So about them federal tax breaks...

Discussion in 'General' started by Feed The Trees, Nov 2, 2017.

  1. Feed The Trees

    Feed The Trees Active Member

    Going bye bye with the new tax plan being floated, for now at least, things still way up in the air on that bill. I can't see Rick 'oil helps prevent sex assault' Perry doing much to support it.

    I have always figured that the big makers were just slow playing their cars while other like Tesla and Chevy do most of the work. When those companies run out of credits boom, here come the other guys who still carry their credits and have let those other guys do the heavy lifting of marketing and R&D. You can really sink your competition if you have $7500 off that they don't. Risk used to be that Chevy and Tesla get to be known as the EV companies but that's short lived when everyone has a decent one. Just like SUVs, now every maker has it and unless you are towing a boat I don't know that Chevy or Ford has a big advantage anymore.

    Though if that was their plan all along I guess it backfired!
     
  2. Counterpoint

    Counterpoint New Member

    There was an informative video posted a few weeks ago of a presentation by an expert in paradigm changes. He made a rather compelling case that electric vehicles would sell for purely economic reasons, even without tax breaks and rebates. His main point was it's much cheaper to run and maintain an electric car than it is to run and maintain a gas car and the components last longer.
     
  3. Feed The Trees

    Feed The Trees Active Member

    Hmm I dunno. How many of those $99 lease specials would've gone out the door if they were $299 instead because cap cost $7500 higher?
     
  4. Domenick

    Domenick Administrator Staff Member

    House Republicans Propose Removal Of $7,500 EV Tax Credit This Year

    Here's the InsideEVs post on this development. Jay makes some salient points.

    Besides that, and contrary to many headlines out there, this isn't so bad for Tesla -- Model S and X, mostly, don't need the rebate, many Model 3 buyers weren't expecting to get it, the value of ZEV credits may increase.)

    It may slow the roll of automakers trying to get their EV programs going, though, as the they will need to buy ZEV credits from the automakers that have them. And, of course, if it slows down EV adoption in the US, it's bad environmentally with regards to climate change, lung disease. It also could give other countries a big leg up (Hi, China!) as they speed up EV adoption, and R&D development, so instead of buying an electric Ford in 2022, you may prefer to buy a more technologically advanced Chinese product.
     
  5. Domenick

    Domenick Administrator Staff Member

    Note: there are political aspects to this story but I'm hoping we can stay far away from getting bogged down in any partisan bickering or arguments over political philosophy. Let's stay on the high road please.
     
  6. Domenick

    Domenick Administrator Staff Member

  7. Feed The Trees

    Feed The Trees Active Member

    Im not so sure about the whole Chinese leg up thing. An EV is a relatively simple machine, at least compared to the ICE counterpart. I am very strongly of the belief that the other makers havent jumped as hard as the early guys has more to do with lack of desire to be the marketing test case for the industry. I would associate the technologically advanced bits to be relevant to things like autopilot, adaptive cruise, HCI with the navi unit etc. None of that has to do with EV, and those lagging makers are not standing still on those aspects. If your car can take a battery in the floor you're halfway there. Slap a motor or two in it, make it fast charging compatible, and you're good for most. What else is there on the EV side to be technologically advanced? An app? OTA updates? Those arent really EV specific either.

    Also, when it comes to domestic cars Chevy seems all in, Ford is at it hard, and then Tesla. Chrysler even has some going. So China having a leg up? Ehh.. I dont think this is a Japan 1980s situation. Even though Chevy, for eg, knows how to make a Corvette and a Suburban they also have a Volt and Bolt.
     
  8. Domenick

    Domenick Administrator Staff Member

    At its most basic level, EVs, are simplistic, but when you're talking about a consumer product, it gets complicated very quickly. That's why many auto companies outsource a lot of that development and engineering.

    With China, it's a bit more complicated. But, if they can show off the same technical prowess as a GM or Ford, but offer comparable product for 60 or 70% of the price, they will take a significant chunk of the market.

    Some consumers won't buy Chinese, and will pay a bit more for perceived quality. Will they buy Ford's first (from-the-ground-up) electric, or will they buy from a VW Group brand or BMW with proven designs?

    Then there's supply chain. If FCA or Ford wants to sell EVs, they need to have supply contracts. Can they find a battery manufacturer with enough available capacity for a full vehicle program? If they decide to make their own (improbable, but it also goes to their potential supplier), they need to compete with companies who've already developed relationships to lock down raw materials. Some of those material markets, rare earths, for example, might become almost impossible to penetrate.
     
  9. WadeTyhon

    WadeTyhon Well-Known Member

    Around December/January, the fear was going around that Trump and congress would kill the tax credit this year. At the time I said:

    "Nope, that ain't gonna happen. Republicans do not retroactively raise taxes for a current tax year." and "If they're going to try to do it, they will try to do it for 2018." and "Even if they do try it next year, the margin in the senate is too slim and the business interests too large. It is unlikely to pass before Tesla and GM hit their 200,000th car".

    I was right about the first 2 points. I think I'll be right about the 3rd one as well! In fact, seeing how ineffective congress has been up to this point, I feel like passing tax reform is even less likely.

    GM said they would be lobbying congress to keep the tax credit. Not sure about Nissan or Tesla. I think GM and the auto industry will work to get the expiration date pushed until at least the end of 2018 so that automakers have time to prepare.

    But the auto industry isn't the only loser here. The EV tax credit is just one of many that would be going away or reduced. Mortgage interest, student loan interest, hell even the adoption tax credit is under threat! These types of credits will hit lawmakers and their constituents hard... financially and morally.

    If they maintain the EV tax credit, adoption credit, student loan interest, etc... and also maintain the lowered tax rates, then the deficit hawks in the senate will cry foul and turn against it.

    There are also hidden tax "bubbles" that increase taxes for the wealthy that were not discussed initially with lawmakers and the press. Some republicans are already starting to call this class warfare.

    So, I just don't see it passing in the Senate as is without getting democrats on board. It has been decades since our country passed major tax reform. I doubt the current government can pull this off unless they're prepared to piss off a LOT of people and industries.
     
    Domenick likes this.
  10. Feed The Trees

    Feed The Trees Active Member

    ^^ Well I can't really say that I have ever heard anyone us the word 'morally' wrt to taxes! ;)

    The dems will never support this tax bill so need to look at the balance. I can't see Paul voting for it since it increases deficits with the hopes of it being made up for. But they need 2 more to get to 49 and not have Pence break the tie. Not sure where those come from, Corker seems like a yes. Unlike the health care issue the red senators don't really come from states that will see a negative impact of some of the bigger items like SALT, $1m mortgages, and huge property tax bills. It makes sense to them, and their constituents, by and large.

    The house republicans are the ones who have some counties that will be hit... those in NY, NJ, CA etc. But the Senators from there are already dems so don't factor into that side. I dont see enough in the house being against, they have a huge excess of GOP house members to stave off some defectors.

    The thing that has the biggest chance to stop the bill in it's current form is some massive CBO score that is well beyond their $1.5t figure they need to fit under. Even then the CBO doesn't HAVE to be listened to. Or some surprise defector from a really narrowly red state will see it's local unpopularity and not want to risk their seat. Are there 2 of those?

    And if there is some tinkering I do not see the EV credit as being tinkered with. If GM and Tesla have claimed most of these and Ford and ChryCo are the only others on domestic turf then the money is going to foreign companies (and ChryCo is owned by Fiat now). Nissan, Toyota, etc. will get most of the money.
     
  11. WadeTyhon

    WadeTyhon Well-Known Member

    Lol things like killing the adoption tax credit, for an evangelical anti-abortion republican, would absolutely be a moral issue to a republican! :)

    Dean Heller (R), is on the Senate Finance Committee. He is currently working on the Senate draft of the tax bill. He said on the subject of the EV tax credit “I’ll be doing my best to try to protect that kind of tax credit that keeps the industry afloat.”

    GM's response to the potential end of the credit was "we will work with Congress to explore ways to maintain this incentive.” Nissan has now also spoken on the subject by stating "We support continuing measures that help encourage greater adoption of EVs given the benefits they can provide."

    Judging from the wording of the statements from Senator Heller, Nissan, and GM, I am expecting a compromise rather than killing it immediately or leaving it as is. A compromise that would likely benefit Tesla, GM and Nissan.

    Heller is a senator from Nevada and is up for re-election next year. If he knows what is good for him and his state he will trigger the phase out period at the end of 2018.
    [​IMG]
    ^ Heller sitting in a Tesla Model X

    The wind tax credit is also most likely going to be safe in the senate tax bill.

    https://www.bloomberg.com/news/arti...wind-tax-credit-is-safe-in-their-tax-overhaul

    Check out the justification from Chuck Grassley (R from Iowa) for keeping the wind tax as is: “The wind energy production tax credit is already being phased out under a compromise brokered in 2015 ... It shouldn’t be re-opened. I’m working within the Senate Finance Committee to see that the commitment made to a multiyear phase-out remains intact.”

    A compromise was reached 2 years ago for a multiyear phase-out? Hmmm sounds familiar.

    Of course, all this lobbying and deal making will ruffle the feathers of the deficit hawks and probably kill the bill anyways.
     
  12. WadeTyhon

    WadeTyhon Well-Known Member

    As I expected a month ago, the senate version maintained the EV and Wind tax credits.

    Now reports are stating that the final tax bill (after reconciliation between the senate and congressional bills) will in fact keep the EV and wind tax credits!!! :D

    https://www.bloomberg.com/news/arti...id-to-keep-wind-electric-car-credits-jb5dh81s

    Called it! ;)

    But we don't know the details yet. There might be some changes to the time table / phase out.

    I would be fine if it stayed exactly as is. Sure, it might seem "unfair" to Tesla, GM and Nissan. But they also have a decade of experience, brand awareness and multiple vehicles in their lineup with more to come in the next 3 years.

    They have been able to drive down their costs by large volume production and by developing the tech early. Because of this they were able to make strong partnerships with suppliers. (Such as Tesla with Panasonic and GM with LG) Plus, they all still have over a year of at least partial credits remaining. Nissan might have 2.

    They will be able to remain competitive with the laggard companies.

    Ultimately the goal is expanding Plug-In sales. If all EV sales continue to rise then all EV manufacturers will benefit.
     

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