-
Want to remove ads? Register an account and login to see fewer ads, and become a Supporting Member to remove almost all ads.
You guys who argue this as always make a very good point. It is pretty incredible how much we spend on certain industries. Many of us open market people are not all that thrilled about subsidies, however one thing is that those oil company subsidies benefit everyone and not just a group of people looking to buy a novelty electric car. Those subsidies help to lower the price of a resource that is very high risk in acquiring and help to ultimately lower the cost of food at the grocery store, the cost of fuel so people can get to work, the cost of all goods, and so on. If you think that is bad in this country, it is crazy how much some countries subsidize their energy sector. This $7500 subsidy does not really benefit everyone. It just gives companies a chance to get their EV's onto the market. If the federal government wanted to subsidize the research or production of EV technology just like they subsidize the high risk activities of oil exploration(Shell recently spent $2B only to realize their find was a bust), then I would be more willing to find it acceptable. Subsidizing the cost so people can buy a luxury car? No.
ChadS
Last tank of gas: March 2009
My issue with the argument about rich EV buyers getting subsidies and making things worse for poor people is that luxury gas car buyers are subsidized MORE than luxury EV buyers. There is absolutely no to way to defend a position that EV subsidies should go away but petroleum subsidies should stay. Such a position not only has no benefit, but actually harms our national interest, economy, air and water quality, AND the economic justice issue you are bringing up.
The whole purpose of the EV subsidy is to make up for the inequity that we're starting with because petroleum is subsidized. It's not about vehicle affordability, or a handout for a certain type of person (the social benefits go to all regardless of who buys the cars), or even about giving new technology a boost (though that may be worthwhile). It was put in place solely to counter existing petroleum subsidies and make the playing field closer to even. A far better solution is to remove the petroleum subsidies. Seriously, I have been reviewing literature on PEV incentives for a work project, and all of the studies by economists whine about EV incentives being a second best solution - stopping petroleum subsidies is far more sane. Because petroleum subsidies are insane. Even the IEA agrees with that.
That said, assuming the petroleum subsidies are not removed (which does not seem to be much of a danger) I do agree with your point that there may well be more cost-effective ways to spend money to promote EVs. And ways that don't "look" as bad.
The whole purpose of the EV subsidy is to make up for the inequity that we're starting with because petroleum is subsidized. It's not about vehicle affordability, or a handout for a certain type of person (the social benefits go to all regardless of who buys the cars), or even about giving new technology a boost (though that may be worthwhile). It was put in place solely to counter existing petroleum subsidies and make the playing field closer to even. A far better solution is to remove the petroleum subsidies. Seriously, I have been reviewing literature on PEV incentives for a work project, and all of the studies by economists whine about EV incentives being a second best solution - stopping petroleum subsidies is far more sane. Because petroleum subsidies are insane. Even the IEA agrees with that.
That said, assuming the petroleum subsidies are not removed (which does not seem to be much of a danger) I do agree with your point that there may well be more cost-effective ways to spend money to promote EVs. And ways that don't "look" as bad.
Last edited:
voip-ninja
Give me some sugar baby
Sure, I'll take that argument.
Petrol subsidies by and large benefit everybody, because virtually everybody who is a working age adult is buying gasoline or diesel. By comparison the primary beneficiaries of EV subsidies to date have been people buying relatively expensive transportation who in all likelihood could purchase it even without the subsidy. In case of Model S this is 10X the case. I know one guy who owns a Model S and he makes $200K a year. Why should I be subsidizing his purchase when he could absolutely afford his luxury electric without my tax dollars?
It is honestly much easier to get behind the federal tax credit energy subsidies around things like putting in high efficiency insulation in your home or solar, as in many cases it results in fewer coal or NG burning power plants being built than a tax credit that helps an incredibly small number of people.
I'm glad that the subsidies have allowed Tesla to get a foothold in the market, but I will not cry when the subsidies are gone, even if it means I pay more for an EV because of it.
Hurray! Something positive to come out of this discussion.
Can you provide some links or more specific data? Thanks!
doublejj
Member
The benefit to everyone is reduced dependency on oil for people transportation & cleaner air...that's worth $7500 to me
Sorry, branching off topic a little but...
This always hits a nerve with me. A lot of problems can only realistically be solved when such burying becomes impossible.
The tax code needs to be simplified to the point where 5th graders can read it during homeroom without being geniuses.
ChadS
Last tank of gas: March 2009
I enjoy discussions more when the people I'm talking to are really looking for what's best overall, rather than looking out for their own interests. So thank you and HanSolo for that. I also agree in looking for cost-effectiveness (in fact that's the subject of my research right now).
That's exactly the claim that the economists disagree with. It doesn't help everybody, because the subsidy money isn't free. It's better - for everybody - to stop collecting taxes to provide a subsidy to everybody. Especially when you incur other enormous costs by encouraging people to consume more petroleum than they would if it was priced at regular market prices. The petroleum subsidy keeps the market from working properly, and is why we need an EV subsidy.
Adjusting the market to price in externalities makes the market work better (as by definition, the market can't handle externalities). Adjusting the market to subsidize an activity that causes more externalities results in market failure - not the market's fault, it is government intervening in a bad way.
After reading a few hundred papers on the topic, I can't recall seeing any economist defend petroleum subsidies. Though I am sure there's one somewhere that is quoted widely in blogs and op-eds...
The tax credit is not about making cars affordable, but that's an aside. The short answer is that you shouldn't. But, if he doesn't buy an EV, you will spend MORE on subsidies for petroleum - why should you do that when he can afford it? My argument is not that the tax credit is a good way to subsidize EVs. My argument is that the EV tax credit helps balance the market-distorting petroleum subsidy, and a better solution is for both subsidies to go away. But the petroleum subsidy staying while the EV study goes away is the worst situation.
I'd rank them this way:
BEST: no subsidies on either side
OK: EV subsidies, but no petroleum subsidies (for a period of time; there should be - and is - a sunset date. I agree applying subsidy to consumer is not the best approach in this situation)
BETTER THAN NOTHING, BUT NOT VERY GOOD: EV subsidies and petroleum subsidies, what we have now
WORST: eternal petroleum subsidies, but no EV subsidies
Last edited:
How about this:
Instead of giving me a tax credit, apply that tax credit directly to the national debt -- and extend it until the debt is paid in full.
Did the Model S/X 8 years get bumped to 10 years for Model 3? I missed a memo it seems.
Since the forum won't let me do it directly, this is why I marked your post as "Dislike".
Here is why the subsidy exists. New technologies are almost always more expensive than established technologies when they are introduced. This becomes a big barrier for adoption in an industry with a big cost to change and a big investment stake in the existing technology. Incentives encourage pioneers to open up this new market and get the ball rolling in the new direction.
There are a number of ways these incentives can be done. The old technology could be taxed more heavily, like they have done in some European countries, the companies expressing interest in developing the new technology could be given grants, or early adopters of the new technology could be given some kind of incentive.
The Model X has some novel features as does the Model S, but if they were ICEs, the base Model S 70 would probably be about on par with a fairly basic Ford Taurus. The 17 inch screen and what it offers is actually cheaper to make than all the buttons and switches on most ICE cars, the door handles are novel, but there isn't much else in the base car that isn't found on a mid-priced family ICE car.
What puts the Model S in the price range of luxury cars is the new technology which is expensive. The incentive gives a tax break to the rich to buy an expensive car so Tesla can do exactly what they are actually doing, taking the lessons learned from the expensive car, as well as the money made from that project to build a more affordable car that is affordable by everyone. Without the incentives, that whole arc would be far more difficult to achieve.
As for free markets, they are mostly a myth. Throughout history they have been rare, and when they did exist, things often went pear shaped. Americans like to tell ourselves that we're this independent people who get things done without any outside help, but the biggest growth in American history happened largely because of government handouts. The biggest was the westward expansion during the building of the railroads and just before that time. The government gave away land to anyone who could prove they could make use of it and the government gave tons and tons of land to the railroads, not just the right of ways for the railroads themselves, but entire sections of land surrounding the tracks the railroads sold and the backers walked away some of the richest people in the country. The country is dotted with the legacies left behind by these people.
Developing any kind of industry or infrastructure with high capital costs is very risky and governments are always in the middle of those projects to some degree because governments are the only entities big enough to absorb the risk. Tesla has had far less government help than most new industrial endeavors. The fledgling car industry in the early 20th century got help too, in that case in the form of new roads all over the country that were better suited for the new horseless carriages. The American road system was a massive investment by governments in the country's infrastructure. Far far larger than the paltry investment in EVs today.
Monthly Plug-In Sales Scorecard
if my math is right, GM is just over 96k sales in the US (volt + spark ev). tesla is just under 73k.
of course, that's assuming that those numbers are 100% accurate, and it's also entirely possible that tesla will blow past them at some point...but at this particular moment in time, it's still a fair assumption that GM is closer to the cap than tesla is.
Tesla has had about as much help as nearly any other company has had. You are absolutely right about the infrastructure investments that often the free market cannot account for. Many of us who believe in free market are not purists. What I find fascinating about Tesla is that they understood this far better than anyone else as they(mostly their investors) took it upon themselves to establish that infrastructure. When it came to the tax credit, Tesla got the same help that everyone else got. The 200k cap was to help get EV's on the market. I absolutely understand your arguments as well as that of others who understand just how vital subsidies can be to getting new technology on the market. However it should be used in a manner that benefits more than just the buyer. From a PR perspective, NO politician would likely go for this because it is not very appropriate in the eyes of public opinion. Why should the rules even be changed when every other manufacturer making EV's abides by the same rules? IMHO, expenditures should be in the area of infrastructure and research.
As Chad and others have noted, this is a narrow view of the intent of the EV subsidies. Some would argue that changing a car buyer's decision from a gasoline/diesel vehicle to an electric vehicle -- assuming it meets the buyer's needs -- benefits the human population of the planet as a whole.
Tes LA
☰
Since the other manufacturers don't really seem to care too much about EVs so far I think it should have been a total # or % of EVs on the road for the cap. Otherwise BMW can basically do nothing until after Teslas credits have expired and then come in and have an advantage over the model 3 by selling a car with a tax credit. It basically encourages them to do nothing until Teslas credits have expired, which I don't think is the real goal of the credits in the first place.
A lot of Oil subsidies arent tax subsidies. They are environmental and health care subsidies in the form of costs that we spend that isnt in the fuel costs. More environmental cleanup that petroleum companies dont make. Not a tax cut for the petroleum company. Not the additional health care costs incurred by citizens. The lack of having to pay for those external costs through the cost of the fuel isnt exactly a subsidy, but is a real cost we all pay.
Similar threads
