Electrek: Dems propose new $12,500 electric car rebate, Tesla left with $4,500 disadvantage

Status
Not open for further replies.

FutureBoy

Well-known member
First Name
Reginald
Joined
Oct 1, 2020
Messages
1,387
Reaction score
2,041
Location
Kirkland WA USA
Vehicles
Toyota Sienna
Occupation
Private Lending Educator
Country flag
Dems propose new $12,500 electric car rebate, Tesla left with $4,500 disadvantage
Fred Lambert
- Sep. 11th 2021 9:14 am PT

@FredericLambert

tesla-fremont-1200.jpg


Democrats have proposed an updated electric car incentive program at the federal level, which would go through their $3.5 trillion social spending bill.

It would remove the limit on the number of vehicles and replace it with a timeline, introduce a higher payout up to $12,500 and make it point-of-sale, but there are also new restrictions that would put Tesla at a $4,500 disadvantage.

Ever since President Biden took over the White House and the Democrats achieved a majority in both the House and the Senate, they have made it clear that they plan to reform the federal EV incentive program.
The current program has some important flaws. The main one is that it caps the $7,500 tax credit to 200,000 electric vehicles per manufacturer.

It puts automakers who were early proponents of electric vehicles, like Tesla and GM, at a disadvantage.
The second biggest problem is that the incentive takes the form of a $7,500 tax credit, which requires you to have the equivalent federal tax burden, and it is only applied on your next taxes.

Over the last year, there have been several proposals to reform the EV incentive.

The latest one is the Clean Energy for America Act, which would increase the incentive to up to $12,500 and remove the threshold of 200,000 EVs delivered by manufacturers.

Now the House Ways and Means Committee has approved a new version of the EV incentive program as part of their $3.5 trillion social spending bill.

Here are the main changes:
  • Remove the 200,000 vehicles per manufacturer cap
  • Keep the $7,500 incentive for new electric cars for 5 years
  • Make the $7,500 incentive a point-of-sale discount instead of tax credit
  • Add an additional $4,500 for EV assembled at union factories
  • Add another $500 for EVs using batteries made in the US
  • After the first 5 years, the $7,500 becomes only for US-made electric vehicles and it applies for another 5 years.
  • They are introduce price limits on the EVs eligible for the incentives:
    • Sedans under $55,000
    • SUVs under $69,000
    • Pickup trucks under $74,000
    • Vans under $54,000
  • They are also introducing caps on income to get access to the incentives, but they are fairly high at an adjusted gross income of up to $400,000 for individuals and up to $800,000 for joint filers.
As usual, these terms could change as the bill goes through the legislative process.

Electrek’s Take
I think that these changes are mostly positive. I like that they are giving foreign automakers a grace period. That will be really helpful not to slow the momentum of EV adoption in the US.

The 10-year period is more than enough to support EV adoption.

As for the price limits, I think they are high enough if not a little too high for the SUVs and pickup trucks.

My main issue is with the $4,500 additional incentive to electric vehicles that are coming out of union factories.

That has nothing to do with the reason we should be discounting EVs versus fossil fuel-powered vehicles.

The reason is to account for the cost to the environment and health that comes with burning gas. It has nothing to do with whether employees making those vehicles, electric or not, are part of a union.

The company most affected by this is going to be Tesla since their employees have not unionized.

I can’t help but think that this is a politically motivated move rather than a pro-environment move, which is disappointing.

However, I’m not going to complain too much because I think $7,500 is plenty of money for an EV incentive and $12,000 is likely too much in most cases.

The result is just really a $4,500 disadvantage to Tesla, which the company will have no problem with considering they have still been dominating the US market over the last two years with a $7,500 disadvantage.
Advertisement

 

Ogre

Well-known member
First Name
Dennis
Joined
Jul 3, 2021
Messages
1,736
Reaction score
3,192
Location
Ogregon
Vehicles
Model Y
Country flag
I kind of like this. Everything save the union clause makes sense. The vehicle caps are much saner than the 40k and 80k numbers we saw previously. The only eyebrow raiser is the "vans under 54k". What do they have against vans, they are some of the most practical vehicles on the market.

Even with the union clause Tesla is **still** going to be the largest beneficiary because they have the largest capacity and market share in the US by a large margin. Mostly I think the dollar amount of the union clause makes the total incentive amount entirely too high. When we start getting $25,000 sedans, is the government really going to kick in $12,000?

I'm just wondering... is this going to be one of those silly things Tesla bypasses the way they bypassed New Mexico's ban on first party dealerships. Will we see a "Tesla Employees Union" with little or no voting rights or something similar?
 

Sirfun

Well-known member
First Name
Joe
Joined
Dec 28, 2019
Messages
977
Reaction score
1,716
Location
Oxnard, California
Vehicles
Toyota Avalon, Chrysler Pacifica PHEV, Ford E-250
Occupation
Retired Sheet Metal Worker
Country flag
Interesting, on one side I think it's ridiculous that they feel union factory made cars will cost so much more/ be at a disadvantage, that the federal gov. would have to give you $4,500 to even the playing field. But also after some thought, maybe that $4,500 per vehicle may give Ford and these other players, some incentive to build their vehicles in the US, and treat their employees fairly. I just don't know which way to go with that.

The van price does seem a bit strange to me also.

One other thing, where does all this money come from? :unsure:
 

Ogre

Well-known member
First Name
Dennis
Joined
Jul 3, 2021
Messages
1,736
Reaction score
3,192
Location
Ogregon
Vehicles
Model Y
Country flag
Ford and these other players, some incentive to build their vehicles in the US, and treat their employees fairly.
Is there something that suggests it must be a US Union? Chinese Unions need not apply?

Isn't very clear from this summary.

Edit: There does seem to be a clause which requires its US made. Maybe
 
Last edited:
OP
OP
FutureBoy

FutureBoy

Well-known member
First Name
Reginald
Joined
Oct 1, 2020
Messages
1,387
Reaction score
2,041
Location
Kirkland WA USA
Vehicles
Toyota Sienna
Occupation
Private Lending Educator
Country flag
My take:

Looking at the various hoops one has to jump through to get the incentive makes me think that big oil auto is trying to do everything it can to give themselves an advantage over Tesla. But from what I see, they are not really able to do that.

The only real advantage they get is from the $4,500 extra incentive for buying from a union shop.

What is interesting though:

  • Remove the 200,000 vehicles per manufacturer cap
    • This works to Tesla's advantage because they get the possibility of getting the incentive on all the sales it does (there are income limitations below though).
  • Keep the $7,500 incentive for new electric cars for 5 years
    • So for the next 5 years, Tesla gets a ton of incentive since it is selling far more volume than anyone else.
  • Make the $7,500 incentive a point-of-sale discount instead of tax credit
    • This works for all the makers and is much more attractive for the buyers.
  • Add an additional $4,500 for EV assembled at union factories
    • This is the one area where Tesla is at a disadvantage.
  • Add another $500 for EVs using batteries made in the US
    • This is an area that Tesla is certainly at an advantage. I get that some of the other automakers are building battery plants now, but it will take them a long time (>5 years?) to get those factories up and running smoothly so there will be a limit to the number of batteries they can use to take advantage of this discount.
  • After the first 5 years, the $7,500 becomes only for US-made electric vehicles and it applies for another 5 years.
    • They are introduce price limits on the EVs eligible for the incentives:
    • Sedans under $55,000
    • SUVs under $69,000
    • Pickup trucks under $74,000
    • Vans under $54,000
      • Oh, boy. All the US sold Tesla vehicles are built in the US. They are the most US-built vehicles in the country. So how many of the big oil automakers are going to be able to even take advantage of this? Are all their EVs being built in the US? If not, their vehicles are going to be at a serious disadvantage to Tesla once we hit this stage.
      • Plus, the price limits are also to Tesla's advantage since Tesla's tend to be much cheaper per functionality. So the cheap vehicles from big oil makers will get the incentive but not have nearly the level of functionality or convenience. Then the cheaper end Tesla vehicles will also get the benefit but will also have all the convenience and functionality of a Tesla vehicle. Then the more expensive Tesla's might not get the incentive (looks like CT M3 still gets the incentive) but the competition also won't get the incentive and they still won't have the functionality.
  • They are also introducing caps on income to get access to the incentives, but they are fairly high at an adjusted gross income of up to $400,000 for individuals and up to $800,000 for joint filers.
    • This still works to Tesla's advantage because these income levels are high enough to allow the vast majority of buyers to get the incentive. Once you hit those income levels, I'm not sure the incentive will sway a buyer to purchase one vehicle over another anyway.
So basically, Tesla wins with this incentive structure.
 

Sirfun

Well-known member
First Name
Joe
Joined
Dec 28, 2019
Messages
977
Reaction score
1,716
Location
Oxnard, California
Vehicles
Toyota Avalon, Chrysler Pacifica PHEV, Ford E-250
Occupation
Retired Sheet Metal Worker
Country flag
Is there something that suggests it must be a US Union? Chinese Unions need not apply?

Isn't very clear from this summary.
Wow interesting thought. I know nothing about Chinese union auto workers, but there are LOTS of European union auto workers. VW comes to mind.

I would hope it would be assembled in the US instead of union. That would be easier to swallow. With assembled in the US, I would think the people who built my car were treated fairly and under US standards for health and safety. And I want to support US workers.

Edit: Can you imagine how unscrupulous some of these manufactures could be with it just union workers clause? Ford could go to Mexico and create a union of their choosing and still get $4,500 off the price of their vehicles paid by US taxpayers.

Here's an article of how they want to produce more vehicles in Mexico already. https://www.reuters.com/article/us-...-new-vehicle-in-mexico-not-ohio-idUSKBN2B82V9
 
Last edited:

JudgeMetal

Member
First Name
Edward
Joined
Jan 31, 2021
Messages
23
Reaction score
13
Location
Charlotte NC
Vehicles
Jeep gladiator
Occupation
Retired
Country flag
Interesting, on one side I think it's ridiculous that they feel union factory made cars will cost so much more/ be at a disadvantage, that the federal gov. would have to give you $4,500 to even the playing field. But also after some thought, maybe that $4,500 per vehicle may give Ford and these other players, some incentive to build their vehicles in the US, and treat their employees fairly. I just don't know which way to go with that.

The van price does seem a bit strange to me also.

One other thing, where does all this money come from? :unsure:
money is basically magic now.
 

Sirfun

Well-known member
First Name
Joe
Joined
Dec 28, 2019
Messages
977
Reaction score
1,716
Location
Oxnard, California
Vehicles
Toyota Avalon, Chrysler Pacifica PHEV, Ford E-250
Occupation
Retired Sheet Metal Worker
Country flag
money is basically magic now.
They say Jerome Powell has a money printing machine and can pump out as much cash as he feels is necessary. :ROFLMAO:
Personally, I try not to spend more money than is coming in. I guess that's part of the reason I'm not too upset that my CT will be delivered a year later. By that time I may be able to pay cash for it. Especially if I get a $8000 refund.:)
 

Tinker71

Well-known member
First Name
Ray
Joined
Aug 8, 2020
Messages
272
Reaction score
307
Location
Utah
Vehicles
1976 electric conversion bus
Occupation
Project Manager
Country flag
Boo on the union clause. $7500 is more than enough. $4000 if > 50% foreign content/value. VW might still make it, not sure, they are right behind Tesla and deserve some credit as an early supply driver.

The 200,000 EV credit worked very well it should be phase out. Everybody else had enough time so well ____-em
 

Ogre

Well-known member
First Name
Dennis
Joined
Jul 3, 2021
Messages
1,736
Reaction score
3,192
Location
Ogregon
Vehicles
Model Y
Country flag
So $74k for a Cybertruck. That makes the options game even tighter than now. It also excludes most of the interesting options for Rivian. Of course Rivian still qualifies under the old law so they have a lot of runway unless this closes the door on that.

Where this gets really crazy is if Tesla does in fact launch a $25,000 vehicle. You could buy a Tesla for $17,000? That would explode. That would also crush the small makers like Arcimoto and Aptera unless they also qualify for at least some funding. Even the Model 3 pricing would be near $30,000.

I really don’t think the people penciling these bills understand how disruptive this could be To the auto market. Last time Tesla got these incentives their cheapest car was $70,000. Very soon Tesla is going to be able to produce millions of Model 3s and Model Ys per year.

The Cybertruck and the Model 25k will absolutely crush their ICE counterparts in terms of value and likely cost less in many cases.

I talked to. Guy today who had a Honda Ridgeline he paid $43k for “before the dealers started marking them up“. The dual CT would be in that price range.
 

JBee

Well-known member
First Name
JB
Joined
Nov 22, 2019
Messages
434
Reaction score
435
Location
6000
Vehicles
Cybertruck
Country flag
One other thing, where does all this money come from? :unsure:
MMT. Modern monetary theory.

"A sovereign country can print as much currency so long it doesn't increase inflation"

Fiat currency on steroids.

But does it mean we still have to pay taxes for them to balance the budget? Nup...they just need taxes to slow down inflation now.

---

Question: Does that mean I can now claim the the incentive to buy a CT in the USA as well now as a foreign citizen because its point of sale?
 

Tinker71

Well-known member
First Name
Ray
Joined
Aug 8, 2020
Messages
272
Reaction score
307
Location
Utah
Vehicles
1976 electric conversion bus
Occupation
Project Manager
Country flag
So $74k for a Cybertruck. That makes the options game even tighter than now. It also excludes most of the interesting options for Rivian. Of course Rivian still qualifies under the old law so they have a lot of runway unless this closes the door on that.

Where this gets really crazy is if Tesla does in fact launch a $25,000 vehicle. You could buy a Tesla for $17,000? That would explode. That would also crush the small makers like Arcimoto and Aptera unless they also qualify for at least some funding. Even the Model 3 pricing would be near $30,000.

I really don’t think the people penciling these bills understand how disruptive this could be To the auto market. Last time Tesla got these incentives their cheapest car was $70,000. Very soon Tesla is going to be able to produce millions of Model 3s and Model Ys per year.

The Cybertruck and the Model 25k will absolutely crush their ICE counterparts in terms of value and likely cost less in many cases.

I talked to. Guy today who had a Honda Ridgeline he paid $43k for “before the dealers started marking them up“. The dual CT would be in that price range.
With the mega casting and 4860 batteries next year, does anybody think the pre incentive sales price of the 3 and Y will actually come down? Elon did say he thought the Y could be the worlds best selling car. ~ $39k (post rebate) for the long range would help.
 

Diehard

Well-known member
First Name
D
Joined
Dec 5, 2020
Messages
1,124
Reaction score
2,050
Location
U.S.A.
Vehicles
Olds Aurora V8, Saturn Sky redline, Frontier, CT2
Country flag
One other thing, where does all this money come from?
We can put eight trillion dollars in this for the next 20 years and just think we never left Afghanistan.

Regarding $4500 Tesla disadvantage, remember Tesla has been taking Big 3’s lunch money for years due to federal regulations. This just evens it out a bit.

Edit: Right now Tesla is $7,500 behind Ford, if this passes, the gap will be smaller and once 4680 start rolling, Tesla will have more home made batteries in their cars than anyone else.
 
Last edited:

Ogre

Well-known member
First Name
Dennis
Joined
Jul 3, 2021
Messages
1,736
Reaction score
3,192
Location
Ogregon
Vehicles
Model Y
Country flag
With the mega casting and 4860 batteries next year, does anybody think the pre incentive sales price of the 3 and Y will actually come down? Elon did say he thought the Y could be the worlds best selling car. ~ $39k (post rebate) for the long range would help.
No idea if prices will come back. I was thinking they might bring back the SR for 43,000 then it would be 35,000 for the base model Y.
 

Sirfun

Well-known member
First Name
Joe
Joined
Dec 28, 2019
Messages
977
Reaction score
1,716
Location
Oxnard, California
Vehicles
Toyota Avalon, Chrysler Pacifica PHEV, Ford E-250
Occupation
Retired Sheet Metal Worker
Country flag
We can put eight trillion dollars in this for the next 20 years and just think we never left Afghanistan.

Regarding $4500 Tesla disadvantage, remember Tesla has been taking Big 3’s lunch money for years due to federal regulations. This just evens it out a bit.

Edit: Right now Tesla is $7,500 behind Ford, if this passes, the gap will be smaller and once 4680 start rolling, Tesla will have more home made batteries in their cars than anyone else.
I said it earlier, I'll say it again. Ford makes their EV's in Mexico. They shouldn't get that $4,500 unless they move the production to US and give US workers the jobs.
 
Advertisement
Status
Not open for further replies.

 
Advertisement
Top