WSJ article on EV subsidies as a drag on the California economy.

[PhilBa]

A Green Car Named Desire. It very much singles out Tesla but lays the blame at the feet of CA lawmakers. I have to say that I agree somewhat with the article. The Model S is good enough to stand on it's own. I can't blame Tesla or Tesla owners for taking advantage of the tax credits and grants. I also think that hastening the EV conversion of our society is a good thing. However, I would be surprised to see Tesla's sales suffer much if the tax credits were withdrawn. Heck Tesla believes in their product so much that they recently raised prices. Maybe Leaf sales would drop since those customers are probably more price sensitive.

 

[stopcrazypp]

A Green Car Named Desire. It very much singles out Tesla but lays the blame at the feet of CA lawmakers. I have to say that I agree somewhat with the article. The Model S is good enough to stand on it's own. I can't blame Tesla or Tesla owners for taking advantage of the tax credits and grants. I also think that hastening the EV conversion of our society is a good thing. However, I would be surprised to see Tesla's sales suffer much if the tax credits were withdrawn. Heck Tesla believes in their product so much that they recently raised prices. Maybe Leaf sales would drop since those customers are probably more price sensitive.

The article mixes in the ZEV credit revenue that Tesla got from other manufacturers (costs CA nothing) and also the grant Tesla got to further develop the Model X (which CA gets money back from extra people being employed and not stuck taking unemployment).

That only thing that's really costing CA anything is the $2.5k tax credit. The Tesla doesn't really need it, but cars like the Leaf, Volt and other compliance vehicles do need that credit. And they are ignoring the higher sales tax revenue that CA is getting (EVs tend to cost more and the sales tax is calculated pre-credit).

The "drag" is negligible on the budget, but the extra boost to the economy (esp. for a CA based automaker like Tesla) is much bigger.

 

[Dwdnjck]

California profits from the sale of each Tesla because the sales tax is much more than the rebate. One might argue that California would get the sales tax anyway. Not true. Many owners stepped up to buy a Tesla or sold a car early. I bought a new car in 2010, knowing that it would be replaced when a Model S became available. I probably spent more in sales taxes because of the Tesla purchase, not less.

 

[ChadS]

It also ignores how much money leaves the state if people buy gas cars instead. Keeping 75% of their gas money and spending the other 25% locally (and in a way that helps with integration of renewables) is a HUGE boon to the economy.

It notes that the money is coming from funds that are meant for pollution mitigation - California has some significant air quality problems. But it ignores that if everybody kept their gas cars, they'd be spending that money on some other solution.

So they're misstating the effects, and ignoring that the money was already being spent. I'm not a big fan of mandates, but I don't find this article compelling.

 

[richkae]

It also ignores how much money leaves the state if people buy gas cars instead. Keeping 75% of their gas money and spending the other 25% locally (and in a way that helps with integration of renewables) is a HUGE boon to the economy.

It notes that the money is coming from funds that are meant for pollution mitigation - California has some significant air quality problems. But it ignores that if everybody kept their gas cars, they'd be spending that money on some other solution.

So they're misstating the effects, and ignoring that the money was already being spent. I'm not a big fan of mandates, but I don't find this article compelling.

California consumed 14.5 billion gallons of gasoline in 2012. CA gasoline consumption falls for 7th straight year | UTSanDiego.com
California produces 37.2 percent of the oil it consumes: California Petroleum Statistics Data
So 9.1 billion of those gallons came from imported oil. It takes about 450 million barrels of oil to make those gallons of gasoline.
That's about 50 billion dollars that leave the state every year to purchase that oil. ( I know the oil makes other stuff too, but we're talking about money leaving the state )
If California subsidized 10,000 Tesla EVs at 2500 a pop, thats 25 million dollars. But those Tesla EVs are about 1 billion dollars worth of direct GDP.
The imported oil is a drag on the economy that is 2000 times bigger than the EV rebate.

 

[Discoducky]

@richkae and others; well said.

 

[djplong]

Also, how much money comes back to state coffers in the form of income taxes on the employees? (To say nothing of all the other taxes that a well-paid manufacturing employee would pay versus someone on unemployment or slinging burgers)