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

NOV 2 2017 BY JAY COLE 165

Least affected (but still devastated) by the removal of the $7,500 federal EV credit would be GM, estimated to finish 2017 with some 167,000 plug-in vehicles sales already made.

A new Republican House tax bill includes a proposal to effectively and immediately remove the $7,500 federal tax credit system that is in place to encourage the adoption of electric vehicles in the US.

Color us not surprised.

If enacted (and considering the track record of the House that is far from a sure thing), all qualifying plug-in purchases after December 31, 2017 would no longer be eligible for any incentive from the Fed.

Truthfully, the alteration (and ultimate removal) of the current federal EV credit system was not unexpected, as the first US automakers are rapidly approaching the individual 200,000 vehicle threshold that triggers a gradual elimination of that credit for the OEM.  There was no way the likes of Honda, Mazda and Chrysler would have be allowed to benefit from having not sold plug-ins in any volume of consequence the past decade

Currently GM stands at 158,144 deliveries of plug-in vehicles in the US through October, while Tesla stands at some 148,000+ plug-in deliveries.  By year’s end, GM should be around 167,000 sales, while Tesla just over 160,000.  (See the current and historical monthly totals for all plug-in sales in the US on our monthly scorecard here).

How The $7,500 Phaseout Of The Federal Credit Works…today anyway

With that said, under the previous administration, the assumption was that the $7,500 EV incentive program would be revised to make it a gradual phase-out over time for all automakers (or a complete reboot of the program with the amount of the incentive increased).

However with the new administration, which has been non-too-friendly when it comes to environment issues (see Scott Pruitt installed as EPA lead as evidence as such), we knew an outright attempt to eliminate the EV credit, as well as many other “green” programs would be forthcoming (this proposal also includes GOP plans to end other energy tax credits, including solar, geothermal, fuel cell, wind energy, etc.).

Tesla Model 3

The removal of the $7,500 federal tax credit, could mean many future Tesla Model 3 buyers expecting the credit will now lose out.

While Tesla is indeed closing in on the 200,000 net plug-ins sold, it will likely be affected the most on a ‘net demand’ basis.  With a plan to build upwards of 5,000 Model 3 sedans/per week by the end of Q1 2018, and up to 10,000/week later in the year – almost of which to the US, the cost to would-be Tesla owners, and the company itself could be upwards of some 250,000 lost future credits (and the potential of many lost reservations).

Will this proposal get through the Senate and come to pass?  Or will it be horse-traded away for the wider tax cut plan?  There has already been a ‘call to action’ by many advocacy groups to save the incentive.

Even the Alliance of Automobile Manufacturers, a working title most of the major automakers use when they want to do things like attempt to remove EPA fleet MPG standards, isn’t in favor.  Spokesperson Gloria Bergquist said:

”The potential elimination of the federal electric vehicle tax credit will impact the choices of prospective buyers and make the electric vehicle mandate in 10 states – about a third of the market – even more difficult to meet.

The key to their objection is in the second part (that we highlighted in bold).

While the federal government can operate as it pleases, so can CARB…and those minimum requirements for ZEV (zero emission) credits aren’t going away even if the federal credit does; the reverse may happen, and they could strengthen.

But rather, CARB standards are set to significantly increase, starting with 2% of total sales in 2018 (up from .79% from 2012-12017), then 4% in 2019, up to almost 16% in 2025.  Loosely translated, the Alliance is saying, ‘if you take away that $7,500…we will have to eat that amount (+ some to get lease payments equalized) to hit our mandated all-electric vehicle targets’.  So this proposition, as it stands, doesn’t have a lot of friends outside the government officials themselves.

2018 Nissan LEAF priced from $29,995…but without a federal credit encouraging sales, Nissan could also be making up to $20,000 in back-channel payments by selling excess CARB credits

On the flip-side of the lost sales and federal incentives, an immediate unseen ‘back channel’ EV credit business for today’s over-producing BEV makers would immediately be born (which has long been why we have felt Tesla CEO Elon Musk has never been too vehemently opposed to the prospect).

As an example, even though Tesla would lose out on the incentive for its upcoming Model 3, each one of Tesla’s excess ZEV credits (as well as for Nissan who have a bunch extra themselves) would immediately be worth their full-value (~$5,000 a pop) to other non-compliant OEMs with no shot at hitting the CARB numbers.

Loosely translated, each future $35,000+ Tesla Model 3, or $29,995 Nissan LEAF sold in a CARB state would potentially come with a ‘backdoor’ bonus to those companies of upwards of $20,000 per sale (as each delivery of a 200 mile LA4 rated EV = 4 ZEV credits).

Luke Tonachel, director of the National Resources Defense Council’s Clean Vehicles and Fuels Project also weighed in

“The EV tax credit repeal would cede U.S. leadership in clean vehicles, putting our companies at a competitive disadvantage and threatening jobs while costing drivers more at the pump and increasing pollution.”

So is this the end of the federal EV credit?  Or will the House’s plan ultimately change?  When tend to think the latter with a fairly high degree of confidnece, but changes of some form are definitely ahead…and the likely not the net positive kind.

Reuters

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165 Comments on "House Republicans Propose Removal Of $7,500 EV Tax Credit This Year"

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I imagine the GOP will fail to perform on this like their other legislation, and no tax changes will happen this year.

It’s pretty silly given that the credits are set to expire for a couple automakers in a few months anyway. Just make the credit sunset for ALL manufacturers once one hits the 200k mark, and it’s pretty much a win-win.

I agree, Clarkson. Sunset the credit when the two leaders, Tesla and GM, see their credits cut in half. No need to reward the laggards.
Toyota, Ford, BMW and Nissan had a chance to build electric cars people wanted to buy and failed to build them. If the credit went away in October of next year when both GM and Tesla will probably see their credits cut, I would be happy to see it go. The Energy Security Act of 2007 has done its job. There is now a viable electric car industry and it will continue to thrive after the credit goes away.

What you said.

“There is now a viable electric car industry and it will continue to thrive after the credit goes away.”

I wish I had your confidence. Because I see it as a project that is only 75% complete. We have a blossoming young electric car industry, but I think it still needs nurturing and a bit of hand-holding still to mature into full adulthood.

With 1% of US sales, it is premature to claim mission accomplished.

Completely agree.

Absolutely. When Georgia abruptly discontinued their tax incentives for EVs, Nissan Leaf sales, at that time second highest in the country, fell to nearly nothing. If Tesla’s model 3 was available at $27,500, I might think that EV sales would not be castrated by elimination of federal incentives. But it is still months away at $50K. Removal of federal tax credits at this time could easily put us back on the road to gasoline dependence.

I hear you, Nix. But it has been 7 years and the car makers have intentionally held back inventory or overpriced the plug in cars. It is time for them to sh** or get off the pot.
As noted, Georgia saw a large reduction in sales when they cut their subsidy/credit. But that was just one state, and neither Nissan nor GM was going to make a national sales price reduction for Georgia. When GM, Tesla, Nissan, BMW, Ford and Chrysler (yeah!) see the credit get cut or eliminated, they will either reduce their MSRP or see their sales drop. I really think there will be a drop in MSRP when the credit goes away. Not dollar for dollar, but it is time to take the training wheels off.
But October of next year works. Less than 60 days from today doesn’t, but getting that bill through before congress leaves for the year is not going to happen.

Not rewarding the laggards may seem fair, but it would ultimately discourage them from developing electric vehicles. It would be more desirable if those ‘laggards’ had an incentive to move forward with real (non-compliance) EVs. Let’s get those laggards in the EV game.

+1
The way it should have been in the first place…
Why penalize the leaders and reward the followers??

+2

There will be marginal lost sales, unless manufacturers drop prices. There’s no guarantee there.
How many sales at the margin is a big question.

But as the oil industry has 24 Special Tax Code advantages that are 25 TIMES more lost federal revenue, this doesn’t help level the playing field at all.

Putin demanded Trump take action that would raise oil back over $50 a barrel.

Putin’s trolls post here often.

It’s driven by Koch brothers the same as to imposing very high EV tax rates in states to “pay for road usage.”

We can only hope it does happen. It’s long overdue.

It would be nice to have some credibility instead of going back and forth. Set the law then it expires in TEN years.

My response from another story:

Passing the house? Entirely possible.

Passing the senate is far less likely.

They have a razor thin majority, a few Trump hating repubs, idealists who do not want to fund tax changes without funding cuts, a few senators on their way out not up for reelection, and John McCain. I doubt it would pass.

Something tells me that with the amount of money GM, Tesla, Nissan and BMW have put into BEVS and PHEVs, we should see some lobbying from them telling congress why this is a terrible idea.

GM has issued a response to this:

https://jalopnik.com/huge-tax-credit-for-electric-vehicles-would-be-eliminat-1820077592

“Update, 1:05 p.m.: GM has sent along a response:

Tax credits are an important customer benefit that can help accelerate the acceptance of electric vehicles. Because General Motors believes in an all-electric future, we will work with Congress to explore ways to maintain this incentive.“

“idealists who do not want to fund tax changes without funding cuts”

Call me idealist, but I’m firmly in this camp. If you don’t cut all taxes corresponding to tax credit elimination, that’s effectively a tax increase. I have no desire to give even more money to Dump administration, or to any administration that spends more on the military than next 8 countries’ militaries combined.

Not saying being idealist is the wrong way to be.

Just that they likely will not vote for tax cuts without budget cuts. Further lowering the chances of this tax bill passing in the senate.

Unfortunately, right now their target is a $1.5 Trillion dollar increase in deficit spending over the next decade for this bill. And that is AFTER using an accounting trick to pretend that 4% growth will go on for a decade and pay for part of the deficit spending. Without constant 4% growth for the entire next decade, this bill will cause even bigger deficit spending. This is all on top of our current deficit spending.

There are no signs of a reduction in spending that will lead to lower deficits. All of their projections are all based upon that same 4% GDP growth for a full decade straight to make their numbers work. And even the spending cuts they have put forth before aren’t even balanced by the increases in military spending that they want at the same time.

Agree completely. It is a terrible tax plan that will make the debt worse.

Which is why Flake and Rand Paul are potential spoilers. Cruz might be as well. In addition to Collins and McCain.

And thats *just* on the issue of spending cuts. Don’t forget republicans in swing counties or liberal districts. Polling shows this tax plan as being VERY unpopular.

And it is not even considering the business side.

If GM really does reach out to congressmen as they say they will, in addition to the auto alliance, then at worst I would expect a compromise to extend another year.

GM, Nissan and BMW especially have put a lot of money towards EV programs. Nissan has a brand new model next year, GM potentially has 2 new models, and BMW has more plug ins than any other car maker.

The republicans might get it passed in the house and senate with no changes. But I would be absolutely shocked! Incompetence, Ideology, Business interests, and sheer spite could very easily kill this bill. XP

I’m at the point where I am firmly in favor of a balanced budget amendment. Running deficits just to give tax cuts that are heavily weighted to the wealthy is insane. We are borrowing from the future to give tax cuts today–tax cuts which have NEVER stimulated the economy in any significant way.

Balanced budget doesn’t mean elimination of stupid spending. If we have to balance the budget under Dump or She-lery, we’d probably see huge cuts social programs cut while still increasing the military spending. Remember, She-lery’s rhetoric was more hawkish than Dump.

It’s true. She was more hawkish.

Also remember that Democratic administrations tend to be more focused on having a balanced budget. Deficit spending used to be part of the “starve the beast” ideology of the Republicans.

“Passing the senate is far less likely. ”
-Wade

Should be interesting to see how my state senators Flake and McCain vote on this.

McCain hates Trump for good reason.

Flake is enough of an ideologue on debt that he probably won’t vote for it. Any Sen from a state with a high state income tax is gonna be a soft maybe. I wouldn’t even be too sure people like Rand Paul are yes votes since it increases the deficit

McCain has many many many good reasons to despise Trump.

I have yet to see any reason for anyone to actively like him. Including most republicans.

The so called “tax reform” is borrow more money then give it to the rich who already have a LOT of money.

The Grand ‘Oil’ Party strikes again! America will be great again in leading the world back to the past.

It’s dissapointing they are trying to kill EV rebate, make solar expensive, and doing coal bailouts. How can this end well.

With a landslide correction in 2018 and 2020, if we survive that long.

The country is seeing what the GOP is all about, before it was cloaked, now it is obvious.

How about phasing it out ONCE the first manufacturer hits 200k? Then all of the slackers do not have an advantage for not being proactive….

The goal of the program is cleaner air, not punishment for being a manufacturing slacker.

Besides, not every mfr is eager to lose money on EVs.

If the goal is cleaner air, ensuring that all manufacturers act sooner than later – by not rewarding them for slacking and sunsetting the credit for everyone – accomplishes that goal too.

Only in a world where you can use your fairy dust to magically make an EV appear!

Nope, the goal of the program was energy independence.

I agree that rewarding the slackers makes no sense. Especially foreign slackers. Even if this bill doesn’t kill the credit, another one will once GM exhausts its credits.

Yes, but pool all manufacturer 200,000, to make it say 2,000,000 across the industry.

Then you’ll get competition.

Once GM and Tesla see their tax credits cut in half it will be time to end the credit. Not before. Don’t reward the laggards like Toyota, BMW, Nissan and Ford.

+1000

BMW is a laggard?

They have a couple offerings but all of them are lame. The i3 is their top selling plug in and it looks like it was intended to be a loser judging by its alienating exterior.
I mean, really, who builds a car with suicide doors in this day and age?

I think it’s cool. I guess there’s no accounting for bad taste.

So who has the bad taste? You, me or BMW? I am not entirely sure it isn’t me. LOL!

(⌐■_■) Trollnonymous

+1

When do the fossil fuel credits expire? Oh right never. 45% of oil wells in the US would be losing money without the subsidies. Why target green energy and not retire all energy subsidies since we want a free and open market where the best win?

The person that Trump appointed to be in charge of Energy Policy in his transition team actually used “National Security” to justify keeping oil subsidies forever. They will never kill a single oil subsidy. If anything, they will grant new ones.

45% of all oil wells are subsidized. What are u smoking? Please provide a reputable source that is NOT biased green for that statistic.

They’re MASSIVE subsidies.

List of US Fossil Fuel subsidies from recent G20 report:
– Expensing of Intangible Drilling Costs
– Percentage Depletion for Oil and Natural-Gas Wells
– Domestic Manufacturing Deduction for Fossil Fuels
– Two Year Amortization Period for Geological & Geophysical Expenditures
– Percentage Depletion for Hard Mineral Fossil Fuels
– Expensing of Exploration and Development Costs for Hard Mineral Fuels
– Capital Gains Treatment for Royalties of Coal
– Deduction for Tertiary Injectants
– Exception to Passive-Loss Limitation for Working Interests in Oil and Natural-Gas Properties
– Enhanced Oil Recovery Credit (EOR) Credit
– Marginal Wells Credit
– Corporate Tax Income Exemption for Fossil-Fuel Publicly Traded Partnerships
– Excise Tax Exemption for Crude Oil Derived from Tar Sands
– Royalty-Exempt Beneficial Use of Fuels
– Royalty-Free Flaring and Venting of Natural Gas
– Liability Cap on Natural Resource Damage
– Subsidies for fossil fuels used in the residential sector
– Low-Income Home Energy Assistance Program (LIHEAP)

And the oil production allowance does disappear in the House bill since oil companies will have a 20% income tax rate instead of 35%. Check out the table in the NYTimes. Of course many green subsidies should end also.

MF’ers…

This and their push to limit the 401(k) to $2,400 a year really chaps my hide!

The 401k is by far the worst idea ever!

Elections have consequences.

WELCOME TO TRUMPLAND

Under the GOP tax plan you will continue to be able to save up to $18,000 per year in your 401k plan. Facts matter.

Off topic, but facts do matter:

“The White House, as the president tweeted, wanted to keep the current annual maximum for tax-free contributions ($18,000); House Republicans wanted to lower the limit to $2,400.”

Rich people need more money now, so we’ll need to throttle back on long term thinking.

Only the top 30% of incomes make enough money to itemize their taxes. One of the great farces of the Occupy movement and the 21st century left is the marketing of the term 1% – as if people in the top 10% or 20% of income are just salt of the earth, humble working types. Suck it up and pay your taxes, because the people with the pitchforks have –>.<– this much sympathy for your coastal whining.

Sup, Ivan. Do they pay you in rubles?

Afraid that the math being quoted is correct, the troll decided that the only fitting response is to call him a foreigner. That will teach him.

You might just be a useful idiot.

Again – you’re terrified to even consider any of the math I provided. That makes you just a plain old useless idiot.

I thought you two could benefit from this
https://www.facebook.com/JungleVT/videos/1707031749438660/

You wouldn’t know math even if you hit your empty head against it. You can run the numbers any way you like, truth is you have to be poor or rich for your taxes not to go up. Middle and single may get a break even…

The kinds of people taking advantage of the EV deduction, as well as the MID and SALT deductions are all upper quintile. Why should a couple earning 60k (national median) subsidize the shenanigans of someone in SF buying an 800k house and an EV?

That is the question that the Trump wing of the GOP is asking. I didn’t vote for him, but it IS an extremely fair question to ask. Their tax policy is far more egalitarian than anything the Dems have been putting out. Im not shy to give credit where it is due.

Dan, that is incorrect. There are no houses in SF available for 800k

Aha, grasshopper. I used the number 800k for a reason. 800k is the point at which it even makes sense to itemize under the new tax plan because of the doubling of the standard deduction. That’s what makes it so appealingly egalitarian. That covers 95% of the country. If your SF is significantly more expensive, then really most of its residents should be paying significantly higher taxes.

Who are you calling grasshopper Mr. Kwai Chang Caine…

You don’t seriously expect people to read or do arithmetic do you?

SCOTT:

Is Dan’s tax math wrong?

Let me rephrase that, since I knw his assessment of income levels and ability to itemize is in fact correct.

What do you find distateful about Dan’s statement about the fact of limited eligibility for itemization, and the fact that most people below that eligibility level find deductions for our more expensive plug-ins to be afoul of fair principles?

Seems your kind of a, hmmm… as the English would say, a bellend.

The EV tax credit isn’t a deduction. Whether you take a deduction or not is completely meaningless in this context.

Nor is income, since leasing an EV gives you access to the fed tax credit regardless of your income.

On top of that, even used EV buyers currently benefit from the tax credit, because most of it is passed through in the form of lower used EV prices. All the analysis that is limited to JUST new EV purchases is fatally flawed when they leave out the benefits reaped by 2nd owners buying in the secondary market.

If anybody is pissed off that some rich guy got a discount on their EV, then GO BUY THEIR USED EV and pocket that money for yourself as it is passed on to you through lower used EV prices.

I should also add that the people who get the tax credit are only getting money back that they paid unfairly in the first place. John Adams describes why he thought the graduated tax system is wrong,

http://press-pubs.uchicago.edu/founders/documents/v1ch16s15.html

I suspect all founding father thought the same. Otherwise, they would’ve instituted tax-the-rich structure in the first place since they (at least Adams) was aware of such system.

The “Founding Fathers” were largely wealthy aristocrats, so I’d take their opinion with a grain of salt, if not the whole salt shaker.

It’s not taking it with grain of salt when it’s plainly visible that’s what they did not want of the country. Yet here we are, graduated taxes and all.

It’s not like there were no poor people in the days of founding fathers. In fact, the poor back then were far worse off than the poor of today. But the founders recognized the evil of stealing from the haves to give to have-nots. That’s why all the socialists (ie, much of Democratic Party) in US are undermining the very foundation of US.

Of course. They were the rich aristocracy! They also wanted only the landed gentry to vote. They were not exactly looking out for the little guy back then. 🙂

Dan, I’m sure your math makes sense, and your stats are true.

But: the reason why the tax credit is on the block is not for any of those reasons. The GOP must somehow keep their cut to “just” $1.5 trillion of additional deficit. Any and all gleanings from easy and soft targets will be swept up in the attempt to make the impossible possible. Unlike fiddling with mortgage deductions, 401(k) tax scheduling etc. the EV credit is relatively poorly defended.

I’d have to say that any resemblance to common sense or evidence-based reasoning here is strictly by accidental coincidence.

The people at the .1% level make the policy.
Like:
Making College unaffordable.
Like pay day lender loans of outrageous percentages to keep poor people poorer.
Like making healthcare in America a bankruptcy experience. The people at the 2% to 20% are not for those policies by a long shot.

Doug most EV buyers are in the upper quintile of income anyway. In fact, the latest data I can find from NADA (end-of-2015) showed the average NEW car buyer was 51.7 yrs old with an income of $80k/ann. EV buyers tend to be in a higher strata yet.

The fed looked at car purchases a bit differently in 2016 but you end up with a similar perspective; it’s an interestng read for quants:

https://www.federalreserve.gov/econresdata/notes/feds-notes/2016/the-young-and-the-carless-the-demographics-of-new-vehicle-purchases-20160624.html

BTW: $80k individual income was at about the 85th %-ile in 2016.

So “rich people” were the ones getting the deduction; now they won’t need it.

I really think this is not a big deal.

You forgot this thing called “leasing”. A 0 income earner can still receive the credit via lease incentives from the manufacturer.

True are your facts.

Then frame it differently – as a taxable grant from the government or as an incentive that the manufacturer has to declare on their taxes. All this convoluted legal gymnastics around deductions that “someone earning 0 can also take advantage of” doesn’t fool anybody.That kind of slimy logic is the reason half the country hates us. Hey, a person earning 0 can also fly first class…nothing prevents them, right? Right?

Earning 0 income does not mean you have no money.

Roth IRA withdrawals for example are tax free == zero income.

You need a high credit rating to get one of the exceptional lease deals. These are not being taken up by the impoverished.

No really great credit is needed, don’t ask me how I know. Decent Credit gets the paperwork signed.

620 credit score to receive GM’s “best” money factor lease rates. 620 ain’t exactly a spotless credit score.

If you are pissed off that some rich guy got a tax incentive for buying an EV, go buy their used EV from them and get that federal incentive passed into your own pocket.

Any analysis of the benefit of the fed tax incentive that fails to account for the impact of the fed incentive being passed on to the 2nd owner in the used market is failed analysis.

You’re describing trickle down economics.

Trickle down economics worked. Companies and wealthy people took their Reagan tax cuts, and went and spent that money funding factories in China and India. The Reagan tax cuts funded the creation of the lower middle class in China and India by funding the shift from US manufacturing to overseas manufacturing. Prior to the huge tax cuts, companies paid so high of taxes that no self-respecting CEO would even consider letting their hard earned money go to waste as cash profits, just to be taxed. Instead they all re-invested profits right back into their factories right here in the US, and into their employee base. It wasn’t until the 80’s tax cuts, and the birth of the modern merger and acquisition fever, complete with the wholesale looting and selloff of company assets that US companies quit reinvesting profits back into US companies. So yea, trickle down tax cuts really had an impact. Just not the impact that we were told they would have. Everything went haywire, and all those tax cuts led to all that money going overseas, and being funneled into the pockets of corporate raiders who suddenly saw pools of money on corporate books to steal and use… Read more »

If you tax companies so high and other countries aren’t as stable, they have no choice but to stay in US. That isn’t the case anymore.

Raise taxes, and they will simply pick up and leave, such as Broadcom moving to Singapore (and now back to US). As long as US corporate tax is highest among OECD countries, there’s incentive to leave US if not for back-room deals (eg. tax credits, etc). I suspect Dump’s back room deals brought back Broadcom.

I don’t know about you, but I don’t like back-room deals made with my tax money.

Your recollection of the 80s is very different from mine. I remember a time of great economic expansion and wealth building for all, including the middle class.

He’s describing the realities of EV resale value in a tax incentive world. It’s straight up passed through to the next buyer. There’s really no economic theory necessary to note resale prices of used EVs.

The tax credit is rewarded to 2 owners.
1) The original buyer.
2) In the used car market with the tax credit is religiously taken off the price in the market. Where these cars are at an incredible discount.

So, Nope. Middle class people are getting this deduction today, in the used car market with No IRS paperwork.

Take the EV tax-credit away, make rate-payers subsidize coal:
https://www.nytimes.com/2017/10/25/opinion/rick-perry-coal-antimarket.html

No ideologues, here. Just Kamikazes.

***mod edit (Jay Cole)***
Thanks for the assist Ambulator…I have no excuses for my spelling on that one, (=
***mod edit***

Coal miners are refusing retraining because they believe that Trump will bring back coal jobs.

Joke of the day…

Also, Sad joke of the day.

Really, most EV buyers are in the top income quintile, and the tax cut will result in sufficient additional disposable income to be more-or-less equal to a $7500 reduction in purchase price when a ~4 yr period of ownership/lease is considered. I don’t think the elimination of the deduction will make much difference beyond the first month or two of its official disappearance. It doesn’t to me.

Stop worrying. The transition to plug-ins was never going to fit the Tony Seba fantasy. We’ll get there.

I believe there was a gentleman who wrote an InsideEVs piece ~1 year ago, who took plenty of flack for predicting exactly this.

Good. Time to remove special interest claims on taxpayer money.

The purpose of taxation is to provide money to run the government, NOT to modify behavior. If you want to modify peoples behavior, pass a law.

Your logic explains why China rules the renewable energy market and has become the leader in EV.
Investing in renewable energy created a lot of jobs Tesla alone created 33,000 jobs. He also sold billions of dollars of EV’s overseas.

China “rules” the solar panel business. Solar panels are the lowest cost item in a solar installation now. The power regulation equipment and the labor are now the major cost items. None of that belongs to china. The statement that china “rules” the solar industry would be like saying that the makers of bricks rule the home building industry. China certainly subsidizes the solar panel making industry. It was an easy in to the market, since solar silicon is a non-critical type of silicon that does not have the requirements of other silicon uses (ie., computer chips). This subsidy is the equivalent of China paying us to install more solar in exchange for owning the solar panel business. Horrors! Why would we want to suceed from the solar panel business!!! In fact Donald trump is being petitioned right now to place a tarrif on solar panels for that very reason by the USA makers of panels (what little of them there are). However, think a bit. Why did we suceed from the panel business in the first place? Well, because it is a low margin business that pays little for labor, if it even uses labor at all. It left… Read more »

We make bricks what’s your point. We had an opportunity to build manufacturing facilities that make solar panels in the US and didn’t losing jobs to China increasing trade deficit.

The point about China is GOVERNMENT Incentives TOOK OVER the SOLAR MARKET. Not any “free market” mechanism. Government LEADERSHIP Took the Market.

Secondly, the oil industry gets 25 TIMES more federal tax credits than the EV, solar and wind market get combined.

List of US Fossil Fuel subsidies from recent G20 report:
– Expensing of Intangible Drilling Costs
– Percentage Depletion for Oil and Natural-Gas Wells
– Domestic Manufacturing Deduction for Fossil Fuels
– Two Year Amortization Period for Geological & Geophysical Expenditures
– Percentage Depletion for Hard Mineral Fossil Fuels
– Expensing of Exploration and Development Costs for Hard Mineral Fuels
– Capital Gains Treatment for Royalties of Coal
– Deduction for Tertiary Injectants
– Exception to Passive-Loss Limitation for Working Interests in Oil and Natural-Gas Properties
– Enhanced Oil Recovery Credit (EOR) Credit
– Marginal Wells Credit
– Corporate Tax Income Exemption for Fossil-Fuel Publicly Traded Partnerships
– Excise Tax Exemption for Crude Oil Derived from Tar Sands
– Royalty-Exempt Beneficial Use of Fuels
– Royalty-Free Flaring and Venting of Natural Gas
– Liability Cap on Natural Resource Damage
– Subsidies for fossil fuels used in the residential sector
– Low-Income Home Energy Assistance Program (LIHEAP)

Sounds to me like you really don’t like the current system of taxation on income with all the deductions and loopholes. Good. Let’s do away with it and implement the Fair Tax, a national retail sales tax that replaces all income taxes.

How can the US afford to bomb the entire world when there are a ton of clean environment programs taking all the money? The US military only spends 3x as much money on the military as the second place, China, surely you don’t think that is not enough? You must cut the EV program so another general can his own taxpayer-funded private jet!

We spend 824 billion on defense and that doesn’t even include the billions on Homeland Security, CIA NSA and a number.of other agenicies. Yet even this amount isn’t enough.

Yep. You could easily cut at least $200 billion from these areas and still outspend everyone else in the world while at the same time afford healthcare, education, clean energy or other things that are actually beneficial to people.

Except that none of those other things you mentioned are listed as proper functions of the federal government in our constitution while the military actually is. Pesky thing that Constitution.

This is as shocking as the Model 3 being delayed.

Make the credit sunset for ALL manufacturers once the first one hits 200k if it is really going to be axed.

@Bro,

The latest delivery dates from Tesla for Model 3 still show SOME people getting delivery in 2017.

Good take on the ZEV credit’s Jay.

One other thing I would note for those that want to buy before the credits expire at this year end is the CUT OFF DATES for ordering a Tesla Model X or S to insure that the vehicle gets delivered before the end of the year.

Here’s the cut off dates for ordering per electrek:

Sources familiar with Tesla’s sales told Electrek that this quarter’s “custom cut-off” dates in the US are November 12 on the east coast, November 19 for the south-west, northwest, and Texas, and November 26 for the west coast.

I wouldn’t wait if I were ordering until those cutoff dates.

Those are estimates based upon previous demand, not guarantees of delivery. If demand rises, or if there are delays, those dates become meaningless.

I called the Tesla dealership in Richmond on my way home today and their least “drop dead” date is the 9th so I am going from a model S test drive/probable birches on this coming Saturday the fourth. Will still keep my “allegedl” January/May model three reservation for now

Forgive my horrible spelling and lack of proofreading… Purchase

“CARB standards are set to significantly increase, starting with 2% of total sales in 2018 (up from .79% from 2012-12017), then 4% in 2019, up to almost 16% in 2025.”

Right, and that’s why pulling the CARB waiver would become an even higher stakes move.

@pjwood,

I know lots of people say the feds will never pull off eliminating CARB’s waiver but I don’t believe it.

That will be next.

Just watch and see. The evil empire will strike.

They will likely try and likely lose in court. Also counter to their philosophy of limited federal government but when has consistency or intellectual honesty (or any honesty) been of concern to these dinks.

“Also counter to their philosophy of limited federal government”

-Koz

Their strong morals and philosophies only apply when it suits their end goals.

They strongly oppose subsidies

….unless the subsidy goes to the oil and gas industry

You’ve forgotten who now names the members of the Supreme Court.

Lose in court? Lose what? In general one of the few powers explicitly granted to the federal government is interstate commerce and that power has been widely exercised (and one of its core purposes) to prevent states from issuing independent state by state requirements for a wide range of things. The only reason CARB can make it’s own rules is that they were granted special dispensation explicitly in legislation. That legislation can be taken away by the same congress that gave it and the courts will not bat an eye. CARB has only the authority granted to it by the US Government. No more, no less. When the congress decides it is tired of that, it is free to change it.

@Jay Cole
Help us out here: what Republican representatives are to blame here? We need names, preferably also email addresses or phone numbers. Our duly elected representatives need to hear how we feel on the issue. Heck, they may even need a little protesting outside their offices.

Constitutionally, the US House originates all spending bills, and it is a team effort on behalf of the party in power. Here is that list of people responsible:

https://www.gop.gov/about/members/

If it passes, Tesla is going to have a strongest Q4 delivery on Model S &X.

Seems like the manufacturers that have sunk a lot of money developing EV’s that qualify based on the existence of the program would have an actionable case against the government if they pull the rug out now. Ironically GM and Tesla may be better off, as discussed in the article. If it sunsets per current guidelines, then Bolt and Model 3 would be at a significant disadvantage to other EV’s once the GM and Tesla’s limits are reached.

Right thing to do is to have all sunset with the first manufacturer to hit 200k or make one credit pool that all manufacturers draw from.

I have taken advantage of this tax credit and the California taxpayers’s largess in the form of a cheap lease with free charging on a C-max energi and a state rebate on the same. I was hoping to do so again with a 2019 purchase, probably an Ioniq plug in hybrid. However, rationally, I don’t think these credits and rebates or the solar/wind ones (which I have also taken advantage of) etc. are a good idea. The benefits go mostly to the quite well off at the expense of other taxpayer and rate payers. The harm to be mitigated is CO2 emissions globally and conventional pollution locally. New vehicles (especially modest size ones) are very clean as far as conventional pollutants (HC, CO, NOx, etc.). Far more reduction of local pollution would would be done by mandating (and financially supporting for the less well off) the retirement of dirty older vehicles than subsidizing the purchase of new plug-ins, especially the $100,000 kind. A phased in carbon tax (entirely, or mostly rebated on a per-capita or similar basis) is the only good option for sensibly reducing CO2. First it effectively finishes of the burning of thermal coal (which cheap natural gas… Read more »

Chrysler would have be allowed (been)

Don’t think the tax break for the rich will pass. They haven’t passed anything so far, just Trump mucking up the works wherever possible. Like at EPA.

Luke Tonachel…“The EV tax credit repeal would cede U.S. leadership in clean vehicles, putting our companies at a competitive disadvantage and threatening jobs while costing drivers more at the pump and increasing pollution.

The US cedded green leadership to China when Obama was still in office and this might change the number of EVs sold in the US but not on US manfactures design and devolpment of EVs…
GM is now selling more cars in China than the US and Ford is not far behind that same respect so they are both going to be devolping and selling lots of EVs…
FCA seems to be slowly killing their company by having limited China sales and ever falling US sales and are laggards in tech so oh well for them…

(⌐■_■) Trollnonymous

Axing the fed tax credit is a small dribble.

If the gooooberment wants to save $$$$, feather down the OPEC welfare and cut petrol subsidies.

Dumb gooooberment.

There goes the entire EV industry. It was nice while it lasted I guess. Just look to other countries to see what happens to the EV market when you remove incentives like this.

This is one of the reasons I won’t buy an EV until they cost as much as an ICE without tax incentives because only then will I be sure the industry is going to survive and that I’m not buying something that will be worthless in a few years.

I think this credit is as good as gone. Unlike the 401K allowance and home-owner tax credit, there is not broad support for the EV credit.

This is EZ money for the GOP to get back and though the rest of the plan may change, I think potential EV buyers are screwed.

Use your tax cut windfall, Jeremy. It’s going to be fine.

Just a little skeptical of what my “windfall” would be. At least the $7500 tax credit was a hard number that I could factor in when making a purchase. Things are much more fuzzy now.

Not good news for GM. They already don’t make money on the Bolt, now it will worth even less to them.

Well, here we go, but nobody makes money on EVs right now, even the vaunted China producers.

If you don’t believe GM can make money on the Bolt, then you must also believe Tesla can’t make money on the M3? Because if an experienced car manufacturer can’t do it, then Tesla has no chance.

In reality the Bolt is profitable per-unit. GM knew the tax credit expiration was near, so likely the Bolt is profitable when they drop the MSRP $7500.

Tesla will keep their US Model S/X business because it doesn’t rely upon incentives at that price point, and the Model 3 will become primarily an export car. The rest of the EV industry in the US will become primarily compliance sales in CARB states and export sales, while Pruitt works on his plan to gut the Clean Air Act in order to kill CARB: https://www.wired.com/2017/03/want-gut-emission-rules-prepare-war-california/ If he succeeds, EV’s/PHEV’s will become primarily a Europe/Asia regional thing for the next decade. Just like small passenger diesel cars and mopeds have been primarily a EU/Asia regional thing for the last 20 years. In the long term EV’s will still win, even in the United States. Because China and Europe will take over leadership and drive down EV prices while improving charging and efficiency. They will reap the benefits and will economically have a massive advantage WHEN (not if) the next global oil crisis happens. Chinese import cars like the Cadillac CT6 Plug-In Hybrid will be the norm a decade from now in the US after China wins the race to electrifying transportation. The best case scenario is that the delay is only 5 years in the US as the most populous… Read more »

Regardless of what happens, this uncertainty should make a lot more fence sitters just off the fence the next 2 months. Could very well see record #’s of EV metal flying off the lots.

Probably why GM wanted to keep inventory in the USA instead of shipping them to PSA in Europe to meet demand there. Should give them a bunch more sales now.

I had planned to push my Bolt purchase to fall of 2018, but am now seriously considering pulling ahead that purchase.

I just don’t know if the OEMs will be able to drop prices enough to keep EVs competitive. I can see GM dropping the price of a Bolt by ~$3K, but not $7500.

On the plus side, resale value of my 2011 Volt should stabilize.

Funny, I don’t hear the argument anymore of “don’t worry, Bush signed the EV tax credit, so Republicans won’t repeal it”.

Does anybody still think that is true?

I don’t know Trump is a complete idiot so if he has his way he would eliminate it.

No, you are missing the point Nix. In 2007 there was no electric car industry. Bush pushed for and then signed into law the Energy Security Act of 2007. Now there are just 2 serious electric car makers. Tesla and GM.

The rest of the car makers have pilfered the credits without investing any real effort in making decent electric cars. Toyota, Ford, BMW and Nissan don’t deserve the credit once Tesla and GM see their credit cut in half. It is time to eliminate the BEV credit.

Excuse me, why is Nissan lumped in with that? Are you making the argument that because of the lack of battery cooling, Nissan is not serious? Spent yesterday with the wife’s Leaf. 2013 with 49k miles. It was an 80 mile day and I got home with 14 miles. Had charging at 2nd stop – got me from 85% back to 100%. So I still was netting 80. Add some charging here and there and you don’t need 300 miles for every car out there. We have an S and a Leaf. They are both serious. The Leaf with some tweaks (presumably 2018 model) would be a better value by a long shot. I was back in the Leaf yesterday because my wife had to drive 230 miles. It reminded me that charging infrastructure matters a lot and we need all types of ranges. The timing of this is not ideal. Partly because we are talking 58 days from now. The unpredicatability of government action is one of the huge complaints. Hard to plan business decisions with an environment like that. Right now, large home building companies just suspended new projects, auto manufacturers just planned work shutdowns, and wall street… Read more »

David, I think Nissan has taken their eye off the ball. It has been 7 years since this wave started to build. Even GM has joined Tesla in the 200+ mile club. Nissan should have been there before GM, not after. If you don’t have 200 miles of combined AER (or a genset like the Volt and Energi’s) your car is a limited utility vehicle, not a full utility vehicle.
Nissan knew they were likely to see the credit go away before they brought their 200+ mile Leaf to the market. Once GM and Tesla lose the full credit, there is no way the US should pay to support the laggards.
Nissan failed.

No worries, anyway Tesla and GM’s 200,000 limit is pretty close and Leaf has already crossed 110,000 mark in USA sales. So it’s up to the other automakers to make a hard decision whether they will lower the product price by $7,500. The battery prices has gone down from $1,000 / KWh in 2010 to $230 / KWh by end of 2016, so the automakers can easily reduce the price instead of pocketing everything that uncle sam gives. What does this $770 / KWh decrease in battery price mean? Leaf: 30 KWh * $770 = $23,100 decrease Volt: 18 KWh * $770 = $13,860 decrease Many prospective customers who think that plugin vehicle prices are expensive without factoring in the Fed credit will now realize how affordable are the plugins. Lets say Leaf has a price of $30,000 and then subtracting $7,500 credit to arrive at $22,500. Instead if Leaf has a sticker price of $23,000, it will be lot simpler to compare with Altima which costs around $23,000 and see how fast the extra cost can be realized. Leaf has lower range, but its drive is lot smoother than any gasmobile. And most of the customers of plugins are… Read more »

Just cancel the OIL subsidies if you stop the EV incentive. Then we’ll see how fast Electrics can sell if they can make them fast enough.

Bet we won’t see this headline on Fox:
Republican Tax Hikes Kill US Auto Jobs!

GM Bolt & Volt: made in Michigan
Nissan Leaf: made in Tennessee
Tesla: made in California / Nevada
BMW SUV plug-ins: made in South Carolina
New Mercedes EV plant planned for Alabama

How many more EV plants in the USA can you name?

Sad day.

All EVs will become compliance cars (think flat 500e).

Those outside of carb States can forget about EVs. Outside carb state can look forward to Prius, Ioniq, and Niro.

Does this mean the Outlander PHEV will never come to the US?

Agreed, sad day. Fortunately, the Senate will likely kill this bill. Maybe the house will too. Email your legislators.
Make sure your voter registration is up to date for 2018. Enough of this nonsense.

Trump is calling this a Santa Claus Gift to the American People.

Fat chance. First thing, it eliminates state income tax deductions – so I’d pay MORE tax living in a highly taxed state.

Eliminating the Property Tax deduction would affect me even more since the property taxes I pay are frankly ridiculous and the deduction was the only saving grace. End Result: MORE TAXES for me.

The $7500 fed tax credit should be continued until around a million of EV’s of all manufacture have been sold. Making it expire at the same time would not give laggards any unfair advantage.

Since this is not a cost to the federal gov’t, but merely less money that they steal out of my hide, it basically only makes the tax code ‘more fair’ on the years I happen to buy an EV.

So far I haven’t heard one thing that will reduce my tax burden. Thanks a lot Repubs.

Of course since most of the repubs are secret Never Trumpers, they’ll fight it anyway to avoid giving Trump a sense of accomplishment.

Bill said “The $7500 fed tax credit should be continued until around a million of EV’s of all manufacture have been sold. ”

Cumulative sales stand at ~ 722k now and should be at or near 765k by year end. Based on expectations for next year that 1 million figure will probably be reached by the end of 2018, so the current proposal in Congress really only speeds up the demise of the credit by 1 year vs your suggestion. So it doesn’t seem like it’s that big a deal.

Not that it really matters, because the chances of this thing passing are slim to none, and Slim just left town. There are a lot of republicans who don’t support this, and that list is growing. It eliminates a lot of tax deductions (effectively increasing taxes), adds a higher tax bracket of 46% to income over $1 Million, and does nothing to reduce spending / the deficit. As a conservative, this bill makes me sick.

It may take a month or 2 before the bill is passed and so the credits may last up to 12/31 and by that time, Tesla and GM would have sold 160,000 (80%) while Nissan has sold 110,000 (55%) and that’s good enough as the leaders were awarded. And these companies who said these words should face the reality. FCAU: Don’t buy our electric cars. Toyota: No needs to be plugged in. Volkswagen: Diesel is the future. I just did a simple math of what the Ioniq-EV will cost in relation to Ioniq-Hybrid. Ioniq-Hybrid costs $22,200 Now subtract $3,000 extra for the Hybrid components and it comes to $19,200 Now subtract $2,000 extra for the Engine components in relation to Motor components and it comes to $17,200 Now add the cost of battery @ $230 / KWh. $230 * 28 = $6,440 $6,440 (Battery) + $17,200 (Car excluding battery) = $23,640 And that’s the amount Ioniq-EV should be priced with out FEDs $7,500 credit. So the Ioniq-EV price of $23,640 is highly competitive with Ioniq-Hybrid price of $22,200 with just $1,440 extra. Of course there is no range anxiety in hybrid as you can travel 550 miles with its 55… Read more »

Our country pays 60
billion dollars of Subsidies to oil companies and only millions to alternative energy. It should be an equal playing field. Globally fossil fuels are subsidized almost 5 trillion dollars on a finite commodity. We need change from this craziness. Look what we have done to our air, water, and land in essentially one persons lifetime. Millions are dying from cancer. Jobs over environment? Mother Nature will ultimately win then it will be environment over jobs. The population is also doubling soon!!