How do you guys think EV sales will fare after the tax credit ends?

"LJ909" (lj909) 12/16/2019 at 18:54 • Filed to: Electric car sales, EV Tax Credit

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A Tesla store in Century City

I’ve been thinking about this since its set to expire soon. Some states have their own that can be used along with the federal credit. I know here in California its about $2k. But I do think that when it expires it will affect sales. I always thought it was problematic to offer an incentive to get people to buy EV’s as it could artificially prop up the market sales wise. In repose to this, !!!error: Indecipherable SUB-paragraph formatting!!! So how do you guys think sales will be after the credit expires ?

TheTurbochargedSquirrel > LJ909 12/16/2019 at 19:10

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Tesla’s seem to still be selling quite well despite their tax credit going away early this year. I think they will be just fine.

Jesus Arias > LJ909 12/16/2019 at 19:11

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I feel like EV’s will take a hit. I mean EV’s are expensive and without the federal credit along with the rise in price (on Teslas), I feel like people may think it’s too much for an electric car.

ZHP Sparky, the 5th > LJ909 12/16/2019 at 19:14

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Is there a cliff after which all federal credits will no longer exist, or are we talking about the $7,500 credit gradually decreasing after a manufacturer reaches certain sales volumes? I’m assuming it’s just the latter right?

I think certain companies who’ve been pretty bad at selling their (even good) EV/PHEVs will just exit the market and nobody will really miss them (read – Chevy) unless the entire industry jumps on the EV bandwagon and they feel like they need to go along for the ride – which seems to be what is happening. From a consumer standpoint there seems to be enough interest, at least in certain niche areas to keep buying these things – for example Tesla with the brand name, and the traditional “Prius drivers”.

That baseline demand (which admittedly isn’t that huge) combined with a whole bunch of more interesting offerings to the market over the coming years (who will have the luxury of the EV credit for a few years to come as I understand) should keep the industry going until it is mature enough to stand on its own say in the 5-10 year range when most manufacturers seem to think they will have a whole host of EV offerings (hopefully economies of scale and battery tech improvements help bring costs down while helping with range issues too).

A lot of moving parts but I don’t think it’s something that’s just going to suddenly disappear as brands start losing their eligibility for federal credits.

SilentButNotReallyDeadly...killed by G/O Media > LJ909 12/16/2019 at 19:15

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You’ll probably find that it makes little difference as your incentives aren’t that big a percentage of the total cost. Which mean there won’t make a massive difference in monthly repayments.

We don’t have any incentives or subsidies on EV cars here in Oz and what is holding them back sales wise is really the lack of supporting infrastructure rather than the actual cost of the machines.

Though the vehicle distributors would love an incentive so they could add it to their profit margin...

facw > LJ909 12/16/2019 at 19:17

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Obviously there will be some impact, but clearly there’s still demand for Teslas even though their federal tax-credit has plunged from $7500 to $1875 this year.

More to the point, global warming isn’t going away, so ICE vehicles are going to have to get more expensive or go away altogether. I mean we might do nothing, but even then we are going to be looking to fund vast flood prevention measures, an fossil fuels will look tempting. Granted that’s farther off, but at some point we are going to go to alternative fuels.

LJ909 > Jesus Arias 12/16/2019 at 19:18

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This is how I feel too. Sticker shock might set in for some. Tesla should be ok though.

superdave847 > LJ909 12/16/2019 at 19:21

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Probably the same. These are leased Luxury status symbols—not fuel economy focused thrifty buyers.

If sales were driven by the latter,  Chevy Bolts and Nissan Leafs would make up the majority of the EV sales.

LJ909 > ZHP Sparky, the 5th 12/16/2019 at 19:24

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Yea I was referring to the latter.

I think outside of Tesla, a bit of sticker shock might come into play. Especially if automakers keep making EV’s small hatchabacks. Those will just go away like you mentioned.

The next few years should be interesting for EV sales that’ s for sure.

fintail > LJ909 12/16/2019 at 19:25

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Minor impact for premium products, more of an impact on the mass market.

It really breaks my heart that the hardworking boostrappers laying down 100K+ on a Model X minivan won’t receive the ridiculous tax gifts forever.

LJ909 > facw 12/16/2019 at 19:28

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Yea but outside of Tesla is what I’m worried about. Everyone’s jumping on EV’s to try and outdo Tesla and its not working for everyone. Just look at E-Tron and I-Pace sales.

The bigger problem that I keep bringing up though is that no one is addressing the lack of investment in charging infrastructure. And to some, that means just simply building more chargers so they are accessible to everyone. But the bigger picture is that we have to have a proper grid to support all these chargers both at home and in the public. Hell we cant even keep the lights on here in California when there are high winds and wild fires. We most definitely need a better grid IF this EV change is supposed to happen.

boredalways > LJ909 12/16/2019 at 19:32

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There’s no organized recharging infrastructure or a universally accepted charging connector standard. So, I think EV’s will go through a self inflicted extended hiccup with or without the tax credit.

In other words, China, Japan and Europe (minus the UK because Brexit) will get their shit together quicker than North America.

jimz > LJ909 12/16/2019 at 19:33

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I don’t think it’s so much about the tax credit, rather it’s about how big the market for EVs is outside of the Elon Musk Fan Club.

TheTurbochargedSquirrel > ZHP Sparky, the 5th 12/16/2019 at 19:35

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There is a staged loss of the federal tax credit. At 200k vehicles sold the companies tax credit is halved and then two quarters later it is cut to 25% and then two quarters after that it is gone completely. Tesla’s phase out started on January 1st so their tax credit is gone completely in 2 weeks.

IRS page on EV tax credits: https://www.irs.gov/businesses/plug-in-electric-vehicle-credit-irc-30-and-irc-30d

TheTurbochargedSquirrel > TheTurbochargedSquirrel 12/16/2019 at 19:36

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Correction: Tesla’s phase out period started on January 1st. Their tax credit is currently $1,875 until it goes away completely at the start of 2020.

SilentButNotReallyDeadly...killed by G/O Media > LJ909 12/16/2019 at 19:37

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Imagine a electricity grid network owned and operated by a vehicle company....[shudder]

Your electrical grids in the US are quite different to those in other countries. In Oz, the grid is centrally managed across the eastern states and Tasmania by one regulatory authority. Components within the grid are however in the hands of multiple private and public companies and operators...but they are all at the beck and call of the management authority. And the authority is well versed on the potential impact of EVs but sees them more as a potential benefit rather than a cost due to the potential buffering effect of all those batteries on the grid (provided they all adopt two way charging like the latest Nissan Leaf).

LJ909 > superdave847 12/16/2019 at 19:40

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You’re entire comment is what people need to realize. The fact that Tesla’s are flying off their production lines shows that these vehicles are bought more by techy badge snobs (in a way Tesla has almost become an American BMW brand cachet) than people that are concerned with fuel economy/value. Its why I haven’ t found any Model 3's within 200 miles of me under $60k

LJ909 > fintail 12/16/2019 at 19:46

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It really breaks my heart that the hardworking boostrappers laying down 100K+ on a Model X minivan won’t receive the ridiculous tax gifts forever.

This is another huge problem I have had with the tax credit. The ones that have been mostly benefiting from the credit are people who could most likely afford the vehicles outright anyway.

MM54 > LJ909 12/16/2019 at 19:47

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My instinct is saying that they’ve gained enough momentum that it won’t make a huge difference.

That said, I know of at least one person who bought the car he did solely because of that $7500 credit, and did so in a rush because there were rumors at the time of the president ending it early.

LJ909 > boredalways 12/16/2019 at 19:48

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Don’ t know why this is so hard for them to figure out. We have USB  for devices. Don’ t see why the same thing cant be done for EV’s.

LJ909 > jimz 12/16/2019 at 19:55

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This. This is the real question. And its one every automakers has been trying to answer. Who can out Tesla Tesla. And to me its been to the determent of the larger, cheaper part of the market. We keep getting luxury focused, EVs. The argument that the tech will trickle down and make it so that there can be cheaper EV’s has come and gone as there are no cheap EV’s because for the most part Tesla has turned them into a luxury high end commodity almost too successfully. Like I mentioned to someone else, go and see if you can find the $30k Model 3 anywhere. You wont.

LJ909 > SilentButNotReallyDeadly...killed by G/O Media 12/16/2019 at 20:00

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That makes way more sense than it does here. Here of course it comes down to just pretty much money and who’ s going to pay for it. So unfortunately I think I do see us going down the road of corporate operated grids/charging which is not a road we should be going down.

imadick > LJ909 12/16/2019 at 20:00

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It ended in Ontario, electric car sales dropped.

https://globalnews.ca/news/6298949/electric-vehicle-sales-down-ontario/

LJ909 > MM54 12/16/2019 at 20:07

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I wouldn’ t be surprised if hes not the only one who bought because of the tax credit.

LJ909 > imadick 12/16/2019 at 20:09

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Just saw that. 55% drop compared to last year. That’ s kinda scary. Is Ontario the only province that has stopped the rebate?

fintail > LJ909 12/16/2019 at 20:23

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I have a lot less problem with it for cars below 30-40K or so, but for it to apply to six figure vehicles is ludicrous IMNSHO. Another way to agree with you, those who receive the tax gift need it least.

jimz > LJ909 12/16/2019 at 20:46

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I don’t think anyone can “out-Tesla Tesla.”  Elon has an army of slavish geeks who defend anything and everything he does.  As far as fanboys who have- up until this point- derided trucks as useless, yet now they say they will buy a Cybertruck on day 1.  

boredalways > imadick 12/16/2019 at 20:47

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Damn

boredalways > LJ909 12/16/2019 at 21:05

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It’s more likely that the winner takes all — like VHS v. Betamax. Come to think of it with technology moving at the pace that it does, I don’t think there will be any winners on that front. The next step will be who’s technological advancement will get an EV to charge to 80% as quick as a modern ICE vehicle can fill its gas tank.

gmporschenut also a fan of hondas > LJ909 12/16/2019 at 21:14

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My state rebate was only for vehicles below 50k. After the first 100k it should have dropped to lower cost vehicles. A manufacturer isn’t going to be handbuilding cars at that point. (well shouldn’t be hand building)   

Ssfancyfresh > LJ909 12/16/2019 at 22:16

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I don’t know. GM, Tesla, and Nissan May be at a disadvantage when ford and VW come to market with their latest offerings and can capitalize on the rebate to lure new customers. But by then, GM will be on its 2nd (3rd?) generation EV platform and will certainly have advantages in terms of manufacturing processes, intellectual property, and economies of scale. Same goes for Tesla.

I don’t think it will kill the segment entirely. Some may lose (for a bit) some may win (for a bit) ultimately, the momentum in the industry it towards electrification.

Personally, my next car will be an EV. It makes sense based on how I use a car. I paid $36k for the car I drive now. I expect that when I replace it in a couple years, I’ll be looking at something in the $35k -$50k range. I would expect there to be a variety of electric options at that price point with or without a government rebate.   

superdave847 > LJ909 12/16/2019 at 22:47

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Exactly. Hence this study:

https://www.bloomberg.com/graphics/2019-tesla-model-3-survey/market-evolution.html

imadick > LJ909 12/17/2019 at 08:38

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Yes, the Ford government cancelled the program (probably to give tax rebate to billionaires). And as far as I know it’s the only province down in sales of electric cars.

avalonian > LJ909 12/17/2019 at 08:51

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No doubt, you can find preowned model S and model 3 in that price point. Which is where my curiosity lies, they're such fantastic bargains. 

davesaddiction @ opposite-lock.com > boredalways 12/17/2019 at 09:15

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Infrastructure like this is a lot easier when you’re a Communist dictatorship.

davesaddiction @ opposite-lock.com > Ssfancyfresh 12/17/2019 at 09:17

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What’s at the top of your list from the current offerings (for sale now or coming soon) ?

davesaddiction @ opposite-lock.com > SilentButNotReallyDeadly...killed by G/O Media 12/17/2019 at 09:19

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How many miles/kms does the average Aussie put on their car each year?

boredalways > davesaddiction @ opposite-lock.com 12/17/2019 at 09:51

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True, but a Communist dictatorship ain't spending the money. Ever.

Ssfancyfresh > davesaddiction @ opposite-lock.com 12/17/2019 at 09:55

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I really like the Tesla Model 3. If I bought a car now, that would be it.

I’m excited for VW’s ID lineup. I was disappointed when they announced the ID.3 would not come to the US. But, they will make the electric crossover and micro us here in the US. So I’m willing to hold out a couple years to see how those turn out.

I really like the Bolt. The range and price point are excellent, but the form factor doesn’t quite work for me. It’s a bit too small. 

davesaddiction @ opposite-lock.com > boredalways 12/17/2019 at 09:57

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https://www.renewableenergyworld.com/2019/07/02/the-number-of-public-charging-stations-for-evs-in-china-surges-505-in-may/

https://qz.com/1517557/five-things-to-know-about-chinas-electric-car-boom/

https://www.autonews.com/china/china-mulls-ban-gasoline-cars-some-regions

boredalways > davesaddiction @ opposite-lock.com 12/17/2019 at 10:03

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I’ve already addressed China

https://oppositelock.kinja.com/how-do-you-guys-think-ev-sales-will-fare-after-the-tax-1840469286

Besides, China maybe Communist dictatorship but they are not traditional.

davesaddiction @ opposite-lock.com > Ssfancyfresh 12/17/2019 at 10:12

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Will be interesting to see how long the Model 3 will get to have the market mostly to itself without a true competitor. I guess the base Mach E lines up roughly in the same space in terms of size and price.

Ssfancyfresh > davesaddiction @ opposite-lock.com 12/17/2019 at 10:36

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The Mach E is a pretty compelling offering. It is hitting the heart of the automotive market. Good price point. Promising performance. If Ford can’t sell a bunch of those, something is wrong

davesaddiction @ opposite-lock.com > Ssfancyfresh 12/17/2019 at 11:02

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It’s all about the charging network. People need/want a car they can use in every situation, regardless of how frequently they take long trips. If Ford is serious, they need to get lots of fast 150 kW chargers online before these hit the road.

https://jalopnik.com/fords-ev-charging-network-sounds-nice-but-its-no-tesla-1839163457

ZHP Sparky, the 5th > TheTurbochargedSquirrel 12/17/2019 at 11:24

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Yes, exactly – this is what I was referring to. I thought the OP was stating that all credits cease to exist after a specific date or something like that.

With many manufacturers entering the EV field over the next few years, even as certain brands start losing their credits (e.g. Tesla – who has built enough of a name for themselves in a specific niche to keep themselves going from a demand perspective at least, not speaking of profit or cashflow here) others will keep attracting buyers who want to enter the market. I think over time the market, while it may not grow as rapidly as some hope, or need it to from an environmental standpoint, isn’t going to just die off.

Ssfancyfresh > davesaddiction @ opposite-lock.com 12/17/2019 at 11:59

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Yes. You are right . If I bought a Tesla Model 3 or Standard or Long Range. today, I could go anywhere I want to go with minimal compromise vs. a gas car. I don’t believe I could say the same for any of the others I have mentioned.

There is a lot of value in that above vehicle MSRP and published range numbers.

SilentButNotReallyDeadly...killed by G/O Media > davesaddiction @ opposite-lock.com 12/17/2019 at 17:18

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To be honest, I’m not really sure. The general rule of thumb is 20,000 km but we personally don’t do that these days.

Plenty others around here do a great deal more given that the nearest big town (>10,000 people) is 105 kilometres away...and some locals commute there and back every day. Same goes for the two other big towns 120 and 140 km away respectively.

However, I recall seeing something about the commuting habits of Sydneysiders who average something like 350-420 km per week. Figures that are well within the capacity of a Leaf or one of the Hyundai Group EVs that are available here.

davesaddiction @ opposite-lock.com > SilentButNotReallyDeadly...killed by G/O Media 12/17/2019 at 17:27

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Yeah, if varies a lot by where you live and your personal use-case. I was just thinking that since Australia is big and kind of spread out, there may be fewer people for whom an EV would really work (even if it would work for the majority of people 90% of the time).

My family takes lots of road trips. We put 25k miles (40k km) on our family/trip car every year.

SilentButNotReallyDeadly...killed by G/O Media > davesaddiction @ opposite-lock.com 12/17/2019 at 17:41

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What few people realise is that, despite its size, Australia is one of the most urbanised countries on the planet. Most people are clustered into the eastern and south eastern coastline plus the south western Western Australian coast and a couple of patches in the NT. So EVs make sense for most of us.

It is quite possible already to drive an EV from Brisbane to Adelaide via Sydney and Melbourne (roughly a three day drive) on high capacity charging infrastructure that is well spaced to break up the journey at appropriate fatigue limits. The issue at the moment is charging away from where most of the people live.

In my town...charging is only possible at a couple of motels and both only charge overnight. We are on a major highway that directly links Brisbane and Melbourne or Adelaide (bypassing the east coast). So there is still a lack of critical infrastructure...

davesaddiction @ opposite-lock.com > SilentButNotReallyDeadly...killed by G/O Media 12/17/2019 at 20:30

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Due to a lack of political will?

SilentButNotReallyDeadly...killed by G/O Media > davesaddiction @ opposite-lock.com 12/18/2019 at 00:42

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That is one of the drivers. But not the only one. There’s no government signals of any sort that support EVs or charging infrastructure. The government take on it is that, if it were profitable then business will invest in it. However, most car companies don’t have affordable EVs (currently starts around AU$50K for a Kia hatch) at the moment so sales are small...so the EV fleet is small. So there’s not much chance of making coin from charging infrastructure. And because the car companies that do have EVs don’t get subsidies for their EVs courtesy of the customer...they don’t make bank on them yet either.

If no-one makes money then nothing much happens...quickly anyway.

The thing is though...one of our major motoring organisations (NRMA) is a mutual no for profit. It was set up a century ago as a roadside service club. It’s now a massive business. And one of the things it is investing in is a regional charging network in my state (NSW). The investment is only $100 million but the potential returns for the association are massive...

So things ARE happening...

davesaddiction @ opposite-lock.com > SilentButNotReallyDeadly...killed by G/O Media 12/18/2019 at 08:57

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While I understand the motivation for governments to pay for EV infrastructure (cleaner air for everyone), I also get the idea of not subsidizing private industry (picking winners and losers). Seems like the right more is a short-ish period of incentives/infrastructure to help get the ball rolling for a new technology, but after that, if the business can’t succeed without government help, so be it.