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Loss of Subsidies Could Burst EV Bubble

Discussion in 'Electric Vehicles' started by Doug_G, Jul 27, 2013.

  1. Doug_G

    Doug_G Lead Moderator

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    Design News - News - Loss of Subsidies Could Burst EV Bubble

    Not sure I buy this argument.
     
  2. Dan5

    Dan5 Member

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    Lux research... Why does that sound familiar... Oh wait now i remember, theses are the same guys good old JP loved to cite about how start-stops are going to take off and in 2017, 39 million will be start stop. Best to ignore lux research
     
  3. jerry33

    jerry33 S85 - VIN:P05130 - 3/2/13

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    The subsidies are less than sales tax, on the Tesla anyway, so I don't see that stopping any sales.

    The article's premise is that no one would buy an EV at it's true price because EVs are inferior and are only selling now because prices are artificially low. However, in practice you get a much better ownership experience when you purchase an EV so the entire argument fails. Very few who have had an EV go back to an old fashioned car.

    Of course, there are a lot of folks who've never even ridden in an EV and many of them believe articles like that. That's why EVs have to be shown and demonstrated.
     
  4. deonb

    deonb Active Member

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    I was about to make the exact following argument, but then saw it in the article. I agree with this part:
    ”For someone who’s buying a Nissan Leaf, the $7,500 tax credit makes a big difference,” Laslau told us. “It can bring the price down from the high twenties to the low twenties.”
    ...The loss of subsidies would also be less dire for companies such as Tesla Motors, which makes luxury EVs. “Tesla will make it through this just fine,” Laslau said. “If you’re a customer spending $80,000 on an EV, then the loss of $7,500 won’t sway you much.”


    The article just predicts that a sales bubble will form shortly before the subsidies expire with a rapid rise in sales (people taking opportunity to make use of the subsidy while they still can), followed by it settling back down to the trend line. That seems fairly obvious.

    In fact I don't think this article is all that bad after all.
     
  5. Cheerose

    Cheerose Member

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    Of course, the net cost is only $ 7,500 lower if someone can take full advantage of the credit.

    I wonder how many people have gotten a shock at tax time when they didn't get the credit; or thought that it would be applied towards their refund.
     
  6. jerry33

    jerry33 S85 - VIN:P05130 - 3/2/13

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    Well, the Leaf raised it price by about $7,500 when the subsidy came out, so when it ends it can just go back to the pre-subsidy price. (originally it was advertised as $21,000 but when the subsidy came it the price suddenly jumped to $28,000 or $29,000). Unfortunately, some subsidies just cause the prices to rise by the amount of the subsidy.
     
  7. Zythryn

    Zythryn MS 70D, MX 90D

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    I do believe it would slow down the purchases of EVs. Leafs and Sparks much more so than Teslas.
    However, while it would slow the adoption of EVs other things will speed the adoption of EVs. Such as more people getting a chance to experience an electric drive.
     
  8. brianman

    brianman Burrito Founder

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    Potentially bending off-topic, but I'd be interested to see an evaluation of that statistically? My gut is that it's "most" not just "some".
     
  9. roblab

    roblab Active Member

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    I'd like to hope that the subsidies are phased out slowly, maybe a thousand a year. They could also be based on a percentage instead of a fixed amount, so people paying for a better EV would get more re-enforcement to buy up instead of buy cheap.

    The subsidies for solar in California are dropping: ten years ago you could get 50% back. Now it's 30 or so. But people are seeing that solar pays back, pays off, and after that it's free generation for life, if you're sufficiently old. EVs may end up doing the same thing now that Elon has eliminated just about every negative anyone can think of for driving EVs.
     
  10. Patrick A.

    Patrick A. Member

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    In Belgium the subsidies for electric cars stopt on jan 1 2013 . They where 30% off or a maximum of 9000 euro , reclaimable through taxes .
    The first 3 months compared to last years first 3 months , sales dropt 60% for EV's . And when you go to a Renault or Nissan dealer , there are no discounts other then model year price changes .
     
  11. deonb

    deonb Active Member

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    What were the 3 months just before the subsidies stopped? I would expect people to frontload the order in anticipation of an event like this. E.g. in the first 3 months of this year the Model S orders dried up a bit because of a small price hike that went into effect on January 1st. However, the "lost" orders really just moved to December and when the effect of frontloading was over, orders resumed at the normal pace.
     
  12. PhilBa

    PhilBa Active Member

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    In general, subsidies like this are bad for a market because they cause artificial behavior and often have unintended negative side effects. And then they either have to be maintained or cause disruption when withdrawn. And people & corporations find ways to game the system. The cash for clunkers program simply shifted forward a very large percentage of the purchases though you won't find a car maker that will admit it. It benefited mostly foreign car makers. It caused used car prices to increase, hurting the poor. Charitable donations of cars were down dramatically. You can argue the benefit of changing buyers' behavior to effect societal change but that is a political position, not economic. In the case of EVs, the benefits are bootstrapping the market and changing people's perceptions of EVs. I believe that a no compromise vehicle like the Model S has done more to change the perception of EVs than anything else. And, by a factor of 10 at least. (I have conversations almost daily where I hear some variation on "I could never picture myself in a LEAF but a Telsa, yeah!". The compliance cars really aren't changing consumer attitudes. Would BMW have brought out the i3 if Tesla didn't exist? I think not. Lots of articles about how Tesla is striking fear into the hearts of automakers everywhere.

    And, I believe that very few Teslas were sold because of the Federal Tax Credit. People are buying the model S because it's a great car. While there are people that will claim they wouldn't have bought without the 7500 credit, I'm firmly of the belief they are very much in the minority (or perhaps even self deceiving). It's basically about a 10% discount which typically doesn't motivate buyers much. I wasn't even aware of it when I made the decision to buy a Model S.
     
  13. Volker.Berlin

    Volker.Berlin Member

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    Just to throw in some perspective: There are no subsidies for electric cars in Germany, not for the customer anyway. And yet I am buying a Tesla. Granted, the EV thing does not take off here as it currently does in the States, but it gains traction nonetheless. It isn't going to go away again. The writing is on the wall and you won't remove it by denying it. It's everybody's own choice when to arrive at the party, of course.
     
  14. Dan5

    Dan5 Member

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    Here's something to consider with the Tesla Model S and the rebates.

    How many people got the base, 40 kwhr?
    Less than 4%. Now how many would have still gotten it if there was no rebate?

    Remember you can load the car up pretty fast.
    Perhaps someone who could get it and the rebate would affect their purchase may forgo one or two options
    Maybe not get the performance package, maybe not the upgraded battery, maybe not leather and some other option, heck maybe they could squeeze out 6 K and change but forgo the special paint.

    When you go to a dealer you typical compromise on something, and it has nothing to do with money.

    If you cant afford something, sometimes you have to compromise. I would rather say i really don't need it because i cant afford it rather than have a dealer say we dont carry those, and the OEM doesnt make it, even though i want it
     

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