There’s this concept of a “Joker origin story” that implies something terrible happens to turn someone into the Joker. It might be the failure of the social safety net, a harsh chemical accident, the murder of a spouse, or, in many versions, the Joker’s failure to become a popular standup comedian. If GM CEO Mary Barra is going to turn into the Joker it might be the Trump administration that finally does it.
Yesterday, an exclusive report came out indicating that one of the priorities in the next Trump administration is the elimination of the $7,500 tax credit for electric vehicles. Given that much of the Trump administration’s plans read like some sort of Marjorie Taylor Green fan fiction (RFK Jr heading HHS, a DOGE commission, Matt Gaetz as AG) this is another clear sign that Tesla CEO Elon Musk is getting his way.
Is this bad for Tesla? It’s a little bad for Tesla, but it’s so bad for everyone else that it could be borderline existential for some automakers. What are they going to do? If you’re Hyundai, you’re going to make your North American boss the boss of the whole darn company. Ford? I’m not sure. Ford’s in a weird position, and it’ll be about $165 million short as it has to pay the second-biggest fine in NHTSA history.
That’s enough politics for The Morning Dump. I just got the latest update on vehicle inventory and it looks like the big incentive drive Stellantis is on is finally working.
The IRA Tax Credit Repeal Is Quite The Concept
With apologies to David, I’m feeling in the mood for pop culture references. If you’ve never seen The Princess Bride or read the book, please stop now and go do one or both of those things. I think The Princess Bride is one of those rare instances where the book is better than the movie and, simultaneously, the movie is better than the book.
There’s a famous scene where, faced with a crafty but diminutive Sicilian mercenary, the Dread Pirate Roberts challenges the mercenary to a battle of wits. The pirate says he’s put a little poison in one of two wine goblets and the Sicilian will have to reason out which goblet contains poison. At the last minute, the Sicilian switches the goblets and takes a drink, assuming he’ll live.
If you’ve watched the movie you know what happens next. Both goblets contained poison, it’s just that the Pirate had built up a tolerance for it and so wasn’t seriously harmed.
This is as apt a metaphor as I can come up with for President Trump, with the support of Tesla, saying he’ll end the $7,500 federal tax credit for electric vehicles produced in the United States. Tesla’s most popular vehicles all take advantage of the $7,500 instant tax rebate and it will, likely, depress the company’s car sales. This is a little bad for Tesla. It’s way, way, way worse for everyone else.
Tesla is the most efficient electric automaker in the world if you look at the company’s margins and production and it got here thanks to years and years of government subsidies. The success of Tesla isn’t just the genius of one lone businessman, it is the genius of the American taxpayer, who has repeatedly backed the company indirectly with carbon credits and directly with loans and tax credits totaling billions of dollars. One could argue that America made Elon Musk the richest man in the world and the benefit we get, as taxpayers, is an extremely competitive global automaker who builds some of the best cars, including many in America.
This doesn’t make Tesla different or more special than any other American automaker as they all, historically, have benefited from tax breaks, loans, and many of the same tax credits that Musk got. The difference is that Musk spent that money much more strategically, first to build a bunch of successful companies, and more recently to buy immense influence with a President and a political party.
I want to be careful not to overstate the impact of the $7,500 tax credit, which prioritizes American-made cars over cars made anywhere else. Carmakers were already planning to build electric cars before the tax credit, which came as a bit of a surprise, and this planning had less to do with government incentives and way more to do with the general mania over electric cars( Remember, the initial EV tax credit, which benefited Tesla greatly, was designed to phase out after 200,000 cars). What’s important about the tax credit is that, now, in an EV market that’s slowing down, it helps keep the efforts of these companies alive.
If you’re a major automaker like Toyota, which has tentatively made electric investments but has a lot of hybrids, this isn’t fatal. You’ll be fine. If you are one of the many, many companies that use the discount to take $7,500 off a lease this hurts a lot. If you’re a company like Hyundai that uses the leases and is already pretty far along in building a plant I don’t know if you’re going to stop or go forward.
General Motors, of all automakers, is maybe hurt the most. The company was so close to being profitable producing electric cars on the backs of this discount and it going away is going to suck. I’m curious to see the guidance the company gives if this actually happens. Ford’s been planning a cheap, skunkworks electric car, but does that happen in this environment? Probably. There’s a slow inevitability to electric cars, it’s just a question of how slow it gets. You can critique companies for basing decisions on politics and government incentives, which is fair, though I’m not sure there’s a large company on the globe that doesn’t at least have to consider these when planning for the future and they’re supposed to provide stability during transition periods.
Tesla, though, thinks it’ll be fine if this happens. Reuters broke the story, so I’ll let them explain:
Musk himself pointed out as much in a July earnings call, saying losing the subsidy under Trump would “probably benefit Tesla” in the long term.
Tesla sold just under half of all U.S. EVs in the third quarter, according to data from Cox Automotive. Other automakers with notable EV sales such as GM, Ford and Hyundai, individually trail far behind. But Tesla’s U.S. EV rivals collectively have steadily eroded its market share, which exceeded 80% in the first quarter of 2020.
Nicholas Mersch, portfolio manager at Purpose Investments, a Tesla investor, said Tesla can withstand a potential sales hit from losing subsidies because the automaker’s “engineering and manufacturing prowess” lowers its costs.
“Getting rid of the subsidy means that competitors can’t catch up and won’t be able to compete on a cost basis,” Mersch said
This can’t be a surprise to anyone as then-candidate Trump said he’d do this exact thing in August.
The politics of this are extremely whacky. In spite of voting against the Inflation Reduction Act, many Republicans are quite happy with all the jobs the IRA has created disproportionately in Republican districts and states. In fact, here’s a letter signed by a bunch of Republicans in Congress stating they’ll block any reductions to tax credits:
Today, many U.S. companies are already using sector-wide energy tax credits – many of which
have enjoyed bipartisan support historically – to make major investments in new U.S. energy
infrastructure. We hear from industry and our constituents who fear the energy tax regime will
once again be turned on its head due to Republican repeal efforts. Prematurely repealing energy
tax credits, particularly those which were used to justify investments that already broke ground,
would undermine private investments and stop development that is already ongoing. A full repeal
would create a worst-case scenario where we would have spent billions of taxpayer dollars and
received next to nothing in return.
The Inflation Reduction Act is an imperfect bill that feels like only 80% of what was necessary if you really wanted to reform our car sector or make non-Tesla automakers competitive, but it was better than nothing. Pulling the plug now on this and other environmental credits is, as the Republicans themselves say, “a worst-case scenario where we would have spent billions of taxpayer dollars and received next to nothing in return.”
We wouldn’t get anything, but Tesla would. It’s as if the industry was stranded on a small island that was submerged every night by a rising tide. We all funded the building of a platform and a rope ladder to get everyone to safety and Tesla was the first one to make it to the top. Rather than try to help everyone else make it up the ladder, we’ve just given Elon Musk a pair of scissors.
For many car dealers, this isn’t an issue, but for others, the tax credits are a big deal. While carmakers have, via its trade group, pushed for a reduction in greenhouse gas requirements, which Trump has signaled he’ll give them, they’ve also largely signaled support for the $7,500 tax credit.
Could this pass? I’m not a political reporter so I don’t know.
While Republicans took control of both the Senate and the House of Representatives, they did so only narrowly and will require broad support from all ends of the party to be successful in passing legislation. If it were a matter of just repealing a bill this seems like a stretch. However, I think America is about to again be introduced to the concept of “reconciliation” which allows a lot of budget-related bills to be passed without going through the normal process. It is, somewhat poignantly, how President Biden snuck the IRA through Congress the first time.
Again, I don’t know what happens, I just know that Elon Musk said it would be a little bad for Tesla and extremely bad for everyone else, and, in this case, I’m inclined to take Elon Musk at his word.
Jose Muñoz Becomes First Non-South Korean To Head Hyundai Motor Company
In my few interactions with Joze Muñoz as head of Hyundai and Genesis in North America I’ve found him to be polite, affable, and able to explain his goals in a simple and straightforward way. Hyundai has been quite successful here in North America and it was no surprise when he was elevated to COO of the global company. It’s even less of a surprise that now, in the incoming Trump era, that Munoz has been tapped as CEO of the whole thing.
From the company:
Muñoz will oversee the execution of the company’s customer-focused vision of ‘Progress for Humanity’, building on its leadership position in next-generation mobility, including electrification, diversified powertrain offerings and hydrogen technology. He will also focus on advancing the company’s global management system to further strengthen Hyundai Motor’s status as a global brand.
It’s going to be a tough gig, but Hyundai feels like it’s in a good position relative to many other automakers.
Ford To Fork Over Up To $165 Million For Slow Recall
Ford’s on the hook for up to $165 million in NHTSA penalties for its response to a recall involving malfunctioning backup cameras.
The three-year consent order agreed to by Ford and the NHTSA includes a civil penalty of up to $165 million, which is exceeded only by the Takata air bag consent order in the regulatory agency’s 54-year history. An investigation that began in 2021 found the company didn’t recall vehicles with defective rearview cameras in a timely manner or provide accurate and complete recall information as required by the National Traffic and Motor Vehicle Safety Act.
It’s not all bad. If Ford doesn’t screw up they’ll get $55 million back and the company also gets to put $45 million of investment into making sure this doesn’t happen again.
Ram Isn’t The Worst Anymore
Stellantis has been tighter than Bill & Ted with its incentive spending this year, but that’s finally changing and, shocker, they’re selling cars. Above is the Days Supply chart from Cox Automotive showing how many days of inventory various brands have. That’s from this summer.
Here’s the new one:
Now only Jaguar is so bad that it literally doesn’t fit on the chart anymore, but Jaguar partially has to do that because it’s not making new cars for a while. Ram, while still not great, is at least not not great enough to fit on the chart!
What I’m Listening To While Writing TMD
Here’s B.B. King doing “Sweet Little Angel” live. Untouchable. It’s so beautiful he starts to cry in the middle of it.
The Big Question
Who is screwed the most and who is screwed the least in this deal? Do you think they’ll do it? Are EV incentives a waste anyway?
EV Incentives seemed like a waste all along.
But in the end how many years do we have to subsidize the BEV pipedream before it can stand on it’s own.
It could have in the late 1990s if the automakers were serious about it. They weren’t. They were adamantly opposed.
Here’s one for you: How long will we have to subsidize the fossil fuel pipe dream before THAT can stand on its own? Or exempting big pickups and SUVs from emissions laws?
I mean, I am not getting a tax credit for buying ICE, if I were then I might see your point.
You can get a deduction if you’re a business and and buy big:
https://masseyandcompanycpa.com/ultimate-guide-to-tax-write-offs-for-vehicles-over-6000-lbs-in-2024/
I am neither, but I do see the adverts for 7500 credits and what not were I to buy an EV.
I’m surprised to see Ferrari on that days supply chart with 97 days supply of vehicles. I would have thought they were so low volume and slow manufacturing that it would be the other way around.
My Polestar lease is up in March and I’m planning on leasing a Mach-E, my big question is do I do it now and suck up two car payments for a few months or count on dealers putting more cash on the hood if the tax incentives go bye-bye come January?
The $7,500 would have to go away via congressional act. That takes time to push through. Trump has some things he can do to make it go away via executive order, i.e. re classify the vehicles to say they don’t comply with the domestic manufacturing requirements, but that should also take some time
I think you may be fine to wait until March, or maybe pull the trigger in February if you’re extra cautious.
He doesn’t take office until late January, so you have some time to think about it
The 2025 Mach E gets a heat pump, so if you can wait, do so
Also to add to my other comment. Yes they will put cash on the hood, but not likely the full $7,500.
You can look at GM for a good example of that. They announced the Equinox EV before the tax credits went through and they were going to sell it for $30k.
Now they sell for $35k and the volume one sells for $42k. So you can figure they tacked on about $5k to pad their bottom line.
When GM lost the tax credit the first time, they dropped the Bolt price by $6,300. So it was close to the same, but not quite there. So I think you’re better off with the credit than without.
Ford makes a negative gross profit on the bill of goods on the Mach E. So they will resist dropping the price too much. Also, trump wants to include tariffs with his doing away of the tax credit so Mexico will likely get nailed (which is where the Mach E is made). So I suspect Ford will just discontinue it.
Thanks for the advice! And I didn’t know the 2025 was getting a heat pump, good to know!
This is how politics works. You never get everything you want. The faster people realize that the better off we’re all going to be. Don’t pass up something good while waiting for something perfect.
In the interest of avoiding too much unrelated political commentary, I will just say that the IRA caused a number of auto manufacturers to invest in US production. Killing it would be bad both for the environment and for factory workers. Do with that what you will.
Live at Cook County Jail. That’s all I’m gonna say.
Regarding EV incentives… we all knew they would go away eventually. It’s just that with Crooked Trump coming into office, it’s happening a little faster.
And this is another thing that absolutely NOBODY should be surprised about when they voted for Crooked and oil-owned-Republican Trump/
And really, if other OEMs like Nissan, Ford and GM wasted their past credits on stupid compliance cars instead of working toward building high volume BEV platforms for their next-gen vehicles, that’s their own fault for taking too long to take BEVs seriously.
If I was a legacy car maker, I would focus on supplying vehicles in segments that Tesla doesn’t yet compete in or doesn’t directly compete in.
For example… Tesla still doesn’t make a van, minivan, conventional pickup truck, convertible, sports car or a small hatchback.
And in the commercial field, the Semi is still being produced in low volumes. And that is a Class 8 truck. There is plenty of market space for other OEMs to tackle.
And don’t forget other segments like transit buses, school buses, airport shuttles, etc.
But the fact remains that there ARE companies that can successfully compete with Tesla like BYD
In light of that fact, if I was in charge of a legacy OEM in the USA, I’d be talking to a company like BYD about a long-term joint venture that would involve jointly producing vehicles and sharing tech and production facilities to get around the proposed tariffs.
Ford is doing exactly that with their joint venture with CATL. They’re currently building an LFP factory in Michigan. Personally I think that’s the best idea among domestic manufacturers because LFP is the future of the cheap EVs and others like GM and Tesla will be caught flat footed in that regard.
The rest of what makes BYD competitive is vertical integration, which automakers are slowly doing more of
“Tesla is the most efficient electric automaker in the world if you…”
…ignore the fact that they don’t give a shit about the quality and functionality of what goes out the factory doors.
There – Fixed for ya.
That trope is getting a little old, don’t you think? You don’t have to be a Tesla-stan to see plenty of Tesla owners that drive around day in and day out in their Teslas and seem to be just fine with them. If you stop and ask some of them (perhaps the next random five that you see in the grocery store parking lot or at the gym or in the school drop off line or maybe even on your own block) what they think, they generally like their cars and don’t find major fault with them from either a quality or a usability standpoint. No different than whatever Toyota or BMW or Hyundai they were driving before.
The point that was being made is that EVERY other automaker had the same exact opportunity to actually move forward and develop and build electrics. Instead the vast majority stood back and said they could build compelling ones whenever they wanted and with their “decades” of experience building cars they would be better than Teslas and still be standing when Tesla closed its doors. It didn’t quite turn out that way despite Musk’s best efforts, especially recently, to literally turn the buying public against him and his products.
Just because someone continues driving a depreciating asset that would cost them significant amounts of additional money to replace doesn’t mean they’re content with its build quality.
https://www.topspeed.com/tesla-reliability-and-repair-costs-the-true-story/#:~:text=J.D.%20Power%20and%20Consumer%20Reports,mechanical%20issues%20per%20100%20vehicles.
https://www.teslarati.com/tesla-placed-bottom-consumer-reports-reliability-rankings/
Other automakers being slow to the EV game does not give Tesla a free pass to continue pushing poorly engineered/constructed vehicles to the market.
Unless you’re a Tesla-stan.
And yet Consumer Reports actually recommends Teslas, not sure how one squares that, something is clearly up with their methodology. Or perhaps it’s just the limited “reporting” by others aggregating content for clicks/eyeballs without context or a full explanation, just a clear realization that for some reason negativity sells. Toyota on the other hand are lauded for reliability and durability and they are generally fantastic cars. Until they aren’t such as with the Tundra engines currently in the news and other issues over the years just like every other manufacturer.
The country just realized again less than two weeks ago that polls and surveys often are clearly inaccurate and don’t paint a complete picture. My advice to anyone would be that perhaps less reading and relying on others’ findings that may have an agenda and instead looking around for oneself would be useful. Form your own opinion instead of just regurgitating someone else’s or even worse, taking advice and reading links provided by someone you’ve never met, don’t know their actual name, and certainly don’t know what their agenda is.
“Form your own opinion instead of just regurgitating someone else’s”
So we should all buy all sorts of things on our own without regard to the opinions of people who have more experience at these things than we do?
I’ll remember that when I shop for something on Amazon, etc – because who cares about those pesky negative reviews?
That mindset pretty much eliminates the purpose of sites like this too – doesn’t it?
*facepalm*
You missed the point. The point was why would or should someone listen *entirely* to the opinion of one other person or site. Or only to negative reviews. Or only to positive reviews for that matter. I note you posted two links to posts that both referenced the same third party. I didn’t see you post a link to someone who actually liked the product, but I can assure you those links DO in fact exist. You didn’t link to the part of the same Consumer Reports report where they recommended the cars, only to sites regurgitating their negative words. A million Model Y owners can’t all be wrong, they just may prioritize things differently than you (or me).
You are too busy hating on Tesla (which is fine I guess, whatever) to even consider the fact that perhaps there is another point of view, that there may be contrasting opinions, that just maybe there are some things that the cars do well or better than anything else out there. As a sidenote this isn’t necessarily about Tesla, we could just as easily replace Tesla with Nissan or RAM or any other product in this discussion, I just haven’t seen you pontificate about those in this thread but you likely have opinions there as well.
Sites like this are basically *entertainment* (which is fine). David is an engineer, and he can talk about some aspects of cars very well. Jason is into oddities and does that very well. Mercedes likes different kinds of oddities and so on. It’s fun to read about their projects and experiences. None of them (and very few people in the blogosphere as a whole) have much if any training in how to properly or comparatively evaluate a vehicle and discuss the nuances in enough detail to make them valuable enough to rely on to actually purchase a vehicle. Matt seems to like his CR-V, does that mean you or I should run out and order one without even driving it or looking at it? No, our own opinion may be very different. In fact he probably liked the Subaru that he came to loathe when he first experienced it, seeing as he plunked down his money for it. We should perhaps look at a CR-V like Matt’s if we are considering something in that space and compare it to what we like and other vehicles to see if our tastes and opinions match those of someone else that we do not know personally or even have any idea of what drives them or their opinions. In fact I did just that with my mother-in-law last month – she thought the CR-V in Hybrid form with leather was alright but could not get over the orange accents in the cabin of a dark red car. So she picked something else. I’m glad she didn’t just order one sight unseen, Matt (and plenty of others) seems to be fine with those accents, opinions are like, well, you know, everyone’s got one…
Anyway, that’s enough of that, time for me to move on to more productive things, but living one’s life by exclusively looking at or blindly following other people’s opinions seems somewhat limiting. Form your own opinion based on your own senses and *balanced” research instead of just what you read on the internet or watch on youtube or your favorite news channel. Everyone has an agenda and biases that may or may not match your own. Have a great day!
“None of them (and very few people in the blogosphere as a whole) have much if any training in how to properly or comparatively evaluate a vehicle and discuss the nuances in enough detail to make them valuable enough to rely on to actually purchase a vehicle.”
I hope you’re joking.
They all have plenty of experience and I would trust their word over anybody else’s. Also, Hondas are the most reliable and best vehicles there are in my opinion…and the CR-V is great and it’s proven- yeah, the hybrid is new but he hasn’t had any problems yet.
Also, Tesla is a joke, Melon Husk is a dipshit and should be in jail w/ Trump, and all EV’s are TRASH…gasoline forever!
Easy; the consumer and taxpayer gets screwed “as it was in the beginning is now and ever shall be world without end”, amen.
I’m not so sure that the other OEMs are as screwed as Musk would lead you to believe. Certainly in a world that is dominated by EVs but that is very much not the reality we are in nor the one the next administration will pursue. Sure EV sales will take a hit but they are just as likely to go buy a ICE Blazer instead of a Model Y if they can’t get the EV tax credit. Others appear to be making serious progress on the cost of EVs front as well. Ford is fast tracking an affordable EV, Kia/Hyundai have a few on the way, the Equinox EV already on sale is cheaper than anything Tesla makes and GM has an even cheaper Bolt (Bolts?) on the way soon. Are we just taking Tesla at their word this is good for them and bad for others? Elon could be making a critical mistake with this. His thoughts probably don’t actually matter as the 7500 tax credit would have likely gone away under Trump anyway.
TLDR: I’m not sure this is the boon for Tesla Musk keeps saying it is.
THIS
The credit is artificially inflating EV purchases beyond what the market would naturally support. Removing it hurts EV sales and probably shrinks the market (compared to what it would be with incentives), but those sales don’t disappear, they’re just non-ev sales now.
So, anyone that offers both will have some offset. Anyone who sells EVs only will see it go away completely. Who is worse off?
Not to mention, when a market contracts it’s the entity with the largest market share that gets hit the most (in absolute dollars). And that’s Tesla.
I don’t believe a thing Elon says, he’s just pumping stock.
Tesla sells its EVs worldwide, not just here with the $7500 rebate. They did just fine the last time the rebate went away. They’ll likely do fine when it goes away again. The others will either magically reduce their prices by $7500 or perhaps if they sell seven pickups for each EV they will just raise those prices by $1100 or so each to compensate. Why can’t an F150 cost $51,000 instead of $50k, who even notices anymore? (and that’s a cheap one!)
Tesla is likely the only one currently selling their EVs at a profit. And note that not everyone buying an EV actually qualifies for the credit (or the full credit). As prices for EVs come down, more and more people will be able to afford them, and not everyone that can afford them has $7500 in federal tax liability.
I’m no fan of Musk the person but I’m not going to put up much of my money betting against him. Historically that hasn’t worked out too well for those that have.
I think Tesla will be just fine. I just don’t think the credit going away is going to be such a boon for them as the liberal media seems to be playing it up. I think if you look solely at EV sales Tesla will fair the best… but for the large automakers EVs are such a small portion of their book of business it is likely to affect them much less overall.
> those sales don’t disappear, they’re just non-ev sales now.
I don’t know about that. The incentives have pushed some people to make the jump to EVs sooner than they might have otherwise, because their ICE car is still good enough. So I suspect there will be net losses (or shortfalls) in overall car sales (EV and ICE) as people simply delay their EV transition until their current ICE car stops being good enough.
Add to that the fact that people’s pocketbooks will be ravaged by the upcoming administration and I expect the next two years to be pretty lean in terms of new car sales if the subsidies go away.
That’s possible. But people tend to stick to the same buying cycle for their cars unless there are larger economics at play (like a recession). I don’t recall any broad statistics saying it was different for EVs outside of the early tech adopters.
I think most of the early adopters are in EVs already which is part of the reason why the market is softening.
Agreed on sales potentially reducing.
I might have bought a new EV in a couple years, but if the deals aren’t good, I’ll just keep the one I have. I’m simply not going to buy a gas vehicle to replace my EV.
Not that I’m anti-ICE, either. I still have a manual hot hatch. But for daily family hauler use, EV is simply far superior to gas for my use case.
It will be a boon to Tesla when CARB mandates for EVs begin kicking in about a year from now, and, who won’t be able to come even close to meeting the requirements? Toyota. Toyota will have to spend a lot of money buying credits in order to keep selling cars in CARB states. And who will have lots of credits to sell? Tesla. Obviously it’s not just Toyota and Tesla at play here, but, cancelling the federal tax credit would have a huge impact on the value of EV credits. Sure, Tesla might have fewer of them to sell with smaller sales numbers, but, I’m pretty sure their credits would be massively more valuable, because they’d be nearly the only ones with any to sell.
Toyota will spend $0 on credits because CARB will no longer have the ability to set different standards than the rest of the country
I think he’s saying that because Tesla has the ability to drop the prices on their cars due to the high profit margins. Considering Ford is negative profit on their current generation, and GM is about equal, those guys don’t have much room to drop prices
What worries me most is wondering how GM is planning to import LFP batteries for the Bolt instead of building a domestic factory for them like Ford is
My takeaway from the Musk story is that the last 2 years have been physically rough for him, he looks so much better in that stupid Twitter sink pic than he does now.
I scrolled back up to look at that photo as well, like dang he looks terrible now
13 active FBI investigations will do that to you.
That’s what a highly paid legal dream team is for. When you’re super rich and your buddy is the president investigation doesn’t necessarily lead to conviction.
Wait, Musk is actually paying his legal team now? That’s a first…
Well his word is good as gold right?
Absolutely. I’m sure after last Tuesday he’s never slept better.
I don’t know if he sleeps given the amount of stimulants he’s obviously on.
According to people “in the know”, that’s what you look like when you take HGH and gear but never actually workout.
Drug addiction will do that to a mf
“Are EV incentives a waste anyway?”
I don’t know about a waste, but I’m not a fan of EV tax credits in their current form so I have mixed feelings about them going away.
I like that the credits subsidized EV development while giving the appearance of subsidizing purchases for consumers. It was a clever way to avoid the negative publicity that comes with handouts to corporations. I think it was reasonable to subsidize EV development, so I like that politicians found a politically palatable way to create these subsidies.
While I like that EV development was subsidized, I am concerned these subsidies brought EVs to the masses prematurely. EVs are still best for early adopters who will know and understand their limitations. I have talked to several EV owners who were disappointed with charging time, charger availability, and range, and as a result have or intend to switch back to ICE vehicles. It is hard to see these people considering another EV any time soon. EV tax credits might have helped sales initially, but I wonder if these credits might have hurt EV adoption over the long term?
Also, I don’t like the income limits. If it is important to replace ICE vehicles with EVs for climate reasons, why limit who can get the credit? Emissions from wealthy drivers are just as harmful as emissions from middle class/working class drivers. The income limits disincentivize EV purchases for wealthier buyers who might otherwise want them.
Plus, the income limits were too low. $7,500 is a non-trivial amount of money for many buyers who were ineligible for the credits. A single person making $150,000 is not the same as a billionaire. Having to pay $7,500 more for an identical product is enough reason for me to not want to buy that product, even if I can realistically spare $7,500.
The income limits for used EVs are even worse. For those above the limits (which may be the majority of single individuals shopping for an EV in addition to a substantial fraction of married individuals), it is hard to tell what price you are going to pay for a vehicle. Deceptive advertising is common in car sales, but advertised prices for used EVs often have no relationship to the price you will actually pay (worst example I saw was a $13,000 advertised price with a final price tag of $29,000). Shopping for a used EV is so frustrating I could see potential buyers opting for an ICE vehicle instead.
Overall, I don’t think the EV tax credits were a waste. I’m just concerned the implementation of the tax credits might have turned a good thing into a bad thing.
You said it much better than I did. I agree with everything you said!
As with all policy, it’s crucial to judge a program by its outcomes rather than its intentions. You point out some very valid considerations!
I like your points. To add to the income limits, higher income individuals are more likely to have a less efficient ICE car so it would be even more prudent to get them into a zero emissions EV, instead.
higher income individuals are more likely to have a less efficient ICE.
Where do you get that from? Most rich people I know drive 1-3 year old cars. Much more efficient then the 10-15 year old cars I drive. By a lot.
Unless you are suggesting that all rich people drive Gwagens or something.
Yeah, I think this talking point is a bit out of date.
Sure, an S class or Escalade isn’t very efficient, but a rich person these days is just as likely to drive a Tesla or a modern hybrid.
Lower income people don’t drive new compacts, they drive old and inefficient SUVs.
There’s been a lot of efficiency gains in the last 10-15 years.
My dads silverado gets close to the mpg of my 15 yo malibu. It’s surprisingly close.
Just imagine what kind of efficiency a 15 year old Silverado with a new, more efficient powertrain of similar power ratings as the old one would be?
Because of the slightly smaller size & weight and far cleaner-aero styling of the 2009 Silverado – I would wager it would be a fair bit more efficient than a new Silverado.
I actually think it would be worse…
The 2024 Silverado Crew Cab drag coefficient is less now.
.38 compared to .41 back in 2009.
They do a lot more to engineer the airflow nowadays.
Also, a 2024 Crew cab LT (4wd) is 5010lbs today and 2009 was around 5,300lbs.
So, it looks like they were actually heavier back in 2009.
I’m not sure about size. The size that matters for efficiency is frontal area. But the drag coefficient already considers frontal area.
“A single person making $150,000 is not the same as a billionaire.”
For that matter, a single person making $150K in Los Angeles is not the same as a single person making $150K in Central Virginia.
The income caps are only to try to mitigate the cries of ‘it’s a handout for the rich!’ It’s bad and counter-productive, but, it’s political reality in a poorly-educated populace that image matters, and EVs are already seen as ‘rich-people playthings’ by a lot of people who will never be able to afford a new car. I agree wholeheartedly – someone making $150k should not be buying an $80k vehicle (or even a $55k vehicle), and it’s similar for the used credit – a $25k vehicle is probably ill-advised for most people making under $75k. But, I understand why the limit is there.
The Marjorie Taylor Greene fan fic comment is pure political commentary and brings nothing to the car discussion and questions/concerns raised by the incoming President and Co.
Political commentary that does not progress the automotive commentary I believe crosses the line of where the Autopian has stated it wants to be. Political comments should only be here when necessitated by the actual automotive news.
We had a whole long conversation about that specific line and my point in mentioning that is to point out that this is part of a long list of items that Trump indicated he might do that some considered were maybe hyperbole. News commentary is about context and while not debating the merits of any of President Trump’s choices, which mostly don’t impact car enthusiasts, I think it’s important to put them into some sort of perspective.
We can agree to disagree that the line goes beyond context and becomes opinion commentary. I appreciate the line was given discussion before publishing.
We can also agree to disagree that pointing out that MTG is batshit crazy is not opinion commentary.
I never said she wasn’t… her crazy is what makes my point.
Ms. Jewish Space Laser being batshit is a 6-sigma fact.
I will say, that sentence also stuck out to me as much more of a political opinion than context and I was also surprised to see it included. My measure of “getting a little too political” is if someone can clearly tell where I sit on the political spectrum with the comment, maybe it’s too far. It’s a funny line, but it’s political opinion.
Ok, noted. For me, it’s sometimes easier to just shorthand things with a joke or a wink than to try and spell them out, but I don’t want it to be a distraction.
I think it’s fine and good actually that we call out crazy when we see it. She is not a normal person, member of Congress or otherwise. Her beliefs are legitimately unhinged and not based in fact.
The original line was “MAGA fan fiction,” which I didn’t like, as that term is a pretty loaded one. Perhaps this wasn’t an improvement.
Maybe the move in the future is to just to discuss political things in a straight up manner (basically what Matt wrote in his comment here) instead of trying to be silly with it.
We’re doing our best, and we’ll work hard to continue improving how we handle such topics. Thank you for your feedback.
(For the record, I personally don’t care about any of this. Not that I don’t recognize its importance, but I just find it boring, especially compared to cars. Glorious, glorious cars).
Thanks David. I dislike politics because they are so heavily loaded in today’s America. So I’m with you, cars glorious cars.
I get your point and agree, mostly, but there’s a line between being thoughtful and considerate so as not to alienate some of your readership, and being too thoughtful in an attempt to placate a section of the readership who doesn’t deserve it.
The MTG line should have been phrased differently, because mentioning MTG draws attention away from the point being made by needling readers all over the political spectrum. But Matt shouldn’t be faulted for pointing out the new cabinet picks are wildly incompetent, because it’s obvious on its face. Entertaining the idea they will be any less than a disaster isn’t “fair and balanced,” it’s dumb, and I’m glad the editors aren’t trying to.
I’d like to see the credits decrease and be phased out in a predictable manner as battery prices drop and development costs are covered. Yes, the incentives sell more EV’s, but the credits go to people that I would say are mostly middle class and up. It’s taxpayer dollars and printed money that we are all paying for. I also never liked the original plan that had caps per manufacturer. It should have been a cap for the industry so it encouraged competition for those incentives.
The one I want to see go is the incentive on leases for all EV’s and not just the ones with enough US content. This should have been corrected to apply to the same cars that the purchase incentives go to.
I’ve bought 2 used PHEV’s so I benefited indirectly from these incentives in lower prices for my used cars, but I see little benefit personally with buying a new EV regardless of incentives.
Permit me a rant:
The whole point of spending my money on this website was to provide a measure of escape from the realities of the rest of the world. To enjoy David Tracy and Company’s various actual car enthusiast postings. I want a happy place where I can read about a man who is living in the back of a Pontiac Aztek, because this is what I came here for.
Yes, government will continue to do its thing with the automobile industry. I accept this. The daily machinations of government policy – however tedious – will continue to be news, because content is king in the land of the internet news cycle.
This is a business. I understand that. You need engagement. I’ve seen what this model does when taken to its logical conclusion. I tolerated the continued presence of the other man’s face pasted all over this site because he at least nominally runs an actual car company (though I wish you could do to him as you do to pictures of Carlos Tavares).
Which is to say (excuse the language):
If I have to look at that fucking man’s face daily for the next four years in a place where I come to escape the unpleasantness of whatever larger machinations are going on in the world, I will not be renewing my subscription.
Best regards,
My Other Car is a Tetanus Shot.
OK, we’ll remove the face from the topshot.
We didn’t include it there for engagement (in fact, I had reservations about it, and should have voiced them), but we figured it made sense given the topic.
But we hear you, and we’re ditching his mug here and in the future.
Amazing replacement topshot.
But the original smiling face did look like he might have been making a morning dump. The new topshot is great though.
Thank you!
Have you considered skipping TMD, while enjoying the rest of the site?
Howdy!
A rebuttal:
I understand the various editorial tensions that exist and am sympathetic to those, and there are legitimate issues to be discussed in the automotive sphere with respect to government.
A deep (perhaps unfair) cynicism pervades in myself with respect to how other websites that have gone down this path have turned out. Fine if I’m not contributing monetarily (hey, free is free), but as a contributing member, feedback as to what I enjoy about this place (or trends I dislike) comes part and parcel. Especially since this website made the conscious decision to be founded under a mantra of a more positive view on automobile enthusiasm.
Given the current state of political discourse, I do not view excessive political association as a positive to discourse on the topic. I want to still like cars for cars. I like the writers here, and want to continue supporting their endeavors in supporting automobile enthusiasm.
I accept that the man is President-Elect, elected fairly. And if that stayed in the political realm, I’d let it go. But sadly, the intrusion of politics into realms beyond seems almost ubiquitous, and fairly exhausting. Would we put George H.W. Bush’s mug paired with an ’89 Ford Taurus SHO on the top shot, had this website existed in 1989?
However, I am glad that this website does respond to its members’ concerns and thank both yourself and David for that.
Cheers,
My Other Car is a Tetanus Shot.
Ultimately, we want as many people to enjoy our stuff as we can so I don’t want to do anything that necessarily limits that. Also, a version of this site in 1989 would have had like 20 topshots with Ford Taurus SHO in it. We’d have been so psyched.
“He’s the President, you’re going to see his face! It’s unavoidable.”
Not quite yet.
And while his face may be on TV from time to time – I can always change the channel or turn it off.
In the words of Phil Collins, “Turn it off if you want to, switch it off it’ll go away”
I know our friend Phil is a little controversial as well.
If the whole credit is wrecked, I can see Kia/Hyundai doing pretty well if they want to, since they’re getting into the affordable EV game pretty well. If the leasing loophole is all that’s closed, they’ll be in pretty rough shape until they move production here.
I mean, Hyundai/Kia is part of a massive conglomerate, I think of all the manufacturers they have the capital to weather the storm, and with their focus on affordability and making good vehicles for the masses it seems like they could be very, very well placed to win. Maybe even more than Tesla, since they also have ICE models to take up the strain.
That’s a good point. I definitely shouldn’t be pretending their EV wing operates in a vacuum. Even if they could no longer sell EVs in the US, it would hardly hurt them overall.
Biden already nerfed the incentives when he insisted they be giveaways to the auto unions. This signaled that politics was more important than the stated goal of making our transportation sector more sustainable.
If the Democrats don’t really care about EV adoption, why should anyone?
You are severely misinformed on how the IRA credits have turned out to work.
Yes, a loophole was invented to undo the damage that ended up helping many EV makers of all nationalities, regardless of what labor force made the cars or which mine in China dug out the lithium.
This just makes the whole thing even more cynical. The politicians get to take credit for saving union jobs while funneling money to Korea and China.
So you’re saying it’s bad when they do X, and bad when they do 1/X?
I am saying that truth is important and people aren’t stupid. When you sell us X and then do Y, people notice and it undermines credibility and gives your opponents ammunition to torpedo the whole thing.
People wrote off the EV credit as a union giveaway because no one sold the vision of a clean, energy independent future and why what would be a better country to live in.
I like EVs, I believe they are more sustainable, and I think they are the future. If I had a good use case I would buy one. Stuff like badly targeted incentives just muddle the message.
I have read a lot of crank complaints about the IRA but the only person who wanted it to be a union giveaway was Joe Manchin, and the Biden administration did an end-run around him.
*raises hand* I did in fact want it to be a union “giveaway.” Unions are a net positive for Americans, regardless of their individual membership.
Actually, Manchin was against the Union requirement because Toyota has a non-union builds engines/transmissions in West Virginia.
I think he just generally wanted to reduce the credit’s effectiveness, but he was publicly against the union “bonus” credit.
Sorry to be the one to tell you think but most people are, in fact, stupid.
…as proven by two Tuesdays ago.
And Altima drivers.
It’s about creating domestic jobs as much as it is about climate change. With his focus on workers, he wanted to ensure those jobs were well paying. Neither of those are bad goals.
If the last four years of GOP-led House has taught us anything, it’s that their slim majority means very little. It only takes a few dissenters to thwart their plans, and there are 18 that signed that letter. The GOP may have gone batshit crazy lately, but there are still a few that have their heads on straight enough and value their jobs enough not to piss off their constituencies. Those guys are up for re-election again in two years.
Yes, but see my comment below: most EVs get a tax credit that can be eliminated by administrative action alone.
It also can’t be underestimated that Trump is now technically a lame duck and his endorsements have not always carried weight.
It will be interesting to see who starts looking to a post-Trump future. 2/3 of the Senate doesn’t face election until he’s gone. I’m cautiously optimistic that some of his insane nominations will not get through.
All this is to say, voting down the IRA, with its tangible benefits to red states, is hopefully not in the cards, no matter the rhetoric from on high.
The best thing about Trump getting elected is that it will never happen again…
Or will it? AHHHHH.
Anyone who actually thinks the Constitution will be amended to allow Trump to run again, or that enough of the civilian and military leadership would allow any type of scenario that keeps him in office in spite of the Constitution are not worth listening to IMO.
There are enough reasons to dislike the man or fear for what he will do/allow others to do while in office without resorting to paranoid fantasies.
If he can figure out a way to do it, he will. He has already broken laws and done things he “shouldn’t” be allowed to do but they just let him do it.
I’d be willing to bet anything I own that Donald Trump will not be the president on January 21, 2029.
Amen.
That’s good, because we’re betting the future of the country on it so I’m glad you’re cool with high stakes.
Personally, I’ve said “He can’t possibly get away with that” and been wrong so many times over the past 8 years that I have no interest in betting on anything.
I get that, and I’m not exactly thrilled about many of the things I expect to come to pass the next four years, but there’s an enormous difference between:
“violation of a long-held norm”, or
“uncharitable interpretation of existing law”, or even
“violation of a somewhat minor/arcane point of law”
vs.
“violation of the clearly worded text of the Constitution and direct challenge to representative government”.
It’s unfortunate that we’re in a place where the distinction needs to be parsed, but I think it’s important to be honest and clear-eyed about the threats that are real vs the ones that aren’t.
Even the viper?
Anyone who actually thinks the Constitution will be amended to allow Trump to run again, or that enough of the civilian and military leadership would allow any type of scenario that keeps him in office in spite of the Constitution are not worth listening to IMO.
I’d never have thought the Capitol building would be stormed in exactly that scenario but it happened.
There’s already been significant pushback on Gaetz’s nomination and the request to allow recess appointments. That’s akin to asking the Senate to give up one of their favorite powers as a favor. Getting powerful people to voluntarily stop being powerful is a big ask, and is unlikely to happen.
“value their jobs enough not to piss off their constituencies.”
As far as I can see from the news, their constituency has for the most part been reduced to one person, the one at the top. They can do whatever to the population they supposedly serve and when re-election time comes, the guy at the top will issue the command for whom to vote and the people will follow. Watch the upcoming senate confirmation hearings, if there actually are any.
Reconciliation has to be neutral to or reduce the federal deficit, among other things. The Republicans gamed the system by making the Congressional Budget Office, which determines what qualifies, use “dynamic scoring”. That assumes that tax cuts pay for themselves. Historically, this has not been true.
That said, watching these incoming majorities in Congress work to get anything done will be like watching a pie fight. Everyone gets pied and nothing ultimately gets done.
Gridlock is frequently the best possible outcome for most of DC.
Well GM blew the initial tax credits on marked up plug-in Cruzes(the Volt) and Tesla used theirs on the Model S so…., who’s fault is that? Not fanboying just saying they had their early start and blew it. That the IRA passed and granted more credits was a little surprising when it happened.
But I think this may be healthy as depreciation on EVs is horrible, and part of that is the $7500 off plus any local state incentives right out of the gate. So in 3 years when you’re looking to sell you’re fancy $50k EV with all the fanciness and it’s depreciated down to $20k, did you really save $7500?
Leases it helps but those were working for all car makes not just US built ones, which wasn’t the point of the IRA either.
Let’s not start hating on the Volt. It was a fantastic car and a decade ahead of its time
I’m not hating on the Volt, I had a 2013 and it was great, and the drivetrain really advanced for it’s time. I’m more hating on GM’s bottom-up approach to expensive electrified vehicles, same with Nissan. The time to sell expensive electric cars was 10 years ago, there were credits, you had the rich eco-warriors and early adopters that were lining up to get the Model S. A 4-door ELR would’ve been the move to make, maybe not a Cadillac, maybe as like a Buick Electra, kind of mid-way between the ELR and Volt.
Stellantis is the most screwed on the PHEV credit front, but I think GM and VW are most screwed on the EV specific credits. GM has had such a tough time with Ultium (no longer her real name) rollout and scalability, that losing the credits that make their cars great lease deals or new purchase options will absolutely throttle sales. Seriously, the only reason Lyriqs seem to be moving is because at $399-499/mo with less than 3k down on a 2-3 year lease, they beat out Rav4s on price. Take away the tax credit and GM will go from losing a bit of money on each unit to losing 5-figures per car. It can be absorbed for a little while, but not indefinitely.
VW is screwed because it’s US sales are already poor, corporate is pushing for an EV only future with no Hybrid models available, and their EV lineup is so poor that without any tax incentives, they WILL sit until heavily discounted by VW themselves. VWs product mix now and forecasted for the future is already struggling, and could not absorb the implications of tax credit hits.
Hyundai and Kia will lose out a bit, but not massively. They’re clearly already content with incentivizing their vehicles on their own, matching the 7500 tax credit for purchases on their own, albeit while still pushing lease deals that are federally subsidized. It would be a hit, but the company is doing well enough with EVs, ICE and Hybrids to be able to absorb it with minimal pain.
Ultimately, the general public will be the hardest hit by far. A loss of tax credits will make EVs far less competitive than they currently are, and many states have hard EV sales mandates that will be impossible to hit. Those will be stubbornly enforced regardless of incentives will cause new car inventory in a large percentage of the US to be a complete blood bath, and certainly drive inflation back up.
Yes, the general public will be hit the hardest – followed by dealers. Bargain hunters have been picking up new EVs on the cheap for a few years while everything else got eye wateringly expensive. Taking that away will be a punch in the face for new car volume and affordability.
“many states have hard EV sales mandates that will be impossible to hit.”
Based on being forced to endure 1000s of political ads in Michigan over the last few months, a vote for Republicans meant a vote to take away the ability of other states to set EV targets.
There are basically two different tax credits:
That is to say, if #2 goes away but #1 stays around due to Congressional resistance, it benefits Tesla more than everybody else even more, but it doesn’t screw over GM or Ford quite as much.
yeah, for sure, that’s a great point.
I think Hyundai was operating on the assumption the lease credit wasn’t going to last forever which is why they pushed to get their most popular EVs made in the US.
Right. Hyundai is in by far the best position of the foreign automakers but they still have a shit-ton of Ioniqs on the lot that need the lease credit.
Keep in mind, too, that just making the cars in the USA doesn’t qualify the car for #1. It needs a certain amount of North American content and can’t exceed certain levels of Chinese/Russian/DRC content. Also, it has to be under a certain price ($80k for SUVs). So the MB EQS and EQE SUVs, along with the Polestar 3 and Volvo EX90, are all made in the USA but don’t qualify for the credit. The levels of content are designed to get stricter over time, but it’s possible for the new admin to make it stricter really fast.
I don’t understand how this is good for Tesla overall. Removing the credits makes ICE more cost advantageous, which are still 85% of the market. It might hurt GM’s EV sales but they still sell a lot more ICE cars than Tesla sells EVs. On the other hand, Hyundai/Kia currently do not get any tax credits for their EVs so I would imagine their sales trajectory would stay pretty similar to how it is now.
Hyundai/Kia gets the tax credit if the vehicle is leased. Most of their EVs are therefore leased.
Why does so much of this feel like the last season of Veep?
Credits are not a waste. They are a driver of industry. I see them as very similar to the per mile payments to the railroads that made the transcontinental connection happen. Would there be a transcontinental railroad without them? Yes, it was inevitable. The credits made the construction feasible much, much sooner than it might have been otherwise.
Oil subsidies on the other hand: Huge waste.
Agreed 100%.
Most screwed? Stellantis.
lol, easy answer. It would be the same if the question was “what if the government gave everyone who bought a Dodge $5000 and a puppy?”