palmermd wrote:The tax credit has nothing to do with corporate profits. The manufacturer sells the car at a price that hopefully includes some profit, and if the government wants to give some of that money back to the consumer in the form of a tax credit, it should have no bearing on corporate profits.
Sure it does, and you said so in your statement below. At its core, the purpose of the tax credit is to take a beneficial, emerging technology (such as automotive batteries) and provide financial support to companies producing said technology to bring the technology to a point where it can be economically built/produced/installed, at which point the benefits of the new technology take over. While as implemented, the tax credit didn't do that directly, providing the benefit to consumers and not manufacturers, and even then only SOME consumers, in reality it did have the intended effect and allowed car makers to price their vehicles at a point where they could compete with otherwise equivalent gas vehicles at a "normal" profit margin ramp. And, once that ramp starts resulting in positive profit margins, it is designed to phase out since it is no longer required.
palmermd wrote:A company could conceivably price a car $7500 more than they would otherwise knowing that the consumer would get that back, but that is another subject.
Yes, and you better believe the heel-draggers of the industry are planning on doing exactly that, as you lament in your paragraph below.
palmermd wrote:Either way, Tesla's ability to get into the black on Model 3 is in their own hands. They need to solve their manufacturing and logistics issues and get sales numbers up and costs down.
Well yes, but ultimately you can say that about ANY company making EVs, and it's not like you can just wave your hands and make that happen. It's a chicken and egg thing. It takes sales to create volume to bring prices down, and it takes low prices to build sales. And Tesla has probably gotten 75-80% of the way there to being able to be competitive on an unsubsidized basis. Going through their 500K deposit backlog would get them there. Going through 300K of those would probably do the trick. The question is whether or not losing the tax credit would cause too many of those 500K to drop their reservations and buy an ICE instead.
palmermd wrote:Tax credit going away completely will be a non issue for Tesla. Having it go away only for Tesla due to their sales numbers is a bigger problem. I've always felt the setup was unfair to GM, Nissan and Tesla for being the first movers. They will have theirs eliminated and then newcomers/latecomers will have an advantage. It should have been a total vehicle production across all MFG's to sunset the program, not individual numbers.
I wholeheartedly agree and have been saying that myself as well. But this is where you contradict your earlier statements. They will have an advantage because they can either price their vehicles $7500 less than Tesla/GM and steal their market, or more likely, they will price their cars $2500 below Tesla/GM, steal market share and pocket the $5000 in pure profit, something Tesla/GM did not have the luxury of doing.