lpickup
Well-known member
I happened to be thinking about this last night.
As you're aware, the $7500 federal tax credit program (proposed to be $10K: see http://www.chargedevs.com/content/news-wire/post/obama’s-budget-calls-increased-ev-tax-credit) was expanded from a limit of 200K automobiles (as originally created by George W. Bush) to 200K automobiles per manufacturer (under Obama).
On the surface this seems like a great thing for the EV community, but as I was thinking last night, maybe not...
Here's my line of thought:
As a BUSINESS, what incentive do companies have to lead the way? If you're a manufacturer on the leading edge of developing EVs, as one would expect, your development costs and manufacturing costs are going to be very high. You'll absolutely need those tax incentives to be able to price your car at a value that will sell. That's fine.
But what if you decided to just wait on the sidelines and let the other guy figure out all the hard stuff and wait for the price of technology and batteries fall. Then come in several years later when all the heavy lifting has been done. Now you can jack the price of your car up artificially because you've still got your 200K cars for which the credit applies and still compete with the other guy whose credit has "expired" because they passed the 200K mark.
I know there is a perceived value to being the industry leader with respect to a given technology, but is that going to matter a few years out? Look at IBM's market share in the PC market once the clones appeared and tell me that there is real market value in being the leader.
I'm not saying this is what is happening. Clearly not with Nissan. They are certainly leading the way here and I don't get the sense they are holding back. But what about the other companies? Are Chevy and Ford really in this to grow their sales as fast as they can, or are they holding back and letting Nissan and Mitsubishi do the heavy lifting?
Would the original Bush model be MORE of an incentive for manufacturers to grow EVs. Because under a fixed limit (of 200K or whatever number is appropriate) then all manufacturers are now incentivized to do their development work early on while they can still recoup some of that cost in the form of a higher MSRP that's still competitive because of available tax credits. Those that sit on the sideline waiting to see how things play out could be left in a situation where they have to sell their early cars at a loss because to be competitive pricing-wise they need to sell their cars at a level that doesn't recoup their development costs. So I see that model as creating more of a real race: a manufacturer wants the largest share they can get of those 200K slots and thus will be plenty motivated to get off their butts and start developing EVs.
What are your thoughts?
As you're aware, the $7500 federal tax credit program (proposed to be $10K: see http://www.chargedevs.com/content/news-wire/post/obama’s-budget-calls-increased-ev-tax-credit) was expanded from a limit of 200K automobiles (as originally created by George W. Bush) to 200K automobiles per manufacturer (under Obama).
On the surface this seems like a great thing for the EV community, but as I was thinking last night, maybe not...
Here's my line of thought:
As a BUSINESS, what incentive do companies have to lead the way? If you're a manufacturer on the leading edge of developing EVs, as one would expect, your development costs and manufacturing costs are going to be very high. You'll absolutely need those tax incentives to be able to price your car at a value that will sell. That's fine.
But what if you decided to just wait on the sidelines and let the other guy figure out all the hard stuff and wait for the price of technology and batteries fall. Then come in several years later when all the heavy lifting has been done. Now you can jack the price of your car up artificially because you've still got your 200K cars for which the credit applies and still compete with the other guy whose credit has "expired" because they passed the 200K mark.
I know there is a perceived value to being the industry leader with respect to a given technology, but is that going to matter a few years out? Look at IBM's market share in the PC market once the clones appeared and tell me that there is real market value in being the leader.
I'm not saying this is what is happening. Clearly not with Nissan. They are certainly leading the way here and I don't get the sense they are holding back. But what about the other companies? Are Chevy and Ford really in this to grow their sales as fast as they can, or are they holding back and letting Nissan and Mitsubishi do the heavy lifting?
Would the original Bush model be MORE of an incentive for manufacturers to grow EVs. Because under a fixed limit (of 200K or whatever number is appropriate) then all manufacturers are now incentivized to do their development work early on while they can still recoup some of that cost in the form of a higher MSRP that's still competitive because of available tax credits. Those that sit on the sideline waiting to see how things play out could be left in a situation where they have to sell their early cars at a loss because to be competitive pricing-wise they need to sell their cars at a level that doesn't recoup their development costs. So I see that model as creating more of a real race: a manufacturer wants the largest share they can get of those 200K slots and thus will be plenty motivated to get off their butts and start developing EVs.
What are your thoughts?