Ending tax credits would kill electric-car market, Edmunds says

Couple of points
- Most people expect to get Model 3 for $35k+ with little or no tax credit
- Nissan. GM etc will adjust the MSRP once their credit ends

GerryAZ said:

If the various hidden subsidies on petroleum were eliminated, the price increases on gasoline and diesel would encourage more consumers to buy EVs and there would be less need for incentives.

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True but irrelevant, as that's not going to happen (certainly not in this administration or with this congress).

tattoogunman said:

I have read a few articles and seen a few videos online by various automotive publications/journalists who predict that EV prices will drop significantly once the tax credit expires. They were of the opinion that once the credits go, we will see prices on EVs that better reflect what they should realistically be selling for (i.e. a lot cheaper than they are now). I've also seen predictions that upwards of 8 out of 10 cars sold by 2030 (or thereabouts) will be an EV, but I think that is probably a bit optimistic. I guess we'll see..............

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It's certainly the hope that the manufacturers have built in enough of a margin (or will be able to achieve it before the credits expire) that they will be able to reduce prices to compensate and still sell the cars for a profit (assuming they're able to do so now). Whether they can remains to be seen.

GRA said:

tattoogunman said:

I have read a few articles and seen a few videos online by various automotive publications/journalists who predict that EV prices will drop significantly once the tax credit expires. They were of the opinion that once the credits go, we will see prices on EVs that better reflect what they should realistically be selling for (i.e. a lot cheaper than they are now). I've also seen predictions that upwards of 8 out of 10 cars sold by 2030 (or thereabouts) will be an EV, but I think that is probably a bit optimistic. I guess we'll see..............

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It's certainly the hope that the manufacturers have built in enough of a margin (or will be able to achieve it before the credits expire) that they will be able to reduce prices to compensate and still sell the cars for a profit (assuming they're able to do so now). Whether they can remains to be seen.

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Let's hope so

Via IEVS:

Ghosn: EV Sales Are Driven By “Mainly State And Company Incentives”

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http://insideevs.com/ghosn-ev-sales-are-driven-by-mainly-state-and-company-incentives/

Ghosn shared:

“Electric car sales are not driven by consumer demand. Consumer demand is very limited for electric cars. [Sales] are driven by emissions regulations, and by mainly state and company incentives, which is pushing the consumer to buy these types of cars.”

“It is very difficult to make the electric car an attractive buy without government subsidies for the consumer. So how can you support electric cars if it depends on government subsidies? We need not for an infinite period of time: just to make sure that you jump-start the sales. . . .”

The outspoken CEO said that battery tech and pricing is just not where it needs to be yet. But, he did acknowledge that electric cars are simple, and can become highly competitive. Now though, it’s just not “the thing to do” in most people’s minds. . . .

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Via IEVS:

With Incentives Removed, Electric Car Sales, Including Teslas, Come To Complete Halt In Hong Kong

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http://insideevs.com/incentives-removed-electric-car-sales-come-halt-hong-kong/

. . . Hong Kong has long been a hotbed for electric car sale, driven mostly by incentives, but what happens when those incentives vanish – almost doubling the cost of a new EV in some cases overnight? EV sales disappear….completely.

In March 2017, electric car sales in Hong Kong stood at 2,964 units. Come April, sales dropped to zero units. This was exactly as we had predicted when news first surfaced of the incentives being slashed.

As South China Morning Post explains:

“Since the April 1 introduction of the first registration tax on EVs, vehicle prices have shot up by 50 to 80 per cent, depending on the model, with tax relief now capped at HK$97,500. The impact has been immediate, and appears to have killed off the future of EVs in Hong Kong overnight.”

Transport Department figures indicate there is a total of 10,589 private EVs registered in the city, and 2,964 of them were registered in March 2017 alone. That healthy growth then hit a red light when not a single private EV was registered in April.”

“There was no first registration of an electric private car in April 2017,” a department spokesman confirms. . . .”

This will impact Tesla the most.The March sales figures show that out of the 2,964 EVs registered that month, all but 20 were either the Model S or Model X. Under the new layout, the price of the Model S soared from HK$570,000 to more than HK$900,000. . . .

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It seems that if the price increase is high enough, even Model S/X are dependent on subsidies for sales. I'm sure there will be a minimal rebound (hard not to, from zero), given the structure of the tax (which is aimed at eliminating subsidies beyond the first car owned to reduce congestion), and people no doubt bought in a rush to get the subsidy while it was still available, so we can expect very little sales in Hong Kong for many months to come.

If you're dropping $100k on a car, you don't care about a $7.5k subsidy. If that is the make or break point for you, you shouldn't be buying a $100k car. The registration fees and taxes are going to be as high as the rebate.

2k1Toaster said:

If you're dropping $100k on a car, you don't care about a $7.5k subsidy. If that is the make or break point for you, you shouldn't be buying a $100k car. The registration fees and taxes are going to be as high as the rebate.

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Quite so, but that's not the level of subsidy in HK.

about HongKong "first registration tax", i think it is 100%+ of the car price normally. That means a 35k+ new car becomes 70k+ at least out of door. The picture is very different than in USA.

soldcake said:

about HongKong "first registration tax", i think it is 100%+ of the car price normally. That means a 35k+ new car becomes 70k+ at least out of door. The picture is very different than in USA.

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I think Singapore is even worse: A friend of mine spent about $70,000 for a Honda Civic about 10 years back. On top of that, he's only allowed to keep the car for 10 years, maximum! It seems that there is a big issue with disposal of a car on an island, so these governments tax UP FRONT for all of the disposal costs. (And it seems they throw in a bunch of other tax, to boot!)

Via IEVS:

Denmark Plug-In Vehicles Sales Tank As Subsidies Vanish

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http://insideevs.com/denmark-electric-car-sales-tank-as-subsidies-vanish/

Denmark, once one of the fastest growing plug-in electric car markets in the world in 2015, has learned the hard way that its decision to re-phase in an import tax too quickly, has collapsed the country’s EV segment, and now looks to at least temporarily rectify the situation.

In 2015 sales of plug-in cars amounted 5,298 units, including 2,738 Tesla Model S. However in the subsequent year, just 1,438 were moved with Tesla taking the largest hit. The US EV-maker plunged to just 176 sales in 2016 (98-Model X, 78-Model S)

Sales in the first quarter of this year (2017) decreased by 60.5%, while the average inside the European Union increased by 30%, including a 80% gain in Sweden (“thanks to a wide range of subsidies, including a five-year tax break and a 40,000 kronor ($4,600) purchase premium”).

The cause of all those changes? The import tax of 180%, from which plug-ins were originally exempted.

In 2016 government launched process of phasing-out the exemptions (planned for 2016-2020), which resulted in December of 2015 surging through the proverbial sales roof…and then demand shriveled up thereafter (see chart below). . . .

“But on April 18, having taken note of the drop in sales, the government decided to change the rules. . . .

The new rules mean the transition to a post-subsidy era has been postponed until at least 5,000 new electric cars are sold over the 2016-2018 period. Tax breaks will in any case be progressively eliminated as of 2019, regardless of sales numbers. The plan envisages a 40 percent registration tax minus a 10,000 kroner ($1,500) deduction in 2019, with the tax rising to 65 percent in 2021, 90 percent in 2021 and 100 percent in 2022.”

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In other news, also via IEVS:

Pure Electric Vehicle (BEV) Sales Surpass PHEVs In Europe For First Time Since Late 2015

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http://insideevs.com/bev-sales-surpass-phevs-in-europe/

Europe is showing more interest again in all-electric vehicles over plug-in hybrids, as after several quarters of PHEV-love the pendulum has swung back to BEVs for the first time since the Fall of 2015.

The reasons for that are simple. There are now more attractive all-electric models (or at least new versions of first generation cars with longer ranges). The Renault ZOE Z.E. 40 (41 kWh) is now the best seller in Europe, supported by the longer-range BMW i3 and relative newcomer – the Tesla Model X.

On the other side, plug-in hybrids this year are struggling in the Netherlands after a favorable tax incentive program ended.

Without Netherlands (previously the largest PHEV market in Europe), and less incentives also in the UK, plug-in hybrids have lost some momentum. . . .

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GRA, that is simply support for the idea that cutting incentives will slow sales.
This seems pretty self evident and I don't think anyone would disagree.

My point is simply that the loss of incentives will not "kill" the EV market.

Zythryn said:

GRA, that is simply support for the idea that cutting incentives will slow sales.
This seems pretty self evident and I don't think anyone would disagree.

My point is simply that the loss of incentives will not "kill" the EV market.

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And I agreed upthread that "kill" is hyperbole. "Massively slow, and limit to only the most ideologically committed or those who can afford to throw money away on premium-priced vehicles" (in the U.S., with our low gas prices) is how I would describe it.

GRA said:

Zythryn said:

GRA, that is simply support for the idea that cutting incentives will slow sales.
This seems pretty self evident and I don't think anyone would disagree.

My point is simply that the loss of incentives will not "kill" the EV market.

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And I agreed upthread that "kill" is hyperbole. "Massively slow, and limit to only the most ideologically committed or those who can afford to throw money away on premium-priced vehicles" (in the U.S., with our low gas prices) is how I would describe it.

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Perhaps. However I do believe that depends upon the degree of change as well as the percent of total cost.
For example, eliminating all incentives in CA will have a bigger effect on CA sales than elimaring all incentives in MN (as our incentives are lower).

Also, eliminating incentives from a $30k car will have a greater effect than on a $80k car.
In addition, the pricing of the cars will have an impact. If the car price is lowered to offset the incentive loss, that could minimize the effect.

I think your definition is at one extreme. We will get to see the results soon though.

Zythryn said:

GRA said:

<snip> I agreed upthread that "kill" is hyperbole. "Massively slow, and limit to only the most ideologically committed or those who can afford to throw money away on premium-priced vehicles" (in the U.S., with our low gas prices) is how I would describe it.

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Perhaps. However I do believe that depends upon the degree of change as well as the percent of total cost.
For example, eliminating all incentives in CA will have a bigger effect on CA sales than elimaring all incentives in MN (as our incentives are lower).

Also, eliminating incentives from a $30k car will have a greater effect than on a $80k car.
In addition, the pricing of the cars will have an impact. If the car price is lowered to offset the incentive loss, that could minimize the effect.

I think your definition is at one extreme. We will get to see the results soon though.

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In California, while the state incentive is nice, what's more valuable to most people are the HOV stickers, although their value is decreasing as the expiration date approaches (1/1/2019, although there's supposed to be a review later this year to see if they need to stop issuing new green [PHEV] stickers a year early, due to HOV lane congestion). I think what we're seeing now is people looking at the value of these cars much more critically than hitherto, which (I believe) is why the Bolt's sales have been somewhat disappointing to date, as the CCS network is too limited at the moment to make it a reasonable choice as a sole vehicle, it's QC rate is pretty slow, and it's pretty pricy for its size and equipment fit. If you need two cars anyway, with one used primarily for local trips, then for most people it's hard to justify the extra cost of the Bolt's range.

I expect we'll see the greatest BEV growth for now in cars with 125-150 miles of range, as they should be available for <=$30k even without incentives (cf. Ionic BEV), and I expect the same will be true for sub-$30k PHEVs like the Prime, with AER more limited than most early adopters insist on, but providing good price/performance for many people.