People shopping for electric vehicles starting next year will be able to get a $7,500 federal tax credit off the sticker price while at the dealership, rather than having to wait months to receive their tax returns.
Not much to add. Other than the IRS PDF is written is legalese…
I’m more a fan of sticks than carrots when it comes to stuff like this, but voters need coddling and this will still move the needle. Even assuming automakers capture the full $7500, that’s pure profit and they’re going to try very hard to sell more EVs. And thanks to the IRA, that manufacturing will happen in NA. You’re absolutely right that it’s a corporate subsidy disguised as a consumer tax break, but it will still have a real effect. I’d rather just have proper emissions requirements drive the change and have a carbon fee and dividend of course, but I think this scheme is still better than nothing.
Assuming your theory is true, you don’t think an extra $7500 in pure profit will have any effect on production? If I was a company I’d try to sell more cars that have massive easy profits…
In reality, there’s a whole price elasticity of demand formula that automakers will attempt to model, and they’ll adjust everything they make to try and maximize profit, both now and in the future.
I agree that the money is much better spent on public transit, trains, bike infrastructure, etc, but that doesn’t mean we get to misrepresent the impact of massive tax credits on the market.
I’m more a fan of sticks than carrots when it comes to stuff like this, but voters need coddling and this will still move the needle. Even assuming automakers capture the full $7500, that’s pure profit and they’re going to try very hard to sell more EVs. And thanks to the IRA, that manufacturing will happen in NA. You’re absolutely right that it’s a corporate subsidy disguised as a consumer tax break, but it will still have a real effect. I’d rather just have proper emissions requirements drive the change and have a carbon fee and dividend of course, but I think this scheme is still better than nothing.
It doesn’t have a real effect tho…
If they decide consumers will buy at X price, they’ll sell them for X and the people willing to spend X will buy it
If there’s a 7k tax credit, they’ll sell it for X+7k, and the same amount of consumers will pay X and buy the same amount of cars…
The only difference is everyone is paying their share of those 7k bonuses to manufacturers.
That tax money would be much better spent on infrastructure or public transport.
Yep. EV sticker prices won’t change. The government was just lobbied successfully into giving your EV rebate directly to car companies.
This. You have to get into the head of a soulless capitalist instead of a face value end user.
This is generally why i’m against subsidies to begin with. EVs are worth it without having to be propped up by governments imho.
Assuming your theory is true, you don’t think an extra $7500 in pure profit will have any effect on production? If I was a company I’d try to sell more cars that have massive easy profits…
In reality, there’s a whole price elasticity of demand formula that automakers will attempt to model, and they’ll adjust everything they make to try and maximize profit, both now and in the future.
I agree that the money is much better spent on public transit, trains, bike infrastructure, etc, but that doesn’t mean we get to misrepresent the impact of massive tax credits on the market.