The Tesla 3 is now in production and a lot of people are on the waiting list. “Tax incentives might run out on Tesla, but electric cars will be just fine” says
In the US, a federal rebate program gives buyers of electric vehicles a $7,500 tax credit for the first 200,000 electric vehicles (EV) a carmaker delivers. The credit gradually phases out once the manufacturer passes the 200,000 mark. Tesla has already sold more than 100,000 cars in the US.
How can a buyer who is on the waiting list know what the net price will be? The buyer of Car #200,000 pays less than the buyer of Car #200,001, right? But there is no way to know exactly where one is in the queue, is there? Even if one knew one’s position among Tesla 3 buyers, Tesla could sell S and X models at sufficient rates to put a Tesla 3 order well beyond the 200,000th car built by Tesla. (After 200,000 cars the phase-out is calendar-based; details.)
Does it simply not matter? People who are rich enough to buy a Tesla don’t care if they pay $7,500 more than budgeted?
Separately, should Tesla have set up a separate “TeslaLite” corporation to build and sell the Tesla 3? That would be good for an additional 200,000 times $7,500 = $1.5 billion in government handouts?
Related:
- “Predicting When US Federal EV Tax Credit Will Expire For Tesla Buyers”
- Economic analysis of the $3 billion Cash for Clunkers handout (NBER Working Paper 20349); mostly taxpayer cash went to subsidize people who were going to buy cars anyway (i.e., taxpayers who weren’t rich enough to buy new cars subsidized Americans who were rich enough) and the “environmental component … failed to meet its environmental objectives in a cost-effective way” (if we had wanted to cut energy consumption and pollution, there were a lot better ways to spend $3 billion)
- Free Golf Cart–But Call It A “Low-Speed Neighborhood Vehicle” (CBS); the 2009 program where fellow taxpayers, via a tax credit, would pay up to 100 percent of the cost of an electric golf cart, typically around $6,500. See also the WSJ: “The IRS has also ruled that there’s no limit to how many electric cars an individual can buy, so some enterprising profiteers are stocking up on multiple carts while the federal credit lasts, in order to resell them at a profit later.” (The WSJ also showed how out of step they were with the modern USA: “This golf-cart fiasco perfectly illustrates tax policy in the age of Obama, when politicians dole out credits and loopholes for everything from plug-in cars to fuel efficient appliances, home insulation and vitamins. Democrats then insist that to pay for these absurdities they have no choice but to raise tax rates on other things—like work and investment—that aren’t politically in vogue. If this keeps up, it’ll soon make more sense to retire and play golf than work for living.”; Obama is gone, but Congress is just as devoted to this kind of tax policy as ever!)
I don’t like the word “handout” for a tax credit, or a tax reduction, or the absence of a tax increase.
“People who are rich enough to buy a Tesla” — the Model 3 isn’t cheap by any standard, but you can get roughly two of them for the price of a Model S.
I know it catches in your throat that the government considers allowing you to keep your own money to be a “tax expenditure” – it seems to be based on the premise that the government is entitled to 100% of your income so that they are doing you a favor by allowing you to keep your own money.
Nevertheless, there really is no difference between the government giving you a $7,500 “tax credit” on a Tesla and the government saying ” pay your taxes as usual but if you buy a Tesla we are going to mail you a check for $7,500.”