Posted on 10/16/2014 1:45:48 PM PDT by jazusamo
Environmentally conscientious, wealthy car enthusiasts are in luck! The much-hyped "D" unveiling came last week as Tesla CEO, Elon Musk, presented what appears to be a very impressive version of its plug-in Model S electric car called the P85D. Boasting 691 horsepower, 687 ft/lb of torque, AWD and a blazing 3.2 second zero to sixty time, the new rich peoples' toy is expected to cost in the neighborhood of $120,000. In fact, the car is so darn impressive that the only obvious question is why in the world do we need to give the affluent purchasers of cars like this a federal tax credit of $7,500 each?
I can see why General Motors would need subsidies to sell such cars as the Cadillac ELR (which lumbers through a zero to sixty time in a laborious 9.4 seconds) at a price of about $75,000. The car is essentially a gussied-up Chevy Volt and has been another embarrassment for GM. Tesla, on the other hand, has proven that it can muster demand for its vehicles.
Tesla and Elon Musk have done a more impressive job of bringing the politically-popular but thus far economically non-viable technology of electric vehicles to the masses. Tesla's recipe for success to date has been to make vehicles that can be afforded by only the wealthiest Americans while the rest of the population is expected to foot the bill for a portion of the cost in the form of tax credits.
The next test for the viability of electric cars will come when Tesla unveils its lower-priced versions of plug-in vehicles, something that is in the works. It will be a credit to Musk and his company if he is successful, but the challenges remain. Tesla does not have a dealer network, so getting service on the cars requires traveling to one of the few existing service sites in the country. Charging stations are still not widely available and have also required taxpayers to foot the bill for most of the installations. Finally, the long-term performance and possible issues for lithium-ion based battery technology are unknown. Add to these the question of Tesla's corporate profitability outlook. Can the company actually make enough money to thrive?
If electric vehicles are truly a viable alternative to traditional gas-powered cars, the technology should be able to grow in the free markets without billions of dollars of taxpayer money. Whatever the future holds for the electric car market and Tesla I think it is hard to argue against, at the least, stopping subsidies for buyers of any cars that cost over $50,000. The purchasers of such cars are people who want and can afford the vehicles. The newest Tesla that was just unveiled is sure to have a bunch of rich folks lined up to purchase the latest green wonder-car. There is no need for the rest of us to have to help them pay for it.
Mark Modica is an NLPC Associate Fellow.
I would argue that lower wage earners and retirees on a fixed income are most often looking for inexpensive used cars. After the tax credit, the Volt is $27,500 and the Leaf is $22,500 which I think falls more in line with the budget of middle to upper-middle class wage earners. Lower income earners will benefit indirectly as the cost of used electric cars are brought down as a result of the original subsidized price.
I did a quick and dirty calculation using this calculator and it seems that a single person claiming one personal exemption and the standard deduction would need to make $57,000 in order to get the full $7,500 tax credit. This falls into the middle to upper-middle class range in my mind. Certainly not rich.
Disclosure: This is all based on my perception of people's buying habits relative to their income. All the cars I've owned were bought used so maybe my own frugality is affecting my analysis.
Actually, George W. Bush signed the tax credit into law, Obama just extended it. Here is a quote from Bush's 2006 State of the Union:
“Keeping America competitive requires affordable energy. And here we have a serious problem: America is addicted to oil, which is often imported from unstable parts of the world. The best way to break this addiction is through technology... We must also change how we power our automobiles. We will increase our research in better batteries for hybrid and electric cars and in pollution-free cars that run on hydrogen.”
Looking back I admit it is a little surprising to hear GWB say those words. Maybe he was feeling a little guilty for letting the allure of cheap oil influence his decision to go into Iraq. I don't know. Either way, the idea of electric cars reducing our oil imports from countries that don't like us is not an idea reserved for democrats.
As is well known, both Bushes were RINOs.
Actually, not being King of the US, I kinda like the idea of Tesla owners getting a tax credit. Tesla cars are neat. Tesla owners are, by definition, smart. And, the idea of the credit annoys the 'Rats and probably even some of the Tesla owners. But far better they should get the tax credit than struggling Pelosi voters who want to be an artist or a photographer without worrying about keeping their day job ... on our dime!
When it comes down to a vote, the credit should be eliminated — for Silicon Valley fat cats and Pelosi voters alike. If that's not politically possible, then it should be retained. Screw all this talk about reaching across the aisle!
WTF are you to be opining on your fellow citizens' buying habits?
In the top-of-the-line P85D version, the Model S retains its 470-hp rear motor and adds a 221-horse front motor. Power goes from today’s 470 horsepower to a staggering 691 combined horsepower and 687 lb-ft of torque. Tesla says the additional traction will enable the P85D to whiz from 0 to 60 mph in 3.2 seconds and through the quarter-mile in 11.8 seconds. We rode along and found the acceleration positively shocking, even though we were expecting and ready for it. Top speed rises from a governed 130 mph to an equally governed 155 mph.
0 to 60 in 3.2. Governed to top out at 155. I would really like to test drive one of these things.
Huh? I think you may have misread my post. I was simply stating that my personal experience may have influenced my guesstimates of what people in different income brackets might buy. I was not, by any means, stating what they should buy.
In a full size sedan with tons of storage, to boot. I’d imagine that the 265 mile range is off considerably with two electric motors instead of one with the same battery pack, though.
It's perfectly OK to opine on what people should buy. That's an open-ended academic exercise.
However, when you bring the government and tax law into the question of what people should buy, it becomes an execrable exercise in fascism.
Yet there are a few Luddites around here who still call them “glorified golf carts.” Some people are immune to facts.
Somebody has to buy the car new.
Sure, but even for conventional cars, low income people are usually not the ones that do. That is all I was saying.
The incentive is needed to jump-start the infrastructure chicken -and -egg problem. Nobody wants an EV I’d there’s no chargers around and there will be no chargers around if not enough people have EVs.
I’m all for lower taxes. So long as they’re not refundable, via tax credits is a viable way to get there.
Somebody making only $50K per year (or a family of 4 making $80K/year) has zero business buying a new car.
That is how to keep people poor. The government should not subsidize bad behaviour.
Nobody in their right mind will purchase a used electric car unless its pennies on the dollar of a new one. The repair costs are just too high at this point in time.
I don't disagree. In fact, my explanation above was basically saying that I don't think a lot of people in that income range and below usually buy new cars.
“That is how to keep people poor. The government should not subsidize bad behaviour.”
Again, that falls in line with the point I was making above. Making $57,000 is the minimum you would have to make in order to fully qualify for the credit. If you make less, you get less of a subsidy and are thus incentivized less to buy a new electric car.
“Nobody in their right mind will purchase a used electric car unless its pennies on the dollar of a new one. The repair costs are just too high at this point in time.”
The repair costs have been overblown by anti-EV pundits. It turns out that just like you don't have to expect to replace a conventional engine and transmission the minute the warranty expires, you also don't have to expect to replace an EV battery the minute the warranty expires.
This depends to some degree on which EV exactly. The Nissan Leaf has had problems in Arizona because the battery is passively air-cooled whereas the Chevy Volt is being reported to see virtually zero battery degradation after years of use (see #2 in common Volt misconceptions). This is because it uses an active liquid-cooled battery and it also prevents the battery from being charged over 80% or fall below 30%. These two things combined turn out to greatly improve battery life.
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