Last week, President Obama revealed his 2014 budget proposal to Congress.  For fans of plug-in vehicles, there were 2 items within the proposed budget worthy of mention: $10,000 point-of-purchase rebate for electric vehicles and $575 million in proposed spending for the DoE's "EV Everywhere Grand Challenge."

NADA Logo

NADA Logo

It's the $10,000 point-of-purchase rebate that seems to be drawing the most criticism, both from EV naysayers and the National Automobile Dealers Association (NADA), but why?

Under the proposal, the tax credit–currently $7,500–would jump to $10,000 and turn from a tax credit to a direct point-of-sale rebate.  Seems simple to us, but NADA says otherwise.

Bailey Wood, a spokesman for NADA, says dealers are all for incentives, as they typically increase sales, but complains that this point-of-purchase setup is flawed.  As Wood claims, it's too complicated.

Wood suggests that by transferring the credit to the dealer, it becomes to difficult to figure out who can claim it and at what point in time it can be claimed.  Wood's argument would make more sense if we re-worded it in a bit of an unusual way, so here goes...

  • Does the dealer claim the $10,000 credit? If so, then how long will it take after the purchase of a vehicle  for the dealer to get reimbursed?
  • Does the customer claim the $10,000 credit?  If so, is this credit instantly given to the customer?
  • If the dealer claims the credit, then will uniformed buyers even realize it exists?
  • Will a dealer receive any advance credits?  Or will they always be in the hole by $10,000 while waiting to receive the credit from the Feds.
The most likely scenario is that the dealer will claim the credit after the sale and, as long as they aren't corrupt, will pass the $10,000 directly to the buyer in the form of a deduction off the vehicle's sticker price.  So, yes, the dealer will technically be in the hole $10,000 as it waits on the money from the Feds, but $10,000 is like pennies to most dealerships.

But dealers say claiming the credit will heighten their workload.  Paperwork will have to be filed correctly, some phone calls might need to be made and a waiting game played while the $10,000 credit goes through the federal channels on its way to dealerships.

This, in our eyes, is fine.  It's how the program should work.  Dealers sell tons of vehicles, file paperwork constantly and are staffed to deal with these sorts of things, while most consumers are not equipped to deal with the complexities of the federal government's overly complicated ways.

Still, Wood says:

"We just don’t think it’s workable in the showroom."

If the proposal passes, then we say to Wood, "Make it work."