Clean Transport

Published on February 4th, 2015 | by Christopher DeMorro

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President Obama Proposes $10,000 EV Credit, Again

February 4th, 2015 by  


Studies have shown that financial and convenience incentives boost plug-in car purchases, and twice President Obama has asked Congress to raise the electric vehicle (EV) subsidy to $10,000. Obama is asking Congress to raise the EV subsidy at least one more time, and he wants to expand it to other alt-fuel vehicles, reports the Detroit News. Is the third time the charm?

obama-volt

The current $7,500 subsidy remains a generous incentive to be sure, bringing the price of plug-in cars like the Nissan LEAF more in line with their conventional competitors. States like California and Georgia also offer their own local incentives, which has helped put both states at the top of plug-in car adoption rates. The more incentives, though, the better, as Norway has proven by exempting EV owners from heavy tax burdens, while also offering free parking, ferries, tolls, and even access to bus lanes during rush hour. Electric car models are often now the best-selling vehicles in Norway, proving just how powerful carefully considered incentives can be.

In comparison, Obama’s goal of bumping the incentive up to $10,000 and making it a point-of-rebate sale, rather than a tax credit, seems relatively mild. As it stands, some EV buyers don’t make enough money to take full advantage of the tax credit, and they’re still on the hook for monthly payments relative to the cost of the car. A point-of-sale rebate would make plug-ins a lot more affordable for a lot more people.

Obama also wants to extend the incentive to natural gas vehicles, something of an olive branch to the fossil fuel industry (which already takes in absurd levels of annual subsidies). Previously, Obama has suggested using fossil fuel royalties to fund new car research, but that plan never came to be.

As you might imagine, not everyone is on-board with Obama’s clean car push, and some even think it’s a New World Order conspiracy designed to control us (or something). So, with both the House and Senate firmly in the control of Republicans and time winding down on Obama’s final term, it seems unlikely that this proposal will gain any traction where it has failed twice before.

Image: Official White House Photostream






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About the Author

A writer and gearhead who loves all things automotive, from hybrids to HEMIs, can be found wrenching or writing- or else, he's running, because he's one of those crazy people who gets enjoyment from running insane distances.



  • NRG4All

    One problem I see is that whenever the government gets involved to directly reduce the cost, then the sellers get a lot more firm on the price. A good deal of the subsidy goes to the seller and not necessarily to the buyer.

    Also, I noticed that both of our (AZ) Republican Senators have voted against a resolution supporting global warming. Thus, to them, EVs aren’t necessary.

    • Benjamin Nead

      EVs aren’t necessary to almost all Republicans in Congress, House or Senate. Jon Stewart sums up their idiocy on the climate change debate better than most. Enjoy . . .

      http://thedailyshow.cc.com/videos/8q3nmm/burn-noticed

      • NRG4All

        Thanks for the link. I got a real kick out of Stewart’s comments. Everyone should see this.

  • Michael Duoba

    Of course subsidies will push higher EV sales. But by how much? You think all the rich Tesla drivers need a $7500 subsidy to sway them to buy a $100,000 car? We are just asking people who cant afford a new EV to hand over money (in taxes) to more affluent consumers who can.

    • Benjamin Nead

      No, buyers of current generation Teslas aren’t. But most people who are buying cars like Leafs and Volts never pay that much in on their federal taxes. Remember that the current program allows for UP TO a $7500 break. If you only pay in, say, $2000, that’s how much you qualify for. The current system really is skewing the maximum savings for the most affluent.

      A direct point of sale rebate, on the other hand, is agnostic to the numbers on your 1040. Even if the amount of money refunded would be less per transaction, it’s a far more equitable system and it certainly brings in a vast number of middle class wage earner who would have received little or nothing under the old/current system.

      • Bob_Wallace

        The federal subsidy wasn’t designed to help people purchase cars. It was designed to help manufacturers sell enough EVs to start building economies of scale.

        200,000 subsidies per manufacturer is a small number when compared to the millions of new cars sold per year.

        I agree that it would have been best to give a direct discount so that those making less than $50k a year could participate. Many of those people could really benefit from the operational cost savings.

  • Dallin Paul Jensen

    It wont matter much when the lithium-sulfur batteries come onto the market in the next year or two anyways.

    • Benjamin Nead

      LS batteries are promising. And Lithium Air. So are non-aqueous electrolyte “solid state” ones . . . and any number of other battery technologies you read about on this blog or elsewhere. If you read a typical press release for any given battery technology today, add about 5 years to when you MIGHT see advanced prototypes and a couple more years after that before real production ramps up to scale that’s required for it to be universally adopted by the industry. Phones and hand-held devices are usually first to see these new battery technologies, since small cells are typically easier to construct than larger ones. And then, lastly, it’s electric cars.

      Not to burst your bubble, but don’t be disappointed if production EVs don’t feature Lithium Sulphur batteries “in the next year or two.” If I’m wrong, I’ll happily buy you a beverage of your choosing. 🙂

  • Will E

    next time election can do the job. what you vote what you get
    it is not the government is the voter that votes the government you get. and the voter that is you.

    • Benjamin Nead

      I think the trend we are seeing in the last decade or so of election cycles is that generally younger and more progressive voters get excited each 4 years when it’s time to elect a president. The “coat tail” effect of those presidential years sweeps in some of that progressiveness into the US House and Senate, as well as state and local races that happen to be occurring.

      Then. on the mid terms, the college kids stay home and, frustratingly, a generally older and more conservative voter has the day. Witness the Tea Party influx of 2010 and further progressive erosion in Congress in 2014. Local and State elections, likewise, follow that trend. It’s also fairly common in the final two years of a 2 term presidency for the opposite party to take control of both house of Congress, no matter which party occupies the White House.

      More pragmatically, get as many young and ethnically diverse groups of people as possible registered to vote for 2016 and encourage them not to sleep in when 2018 rolls around. The old craggy rednecks? Tell ’em the election’s been moved to Wednesday! Some of the more senile ones might actually fall for it! 🙂

  • Marion Meads

    Just making the current $7,500 a point of sale rebate would do wonders! It would remove the stigma of subsidizing only the upper middle class.

    • Benjamin Nead

      Even $5000 at point of sale for the purchase of a new EV would be preferable to a $7500 federal income tax rebate. I think the most my wife and I have ever gotten back in a federal income tax refund was something like $2000. If a $23K EV becomes an $18K the day you sign the paperwork, there would be a LOT of people wanting to take advantage of this.

      • Bob_Wallace

        It’s not how much you got back, but how much you paid.

        The refund is simply overpayment of taxes due. Look at what your federal income taxes were for the year. If they were at least $7,500 then your tax bill would have been lowered by $7,500 and you would have received $9,500.

        • Benjamin Nead

          Yes, but a household that earns an annual total of, say, $75K is not going to have paid in anywhere near $7500 in federal income taxes. They’re mostly paying towards the FICA. The $7500 tax refund only serves those in a much higher tax bracket. As you note below, a direct rebate at point of sale is so much more equitable.

          • Mint

            A house with $75k income is gonna have what, $50k taxable income? That results in ~$6.6k income tax. That’s pretty close to $7.5k in my book.

          • Benjamin Nead

            Yes, but one has to assume that a household of that income is composed of two people with absolutely perfect credit ratings (we had to short sale our house in 2013, have other debts, etc.) who are willing to trade in BOTH their gasoline cars for a single EV (really?) that offers no additional point-of-sale rebates (Arizona ain’t California or Colorado in that respect) and then, with all that, qualify to buy a new car. Oh yeah . . . with a kid on the way to college and all the extra expense that goes along with that.

            I’m not sure what income bracket you’re in, Mint, but I’m here to tell you that there are MANY two-earner households who make ~$75K or more – my wife and I included – who would be laughed out of the dealership showroom if we attempted to buy any new cars that are in the Volt/Leaf price range. A point-of-sale rebate would make it easier, but even this would be a stretch. And is the Republican-led Congress going to put their rubber stamp on the Obama proposal outlined in the article? Surely not.

            As it is, it will be a used electric for me later this year, after the last significant debt I have left is paid down and I have more than a lunch money sort of amount saved up for a down payment.

          • Mint

            You do realize that you’re only supporting our point, right?

            New car buyers – even for non-electric cars – are generally higher income folks. Yes, a $30k car would indeed be a stretch or a no-go for a lot of households in that income range, so it makes no difference to them how the incentive is structured. The majority of people who can afford a $30k new car won’t have any difficulty paying $37.5k up front and getting $7.5k back in a year.

          • Benjamin Nead

            OK, I’ll recant what I said about the $5000 point of sale rebate vs. the $7500 tax refund.

            But two posts up, you instantly figured out my taxes to be $6600. If the $7500 was simply point of sale rebated
            instead of being tied to my income taxes, I’d save $900.
            Depending upon my debts (or lack thereof on any given year) that $900 could be enough to make the difference if i’m right on the edge of qualifying for the purchase.

          • Bob_Wallace

            If you’re earning $75k and not paying at least $7,500 in federal income tax then you’re pretty loaded up with deductibles. Probably a mortgage you’re struggling to pay.

            I agree that it would be better were it a direct rebate, but it isn’t.

        • Haeze

          All of this is a null argument. It is a Tax Credit, not a Tax Refund. Period. It doesn’t matter how much you pay in taxes, the credit amount is based on the car, not on the buyer. The tax credit was tiered based on the size of the battery in the car, and Tesla qualified for the full $7500.

          • Bob_Wallace

            Yes, it is a tax credit.

            And if you have already paid that year’s tax via withholding it will generate a refund.

            It does matter how much you paid in taxes. If your federal income tax for the year in which you bought the EV was only $4,000 that would be the limit of the credit/refund you would get. There would be no $3,500 “negative tax”.

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