started by gowthamn, Apr 13, 2017.

Tags:
  1. gowthamn

    gowthamn Science

    Joined:
    Apr 14, 2016
    Messages:
    235
    Location:
    Seattle
    Does Washington state have any incentives for Model S? I know the limit is $42500 to receive tax breaks. So if someone buys a Model S then do they pay the full tax or does the first $42500 of the MS will be tax exempted?
     
  2. BerTX

    BerTX Active Member

    Joined:
    May 2, 2014
    Messages:
    2,018
    Location:
    Texas/Washington
    No. The limit was a punishment for being able to afford a Tesla. You don't deserve a break. You should be ashamed for asking. ;)
     
    • Funny x 2
  3. daniel

    daniel Active Member

    Joined:
    May 7, 2009
    Messages:
    2,049
    Location:
    Spokane, WA
    Not so much a punishment for being able to afford the car, but rather the argument is that if you can afford a $75,000 car, you really don't need the tax break. Actually, they figure that if you can afford anything over $42,500 you don't need the tax break. Hey, the tax man needs money, and in the absence of a state income tax, the sales tax is the source of a lot of money for the state. We're already not paying gasoline taxes because we don't buy any gasoline. And we're not paying state income tax because WA doesn't have that.

    Death and taxes. Drive safely and perhaps you can postpone the former for a bit. The latter won't let you go so easily. Personally, I like living in a nation and a state that has a good quality of life and provides the services we need. Taxes are the price we pay for that.

    Rather than giving tax breaks for buying an electric car, it would make more sense to tax carbon. Tax the hell out of carbon!
     
    • Like x 2
  4. EarlyAdopter

    EarlyAdopter Active Member

    Joined:
    Jun 24, 2012
    Messages:
    2,689
    Location:
    Redmond, WA
    Actually, we are paying gasoline taxes for our EVs in WA state. You're forgetting the EV surcharge on your annual registration.

    I think the fact that the $42,500 cutoff is a hard cliff (all or nothing) rather than a soft one (first $42k gets the benefit, rest of cost beyond does not) is stupid.

    Basically, we've gone from being one of the most incentivizing states to now one of net disincentive for a Model S or X, when you take the fact that we offer no incentive on purchase, but then throw on a gasoline tax, and also add on the extremely high Sound Transit RTA tax, too.

    Fortunately, I still see plenty of new Model S and X around all the time here despite this.
     
    • Informative x 2
    • Like x 1
    • Disagree x 1
  5. dss33

    dss33 Member

    Joined:
    Apr 14, 2016
    Messages:
    183
    Location:
    Seattle
    Agreed. We had to renew our tabs today and the $150 EV fee was more than half of the total. Granted, we're just outside of the ST district so we're still low relative to most folks in the area, but having a fee that just targets EVs is an awful idea. Encouraging more electric vehicles easily offsets their usage of the roads. And they're already taxing by vehicle weight (which is the real thing that deteriorates roads and other infrastructure) so perhaps they should instead lean more heavily on that.
     
    • Like x 2
  6. daniel

    daniel Active Member

    Joined:
    May 7, 2009
    Messages:
    2,049
    Location:
    Spokane, WA
    If the idea of the tax incentive is to encourage people to switch to electric, and the electric-car makers are selling every car they can build months before they build it, then the incentive accomplishes nothing other than to reduce overall tax revenue. If the automakers were having a hard time selling BEVs, then a tax incentive would make sense. In the present market what it does is move the available cars to lower-income people, as people with less to spend will get in line as the incentive brings the car into their price range.

    If you are one of the ones would could afford a Model S with the tax incentive, but not without, then it makes a big difference. But the state does not care who buys the cars, as long as they get onto the roads, and it will be a while before Tesla can build more cars than the market can absorb.

    So the incentive does not put one single extra car on the road. It merely reduces the state's revenue.

    Another effect the tax incentive can have is to allow automakers to raise the price of the cars, since the tax incentive brings it back down. Thus the government is giving a subsidy to the automaker. The real effect is probably a mix of the two.

    From the point of view of legislators who need money to run the state, a tax incentive on BEVs today makes no sense.

    What would make sense would be to eliminate all subsidies, especially the indirect subsidy of allowing people to use the atmosphere as a free dumping place for all their waste carbon. The future cost to society of that will be enormous and catastrophic. But of course today's legislators don't expect to be alive long enough to have to pay for that, financially or politically. Nations are run by people whose time horizon is too short for them to be willing to invest in the environment.
     
  7. ChadS

    ChadS Petroleum is for sissies

    Joined:
    Jul 16, 2009
    Messages:
    2,618
    #7 ChadS, Apr 13, 2017
    Last edited: Apr 13, 2017
    I completely agree that getting rid of all subsidies and pricing externalities would be a far better plan.

    I also agree that PEV incentives (an area of detailed study for me) are less important to most Model S/X buyers today than they are for other EV models - but, they do still help, and they were more important in the past. Similarly, I think they will be less important in the future. So any discussion of what type of support is appropriate will vary by time.

    Given the environment we are actually in, a few things on the WA sales tax waiver (TLDNR: PEV incentives work, even for the S/X. The economic benefit to the state is large):

    Even if all EV makers were production constrained (clearly not the case, but just for argument's sake), if the sales tax waiver can get some of the cars HERE instead of in some other state, it is still a net economic benefit to the state (more on this below), even if it doesn't sell more cars total. Not to mention that long-term, sustained demand will encourage other EV capacity expansion.

    The WA sales tax waiver (which is not just for EVs, it is for any petroleum alternative) was never envisioned as a way to help poor people buy an EV. Poor people don't buy new cars, especially not ones with new technology. If the sales tax waiver is the difference between being able to afford it and not, then it is still probably not a good idea for you. New technology is expensive, and the fastest way to make it cheaper and available to all is to sell a lot of it (which also increases the availability of used models). Enticing rich people to buy an EV instead of an ICE leverages their dollars to reduce technology costs - and still has all of the same benefits to the states and citizenry. This also explains why the incentive has a sunset date - we will still have poor people after the sunset, but we hope the technology will be cheaper.

    The key point from above is that the waiver is not financial assistance, it is a buying incentive. Effectiveness of any incentive will of course always be less than 100%; that would only be possible if you sold zero without the incentive. At some low level of effectiveness the incentive is not cost effective as Daniel noted, so constant inspection is warranted. But people buying cars respond to incentives. Yes, even rich people; despite most people believing that while they respond to incentives, people richer than them "don't have to". And even Tesla buyers. The idea is to switch ICE purchases into EV purchases, and it has been effective.

    Even better is when somebody is NOT contemplating a new ICE purchase, but decides to upgrade to an EV because of the incentive (a purchase of mine fell in to this category). The WA new car sales tax has always been a drag on vehicle upgrades, and waiving it for some cars definitely makes it easier for people to decide to switch cars. In this case the state doesn't even "lose" the sales tax revenue, because they wouldn't have gotten it without the waiver. That reduces the cost to the state.

    Note that the sales tax waiver isn't all just about money the state isn't bringing in anyway. Believe me, the state crunched some numbers before enacting it. But between the utility price effects (more electricity sold off-peak, allowing more revenue without capex puts downward pressure on rates for all customers - plus it makes it easier to integrate intermittent sources like wind), reduced costs trying to mitigate air pollution (WA state has a relative abundance of clean power and paucity of dirty industry; most of our air pollution is from vehicles), reduced costs trying to mitigate water pollution (most cars in the state are in a basin near Puget Sound; much spilled gas and oil runs in to the sound - it's a huge management problem), reduced costs reducing CO2 emissions (again given the power/industry mix, switching transportation to electric is the ONLY way the state can meet CO2 goals), and the enhanced economy (and ensuing sales tax revenue) from people keeping most of their fuel dollars, and the ones they do spend staying in-state...well, this is a lot of money. EVs are an economic driver for WA. It still doesn't mean we should have an incentive if the effectiveness rate is 0, but it does mean the effectiveness rate can be far lower than many think and still be cost-effective.

    MSRP effects of subsidies have been studied in detail too. Of course we don't have enough data to be SURE on EVs, but it sure doesn't look like manufacturers are raising prices on EVs just because of incentives - especially since the prices don't vary in other areas with different incentives. And detailed studies on HEV incentive effects, including careful study after the incentives went away, showed that there was no MSRP price effect. On the other hand, places with more incentives do clearly sell more far more PEVs, so the incentives definitely work as designed. Sure, like any incentive some will buy even without them - but more buy with them.

    Also note that many people that argue that the S/X should not get a subsidy say it's because they "only" offer luxury and performance, which the taxpayers should not pay for. If that was all they offered, I would agree. But until very recently, the S/X were the ONLY way to get a BEV that has over 125 miles of range; and it is still the only way to get a BEV that has AWD, so much cargo space, or can seat 7 people. There are many buyers that would get an ICE if it wasn't for the S/X. Of course this will change as more models become available.
     
    • Like x 4
    • Informative x 3
  8. EarlyAdopter

    EarlyAdopter Active Member

    Joined:
    Jun 24, 2012
    Messages:
    2,689
    Location:
    Redmond, WA
    Well, in my case back in 2012 the state incentive absolutely factored into my decision to buy a Model S vs an Audi A7. It helped level the playing field between the two by taking cost away as a decision to have to weigh. Basically, it added value back on the Model S column so that I could then form my decision on other criteria.

    Without the incentive, I very well might not have bought the Tesla. Not because I couldn't afford it, but because I couldn't have justified it to myself. I'm sure I'm not alone in this.

    Now, if the incentive hadn't been there and I didn't buy, you're right Tesla would have had no problem selling that production slot to someone else. But I'd be willing to bet that it would have been to someone in another state and WA would have far fewer Model S's driving around. So I argue that the incentive did exactly what it was intended to do.

    The thought experiment that's left is this: Tesla is still selling cars in WA state without the incentive now. However, how many more would there be on the roads here had they left the incentive?

    The real reason it was killed was due to lobbying from the WA state dealer association. Audi would have no doubt preferred to not lose me as a customer back in 2012, and they had (and still have) no offering that can compare to the Model S and benefit from the incentive.
     
  9. whitex

    whitex Active Member

    Joined:
    Sep 30, 2015
    Messages:
    1,840
    Location:
    Seattle area, WA
    #9 whitex, Apr 14, 2017
    Last edited: Apr 14, 2017
    @ChadS gives a lot of valid points. Some more, from personal experience.

    Without the incentive, I probably would not have purchased my first 2013 S60, which was my gateway to EV's. The incentives (federal and state) made is possible to lower the price just enough to justify to myself to give the EV a chance. That in turn led me to buy 2 more Teslas (the last one without WA sales tax incentive). There is a good chance I would have never bought any of them had there not been the inventive back in 2013.

    An incentive like this can be a great thing to get people to give new technologies a chance. It's like saying "here, we'll offset some of your risk if you try this new thing".

    About making used cars cheaper, that doesn't directly apply when the incentive is a sales tax exemption on a new car. It also doesn't apply once the incentive goes away, since there is no more option to buy new with the incentive (similar to, when the federal incentive goes away for new Tesla, the price of used Teslas will go up, not the full $7,500 of course but some percentage of that).

    Lastly, it is pure BS that this incentive helped mostly "the rich". It actually helped the poorer buyers more because they had lower trade-in values. Trading up from a $10K Corolla to $80K Model S had a much higher tax incentive than trading in a porsche for 80K and getting a $110K Tesla. Bottom line, the car dealer's lobbyist won. They almost managed to get Tesla banned from selling completely, but fortunately were force to grandfather-in their existing stores. They did however pass legislation to prevent any new Tesla-like competitors from coming onto WA market. Welcome to politics.

    As for the EV fee, I have no problem with it as it pays for the roads. The proper way would be to charge all cars for mileage, but I understand they needed a quick workaround (though somehow it seemed off that one part of the government is giving incentives while the other part charges more at the same time, but politicians have never been a logical bunch). What I did have a problem is how they did it - they got people to vote on a $10 surcharge, then raised it to $100 the next year without a vote, then to $150. When the $10 EV charge was on a ballot, I remember commenting to my wife, this is how the politicians get a "foot in the door", get you to vote on a new tax, then rape you by raising it 1500%. Similar story with RTA tax, the ballot said "less than 1% increase" but didn't clarify that the RTA tax would nearly tripple (so 300% of the original tax). But I will say, they learned from the monorail fiasco which had a short deadline and they were caught with their pants down - this time, this huge tax increase (over $2000 per year for just our 2 Teslas) is for a project that is not supposed to show anything for 20 years! I bet the politicians that got that passed the voters who cannot do math are hoping by the time anyone comes asking "what did we get for this money?" they will be retired collecting their pensions and the new guys will just say "we don't know, it was the old guys who took it, but don't worry, you don't need public transit with all those self-driving cars around". What BS.
     
    • Informative x 1

Share This Page