I think this is a good thing. Electric cars are no longer demand-limited, they are supply-limited. People are paying $10k above sticker for used Teslas. We don’t need to further incentivize people to buy electric cars. The demand is there. We need to increase the supply.
There was always this tension with EV subsidies. Yes, it was hopefully serving to get a fledgling technology chain off the ground, but it was also basically a subsidy for rich people. Electric cars are expensive, and the people who buy them are rich.
Now that the industry is well off the ground, we don’t need to subsidize rich people. But maybe we should subsidize the creation of new battery fabs, which is what the new bill effectively does.
Unfortunately, Democrats have completely forgotten how to sell their accomplishments. LBJ would have ensured that every single senior got a “prescription discount card” in the mail in October with his signature in it and an inset saying, “Unfortunately this benefit does not apply to insulin, please see Senate Vote 186 to see how your Senator voted.”
Modern Democrats are either too afraid of being accused of “politicizing” an issue to take credit, or feel like it would sully their high-minded policy accomplishments to shout about them like carnival barkers.
IMO it’s a problem when the hoops that automakers have to jump through to get the subsidies are too significant. It incentivizes them to build enough capacity in this proscribed way where they’re meeting the domestic production requirements and collecting the easy money on the table but the global supply chain for gas cars is (at least in normal times) more nimble and the profit incentives lead the industry to find the cheapest ways to build cars at capacity. Realistically if we want to reach the end goal that EVs are widespread and affordable then realistically it will take way too long to put requirements on domestic manufacturing and wait for the auto industry to ramp it up and meet the rules.
EV investment for a long time has been sold to Washington as an American jobs program which was probably necessary to get support but we’re running into limits of how close that approach can ger us to the finish line.
It’s of course also a problem that the subsidies have generally been temporary and uncertain so the auto industry isn’t incentivized to build capacity for the long-term, but unfortunately there’s less the democrats can do about that.
The population of electric vehicle owners is substantially richer than the average. That of course does not mean that each individual owner is rich. But subsides toward EV ownership are largely going to the rich.
I mostly agree with this. I don’t know enough about how the new subsidies are structured to know if they’re going to be mostly ok or a boondoggle.
But I think it’s definitely time for the old subsidies to go away. Electric Vehicles are no longer dependent on them, and in the current state of limited supply, it’s just directly subsidizing the luxury purchases of (mostly) quite wealthy people.
I think you’re probably right about this overall, since we’re still in the “early adopter” phase of EVs. But I would be interested to see if there is any data around this. But in any case, your final sentence there is more accurate than your previous unqualified statement that I reacted to. And I may be guilty of pedantry, but I do think it’s important for EVs not to be pigeonholed as “toys for the rich.” We need lots and lots of people to convert to EVs and I hope this bill helps spur that along.
I agree with all this, and I think that the previous subsidies were good to promote that goal in the past, but they’re no longer the right way to promote EVs going forward, given current market conditions and the robustness of EV offerings.
EVs have never been demand-limited. The limitation has always been in the supply. Tesla could sell two or three times as many cars that it makes. The main limitation is the supply of batteries. Demand is higher right now, due to the high gas prices, but even before that, Tesla never had a problem selling every vehicle they could make.
As far as subsidies, buyers of Tesla and GM EVs do not get a federal incentive, although buyers of other manufacturers do. The reason is that the the existing subsidies start to expire after a manufactiurer has sold 200,000 EVs and PHEVs. Both Tesla and GM have exceeded that number. I don’t think the subsidies in the new law have a similar limit (at least no one’s mentioned one), but those aren’t quite in effect yet.
I don’t think that’s true, but if we assume it is for the sake of argument, that is another point in favor of getting rid of the subsidies. You don’t have to subsidize the price of products that will all sell out without subsidy.
Did they ever sell any before existing EV subsidies? Presumably people willing to buy a Tesla for $X might have been less willing at $X+7500.
There were a bunch of EVs that automakers were building to meet various (state) requirements but nobody really wanted them. The Nissan Leaf was a tough sell, and that was probably the best of the bunch. Ford Focus EV, Mini Cooper EV, Kia Soul EV… Mercedes had one that wasn’t very good, the BMW i3 was also a slow seller. These were all $40k EVs that couldn’t do 100 miles on a charge, and the market emphatically did not consider that to be a good value. Even with the subsidies they sat on dealer lots.
Tesla targeted a higher price and ironically didn’t have a problem because of that.
Well, you’re probably right if you count the Nissan Leaf and other compliance EVs, as @steronz points out. Let’s change it to Tesla has not been demand-limited since I started to pay attention to EV market. Which was roughly the time the Model 3 was introduced which was 5 years ago. And I have the impression that they weren’t demand-limited before that.
I don’t know when the existing subsidies were put in place, so I can’t answer that. There are people who can’t afford them without the subsidies, but there’s enough other people who can that they are still supply-limited. I don’t think that’s a reason to get rid of them, though. I’m pretty sure that the new subsidy has an upper limit on the buyer’s income, so really rich people won’t qualify.
I saw a post on Facebook with a graphic from Fox “News” proclaiming that due to the Inflation Reduction Act:
97.2% of those earning between $100,000-$200,000 would see a tax increase
91.3% of those earning between $750,000-$100,000 would see a tax increase
61.7% of those earning between $40,000-$50,000 would see a tax increase
24.6% of those earning between $10,000-$20,000 would see a tax increase
Of course, since it’s Fox, I distrust the numbers. Anyone got a clue as to where they came from? It could be as simple as raising passport fees by a nickel that could make such a thing technically true but misleading as hell. Where is Fox getting this?
According to politifact, it appears that these numbers are based on an analysis presented by the Joint Committee on Taxation.
Basically either the analysis was misleading, or FOX cherry-picked. Because, while it’s technically true that taxes may increase for those groups, it’s also true that the increases:
Are an estimate of trickle-down effects from taxing corporations, not any increase in direct taxes
Are relatively small: 1.0 to 1.4% increase in taxes
Are offset for the majority of people by subsidies and benefits i.e. the actual money in those group’s pockets would increase according to the analysis.
Honestly while I think income taxes would be better than corporate taxes generally (and in the current situation) taxing the 100-400k range more is probably a good thing right now and this was likely the only way to do it.
