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Why electric car subsidies are a waste of money

Discussion in 'Energy, Environment, and Policy' started by mknox, Sep 25, 2012.

  1. mknox

    mknox Well-Known Member

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  2. Robert.Boston

    Robert.Boston Model S VIN P01536

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    Thanks for flagging this; the article references a CBO study, which you can find HERE.
     
  3. vfx

    vfx Well-Known Member

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    This report came out Sunday. Good counter.




     
  4. Jaff

    Jaff Active Member

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    I wouldn't worry about it M...the author (Peter Gorrie) is a dinosaur.

    Wheels.ca is generally a very good publication...check out Ian Law's Volt vs Leaf article from Saturday, Sept 15...

    Ian's is a hands on guy who, with a great staff, runs a driving school for track, autocross, car control, etc...he is well able to handle a vehicle and write an excellent article about his experiences.







     
  5. Robert.Boston

    Robert.Boston Model S VIN P01536

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    The CBO study is much more worrisome. It's author, Ron Gecan, used to work with me, and he's a solid economist but he missed the points made by CalETC about the different multiplier effects across the value chains. Big omission. Nonetheless, because CBO is considered a neutral "referee" on policy issues, expect to see this report waved around if Congress considers the EV tax credit.
     
  6. daniel

    daniel Active Member

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    I agree that rich people like me should not get incentives for buying a car I'd buy anyway. Also, tax breaks are a terrible way to promote policy because it's virtually impossible to assess their cost:benefit. I'd rather see the incentive money used to fund basic research, especially in battery technology, with the resultant patents going into the public domain. I do think the loan to Tesla was a much better use of money than the tax credit. Will Tesla sell more Model S because of the tax credit? Yes. But how many more? That's impossible to know. I'd expect not a lot more. And right now, when it matters most, the bottleneck is production, not demand. And if demand is not an issue, then tax breaks for buyers accomplish nothing at all. We all like to get free money. But for the first critical year of the Model S, the tax break will not increase by even one car the number of cars sold.
     
  7. mknox

    mknox Well-Known Member

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    I'm not sure I agree with all of what you say. In my case, I am proposing to spend about double what I've ever spent on a car, and that is with Ontario's $8,500 rebate. (Remember, us Canadians also got hit with duties on these cars due to the Japanese battery cells). I can rationalize it with the fact that I project to save nearly $20,000 in "fuel" costs (I'm a high mileage driver), but that still means I'll be spending $20to $30k more than ever before.

    Without the rebate, I'd be out.

    Where I can agree is if demand is exceeding supply, then the car I wouldn't buy would simply be bought by someone else. Soin that sense, rebates "don't work". But I would think when supply and demand start to level out, the rebates may well have a positive impact on sales.
     
  8. vfx

    vfx Well-Known Member

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    Daniel's comment was not true. It may be true for him that he should not get rebates since he is (admittedly) rich, but the point of rebates are for people exactly like you. Just enough to bring the price of an EV to something closer to the price of a similar ICE and stimulate sales to prices can come down for others. Also rebates are for cheap electric cars and motorcycles too, so less affluent buyers can get Mitsubishis, Leafs, Fits, and Zaps.
     
  9. jkirkebo

    jkirkebo Model S P85+ VIN 14420 EU

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    We do not have tax breaks for EVs in Norway, but they are exempt from the one-time registration tax and VAT. If they were not, I can assure everyone that Tesla would not sell more than a handful of Model S cars here as the price would be about double. Few people want to spend >200k USD on a car.

    As it stands, since we do have the exemption, Tesla have at least 500 S reservations over here.

    The Leaf would only increase about 26% in price without the exemptions and thus would not be hit as hard were they to disappear.
     
  10. ItsNotAboutTheMoney

    ItsNotAboutTheMoney Active Member

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    #10 ItsNotAboutTheMoney, Sep 27, 2012
    Last edited: Sep 27, 2012
    Well, that completely missed the point of the battery subsidy in the summary.

    In this case it's pretty simple. Rich people should buy clean, efficient vehicles. So you simply increase their overall taxes by n * credit so they get the money back if they make the right decision. Voila.

    It can also help early development of the market which helps sustain development of the technology.
     
  11. Jaff

    Jaff Active Member

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    +1 Eric...well said!

    - - - Updated - - -

    This seems to be a much better way to deal with the issue...scrap the after-tax rebates, exempt all EV's from any import duties, and exempt them from sales tax as well...setting up a rebate program is probably more labour intensive (to manage) than simply exempting EV's from sales tax...we have enough government employees...we don't need any additional ones...

     
  12. Doug_G

    Doug_G Lead Moderator

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    How about simply stopping the massive subsidies given to oil and gas companies? That'll help level the playing field.
     
  13. Jaff

    Jaff Active Member

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    Yep, that'd be a big +1


     
  14. vfx

    vfx Well-Known Member

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    Thanks. I'm going to add one more thing. There are some rich people who are cheap. Incredibly cheap. In many cases, that's how they got rich. Incentives mean a lot to them too.
     
  15. Johann Koeber

    Johann Koeber Member

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    Taxes are a main source of funding for the government. They are imposed on us, we do not choose to pay. Some of the tax laws do not only serve the purpose of funding government activity, but to nudge our behaviour in a direction considered favourable to / by society.

    As far as taxes or subsidies are used to direct our behaviour, there is a cost involved. They are external to a free market system. Taxes can cause inefficiencies in the working of the market system. They can be used to compensate external inefficiencies (use of free clean air is taxed). That is one of the reasons pollutants (gasoline) are taxed so high (0.64 Euro per liter, ca. US$3.21 per gallon) here in Germany.

    So by subsidizing EVs the government is telling you: We want you to buy an EV.

    This will nudge some people to do just that. But the government will also pay all the others (who yould have bought an EV regardless of the subsidy) the incentive. This makes the incentive costly for the government (inefficient)
     
  16. mnx

    mnx 2013 P85

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    It sure would be nice to not have 19% added to the price of my Model S!!!!!!!!!!!

    These after tax rebates are silly IMO. Although I suppose I would feel differently if I were buying an iMev or a Leaf...

     
  17. mknox

    mknox Well-Known Member

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    I agree, but I think the problem is that government's like the optics of rebates. Jaff, I believe you're in Ontario, so you're probably aware of the "Clean Energy Rebate" on your electricity bill. This is a 10% rebate on the after-tax total of your electricity bill, supposedly to make up for all of the government's mis-steps in regulating the industry. This rebate was a nightmare for utilities to implement and it would have been a lot easier to simply remove the Provincial portion of the HST (tax). Removing the tax would have been less visible and Dalton, our Dear Leader wouldn't get a special line on the bill highlighting the rebate.
     

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