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EV Incentives are unfair and needs to be changed!

Discussion in 'Prius, Hybrid, EV and Alt-Fuel News' started by DaveinOlyWA, Dec 13, 2014.

  1. DaveinOlyWA

    DaveinOlyWA 3rd Time was Solariffic!!

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    Who remembers late Summer of 2006? Well, I do and why is that time memorable? Well, it was a time where you could not find a Prius on the lot at a decent price and the reason is because government incentives were being phased out. 100% incentives for Hybrids ended for Toyota Sept 30, 2006. This gave other manufacturers a price advantage in the market.

    It was unfair back then and its unfair now. Why do I say that? Because making incentives based on unit sales penalizes the manufacturer who is first to market and who has greatest market distribution; iow, it penalizes the company that takes the greatest risk.

    This travesty is being repeated right now. EV incentives are up to $7500 per unit for the first 200,000 units from each manufacturer. After that number is hit, then it drops each quarter to zero. Which means soon, Nissan will have a HUGE price disadvantage with the other manufacturers producing EVs.

    Why is this unfair? Its emerging technology. Why risk 5 Billion Dollars like Nissan did when one could just sit back and wait for the technology to mature? After all, you still get your 200,000 units nearly presold because of incentives right?? so whats the hurry? We all know the first units are more costly and that is even moreso when you have a major component like batteries is part of that equation.

    BUT, what if incentives were time based? say for all units sold by Dec 31, 2o18? This puts all manufacturers on even ground PLUS rewards those manufacturers taking the risk to put out products now. After 4 years, the Nissan LEAF is still the best choice for me but ONLY because I am not lucky enough to live in the correct zip code aka "compliance land"


    http://daveinolywa.blogspot.com/2014/12/trailblazing.html
     
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  2. bisco

    bisco cookie crumbler

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    agreed. unfortunately, government incentives are always limited by budgetary constraint. can the same amount of money be reallocated to make more sense?
     
  3. DaveinOlyWA

    DaveinOlyWA 3rd Time was Solariffic!!

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    yes. make the incentive time based. if you have 2 dozen manufacturers; they could have 2.4 million vehicles qualify but if you make it time based to the end of 2018 (or whatever) its likely many won't get near 200,000 units sold because they dragged their feet in the beginning. This way, the true trailblazers get the bigger reward justifying their taking the bigger risk
     
  4. bisco

    bisco cookie crumbler

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    i like it, i'll pass along to ed markey.
     
  5. jfschultz

    jfschultz Active Member

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    Good point. It would have been better to limit it to the first 1,000,000 sold across all manufacturers.
     
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  6. DaveinOlyWA

    DaveinOlyWA 3rd Time was Solariffic!!

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    very true. this does allow a truer budget. There is a time limit on the current EV incentives but does not expire until 2025? I think but then again, a quick search has me unable to find that in writing. hard to believe this incentive could go on forever... anyone know the date?
     
  7. Zythryn

    Zythryn Senior Member

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    No incentive program is perfect.

    To me, per manufacturer incentives are better than an across the board incentive.

    The first movers still have other advantages of being first.
    Experience in producing the new technology leads to price breaks. Yes, some of those advantages are available to the late-comers, but not all.

    An across the board quantity limit dissuades late comers, lowering choice and competition.
    Yes, the late-comers have less risk, however they have given away market share, name recognition and experience.
    They are also entering a market with a lot more competition. They may get a price advantage, but that is about it.
     
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  8. hill

    hill High Fiber Member

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    Incentives are being given to the highest bribe. That's why CARB has the deck so seriously stacked towards fuel cels. The post below was borrowed with permission from another board:

     
  9. Mendel Leisk

    Mendel Leisk Senior Member

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    EV incentives are unfair? Yes. Cancel all incentives, level the playing field. D.O. for preferred parking for EV's.
     
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  10. JimN

    JimN Let the games begin!

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    Every manufacturer has the same opportunity. Some choose to enter the segment later. Some choose to not play. If Nissan NEEDS a $7500 tax credit to sell cars then they NEED to remove $7500 worth of cost from the finished unit or discontinue the product.

    I'm sure if enough registered voters contact the members of the next House & Senate asking for the repeal of tax credits they can get something done.
     
  11. bisco

    bisco cookie crumbler

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    'enough' being the key word.:p and let's do the same with deductions.;)
     
  12. Trollbait

    Trollbait It's a D&D thing

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    Neither Nissan nor GM have reached 100,000 yet. So ending soon will be a few years off still. Then the prices have already dropped since these cars have been released, and we still haven't seen the gen2 pricing yet.

    As to competitors getting an unfair advantage when the credits end for Nissan, GM, and Tesla, I don't think they'll see it that way. They'll be looking at it as Nissan, GM, and Tesla have sold so many more than they have, while also establishing a manufacturing and supply network. GM and Nissan didn't just sell 200k cars, they invested in the means to do so. The others still need to do that while hoping Congress doesn't decide to end the program.

    Also don't forget the issue of patents. Just because Toyota sold their limit on the Prius, didn't mean they lost their IP edge with hybrids. Some of the late comers for those hybrid credits never got the full benefit before it ended either.

    As for dealers jacking up the price before the end of the full credit, don't to business with them, and spread the word about them here and elsewhere. The internet makes it easier for you to find a dealer willing to work with you. If that doesn't work call the manufacturer and tell them why you aren't buying from them. Then support Tesla against the dealer associations.
     
  13. Ashlem

    Ashlem Senior Member

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    Hmm, I could've sworn that it was the first 200k vehicles per manufacturer, or when there were a cumulative 1 million EV's sold across the board, that the tax credit would be phased out, whichever came first. Or did I read it wrong and it's 200k per manufacturer only?
     
  14. Zythryn

    Zythryn Senior Member

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    I see no mention of an overall limit of 1,000,000 cars.
    http://www.irs.gov/irb/2009-48_IRB/ar09.html
     
  15. austingreen

    austingreen Senior Member

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    First these incentive plans are rarely perfect but the plug-in program does a number of things better than the hybrid program. The DOE learned the hybrid program was mainly a waste of money.

    The hybrid program did not fail because it didn't funnel toyota enough money, and that they didn't get their fair share. The problems were many, but it was late, and at a time of rising gas prices and constrained prius production. That meant that at least for the prius, the money simply went to inflate prices which means more dealer money. It definitely didn't make the prius more popular or get toyota to build prii in the US. A worse program cash for clunkers probably did sell more prii, but of course that was not its intent..

    In a similar way nissan capping out at $1.5B is not a problem with the program. It may be too high. The purpose of the program is to get car companies to invest and bring these plug-ins to market, and drive battery prices down. Looking at it from an objective point of view it is much more sucessful than the hybrid or cash for clunkers or california zev program to get these cars developed and decrease the cost of batteries and motors.

    Yes there is a program cap at 1M cars. That means if things continue the way they have Nissan, GM, Telsa will recieved their maximum subsidy of $1.5Billion. These are the companies that have invested the most. GM with its LG partnership appears to be driving lg batteries down to around $275/kwh. Tesla with its gigafactory and partnership with Panasonic may provide bellow $200/kwh.

    This leaves the other big players in terms of current sales ford, toyota, bmw and mercedes to split the last 400,000 units.

    In total the program will provide about $7B of which around half will be paid by the end of 2015.
     
  16. JimN

    JimN Let the games begin!

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    I haven't seen dealers "jacking up the price" because a tax credit was/is available. When the Prius was selling for MSRP (or more) demand exceeded supply because people were concerned about "high" gas prices. When I bought the 2006 my dealer did not say one word about the credit.

    News of the credit expiring did shift demand especially around the reduction dates. I'll say the same thing happens at the end of every sale or rebate.

    Around here Nissan & their dealers are NOT getting anything close to MSRP for a LEAF even though there is a Federal tax credit available and the car is not subject to the state's 7% sales tax and $6 tire tax.
     
  17. john1701a

    john1701a Prius Guru

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    Being same is the problem. What's the incentive?

    Setting a due-date is quite reasonable. You get the choice, but it should expire for everyone at a set date... rather than going on for years and years.

    Lack of encouragement to compete is a big deal. Having set an across-the-board expiration would achieve that.
     
  18. Zythryn

    Zythryn Senior Member

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    Could you give me a reference to this?
    It makes sense, and I like the idea. However I could not find mention of it.
     
  19. DaveinOlyWA

    DaveinOlyWA 3rd Time was Solariffic!!

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    The problem with this incentive is that it encourages manufacturers to create the product in the first place. this "well, if Nissan cant build it for less, they should not sell it?" is really beyond pathetic because that is exactly what would have happened. There would still not be a viable EV option or at best it would be a niche purchase outside probably half the LEAF drivers today.

    But the incentive is there and that is to allow manufacturers to charge enough of a price to get some of the money back which increases sales and investment into the technology. Nissan is doing this a minimal return on each unit sold and without the tax incentive, there would be no LEAF, period.

    But the tech is getting better, manufacturing processes more efficient, etc. so costs are going down and Nissan is well positioned for the day that incentives go away. They will soon have a car with double the EV range at nearly the same price as today's offering.

    So now we have a company who has taken no risk, invested no money, has not sweated out a single day of slow initial sales ramp up while putting off investors who now can sell an EV and take a much higher level of profit simply because they have a $7500 advantage in the marketplace over their Nissan competition?

    Ya, we all bought $3,000 PCs that struggled to process our email so what is it that allows auto manufacturers to get this incentive when PC manufacturers did not? Now, we have to get into the reason that most of us are here. Why this forum was started and that is there are somethings that are simply too right in too many ways to argue with and our only real challenge is figuring out a way to get there.

    This is how we reward a company who pushed the EV product envelop, allowing us to drive EVs years before any natural cycle would have allowed us? So, ya I do have a big problem with that.

    So, maybe my thoughts are too personal cause I am driving my 2nd LEAF and 3rd EV but right now, if there was another viable option in my area (its LEAF or Tesla here) I would consider it in a second, but there is not. My current lease runs out in Dec, 2016 and would very much like the option to "shop around" for my next EV...
     
  20. DaveinOlyWA

    DaveinOlyWA 3rd Time was Solariffic!!

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    no he cannot...

    When does the New Plug-in Tax Credit expire?

    The New Plug-In Tax Credit doesn’t have an expiration date. Purchasers of qualified vehicles can continue to claim the credit until the manufacturer has sold 200,000 qualified vehicles for use in the United States. Once a manufacturer’s U.S. sales reach 200,000 qualified vehicles, the Credit for all qualified vehicles produced by the manufacturer will begin to phase-out over a one year period.

    http://insideevs.com/top-15-faqs-income-tax-credit-plug-vehicles/