Early Christmas Present

The EV tax credit did what it was intended:

• Tesla - looks like solid growth and a growing set of models.
• Other EV makers - abysmal performance head-to-head with Tesla, still too expensive.

As a TSLA owner, I kinda like the future prospects.

Bob Wilson

 

I look at the tax credit differently. When it was first instituted, battery prices were many times what they are now. A full EV would have been prohibitively expensive - the first model Tesla wasnt something the average person would ever consider.

But the tax credit helped to bootstrap the battery production and get production costs way down. I see discussions about how new battery facilities will be able to build batteries for 100$/kWh - that by itself makes it possible for far more affordable EVs.

And for that matter, the markets are global. The rest of the world is going to ignore what the US does, and will continue full speed ahead, and further reductions in battery prices are likely.

 

That is the USA's problem nowadays lots of nations are ignoring what the US does these days and just go ahead and do their sensible trade deals etc. Hard to explain this to many US citizens but unfortunately the US is slowly being left behind.. All because of politics not common sense... All the US actions these days leaves China in waiting many years down the road to be the #1 economic nation. Just saying

 

In real life, it is never black and white, it is all shades of grey. What are some factors and reasons that influenced Trump to push back?

1. First, there is a feeling among Trump's advisors that this continuation will benefit rich California liberals, who do not support Trump. Right or wrong this is a political calculation.
2. Second, oil lobby does not like it and would have used their considerable lobbying might to kill it.
   
3. The president is skeptical of environmental effects and global warming and does not see a need to act with any urgency
   
4. Fourth, there is a strong libertarian economic argument against subsidies. They argue that what generally happens is that the person who gets the subsidy, gets used to it and lobbies to keep it in place, even when they do not need it or need it as much. A corollary argument is the rich liberals who have taken advantage of this subsidy are doing so at the cost of the poor. That Tesla and GM are doing fine without it, so why continue to help them with tax payer money.

I am going to believe it is number 1 above followed by number 2 as the main factors. And the oil industry could have used arguments 1, 3 and 4 above to reinforce their message and sway the president (which would be hypocritical of the oil industry as they get massive subsidies, but that never stopped the oil industry.) Number 4 may be reason that is publicly given but may not a real reason as the administration has been on both sides of this issue of sbusidies.

I believe that subsides are needed at the beginning but there needs to be a sunset clause. Unfortunately, the sunset clause (200,000 per manufacturer) here is hurting the companies that are trying to do the most i.e. Tesla and to smaller extent GM. They proved the market exists, but with the beginning to take off, there are at a disadvantage. The other manufacturers can take their own sweet time.

I would suggest a different approach to this tax credit. Instead of having a 200,000 per manufacturer, say there is an overall limit of say 1 or 2 million vehicles, with no one manufacturer allowed to get more than say 60% and everything goes away once the 1 or 2 million mark is reached. So there is a limit on each manufacturer but it is much larger and it is a cumulative pool and not limited the way it is. If one sells more, the other has a smaller piece of the cake. This way, the manufacturers are fighting to get the biggest piece, and not being complacent as they are now. The other manufacturers know they have their piece of the cake reserved for them, why hurry?

Again, I personally believe that governmental help is still needed to the get the EV market going. However in this political climate, being pragmatic, I do not expect anything will change.

 

The oil and gas industry continues to receive all sorts of subsidies and tax credits, which in a sense is a good example of #4 above.

So for some of these arguments to make sense, there should be a level playing field and all energy subsidies should be eliminated.

 

A TSLA stock owner, I'm fairly calm. The Tesla competition makes gut-less, compliance cars or short-range, EV dragsters or "PowerPoint" spec-mobiles. None of them have figured out that LG Chem is not their friend.

Bob Wilson

 

That would be a pure libertarian stand. Unfortunately even those who profess pure libertarianism bow to political reality. The people who rail against welfare have no problems supporting agricultural conglomerates who buy from the farmer/voter in their district. (Over $11 billion in farm subsidies flowed to just 6,618 lucky recipients who received at least $1 million since 2008. https://www.forbes.com/sites/adamandrzejewski/2018/08/14/mapping-the-u-s-farm-subsidy-1-million-club/#2bc2903d3efc)

Imagine a congressman/congresswomen in Texas or Oklahoma telling his/her constituents "I am against big government, so I am going to vote against oil subsidies, even though it may reduce the profits of companies that provide you with a lot of jobs". And imagine an oil company making a campaign contribution to a politician who votes against their interests. Again, being hypocritical goes on both sides of aisle.