[GM EV2]

If federal tax credits for plug-in electric vehicles come to an end, get ready for a sales implosion.

This is the conclusion of Edmunds.com analysts who point to the impending end of a $7,500 credit, and say automakers and elected officials need to be ready for what likely will follow.

“This market would crash,” said Jessica Calwell, a senior analyst for Edmunds...

http://www.dispatch.com/business/20170408/automakers-worried-federal-tax-credits-may-end-for-plug-ins

 

[caronjeff]

It would appear plug in EVs have 2 types of buyers. #1 those who consider themselves environmentally responsible and feel good about not burning gasoline, divorcing themselves from big oil, etc. #2 those who did the math, especially back in the $4 a gallon era and purchased in large part on economics. I did the math in spring if 2012 when considering the Volt. My $38,900 sale price $31,400 after federal tax credit. Then expected fuel savings of $2,000 a year vs. the BMW I was driving, after 10 years of Volt ownership my comparative expense will have saved me almost 30 grand. Now looking at cheap gas and no tax credit, yes I can see the bottom falling out of EV sales. Unless those $35,000 stickers get down to $29,900 area. An article today warns of 20% increase in oil prices this year, that pushes gas back to $3 plus. Perhaps that will spur a big push in sales before the magic 200,000 quota is reached.

 

[Shivetya]

There are far more types of EV buyers.

You completely overlook the pretentious crowd, usually driving one of two brands of EV. Then there is the "EV" is just cool, love how it accelerates. Then the faux environmentalist type that has an EV but still jets around on trips or has two homes.

Then there are nut cases like me who figures he can offset his EV with a good old Road King Actually I finally bought the Volt after more than a decade of convertibles because while I liked the idea of the Volt I could not stand the v1 center stack and I could not have a chance of to and from work on EV. The v2 took forever to come to Georgia and when it did I wanted to hold on to my current car at least two years. Jumped when I figured its the last year GM cars will qualify for the 7500

 

[caronjeff]

Yes I completely forget the average Tesla buyer is making 7 figure salary and burning way more fossil fuel cooling a couple of California mansions, than will be saved by an EV! LOL

 

[Jmaj]

An article today warns of 20% increase in oil prices this year, that pushes gas back to $3 plus. Perhaps that will spur a big push in sales before the magic 200,000 quota is reached.

Doubt it. My friend the Volt salesman says it took $4 gas to stimulate sales the last time gas prices rallied. Meanwhile the competition hasn't been standing still. I've rented/test driven some ICE vehicles lately that showed some very impressive MPG figures.

 

[bjrosen]

For a car in the Volt's or Bolt's price range the Federal and State incentives do make a big difference because they add up to 25% of the price of the car. Fuel costs and the environment didn't enter into my decision to buy the Volt, I don't care about fuel costs and as for my environmental impact heating and cooling my house take far more energy then any car would. I bought the Volt for two reasons, the first was electric drive and the second was the price vs my other choice, the Audi A4. The Volt with incentives was $20,000 less than the Audi and that sealed the deal for me. Drive trains excepted, the Audi is a much better car, it handles better and it's AWD. However the electric drive in the Volt is simply better than any pure ICE drive train, even a really good one like the Audi's. Electric motors are silent, there is no transmission to jerk, and they have great acceleration. ICE cars in the Volt's price range, and much more so in the Volt's post incentive price range, are horrible. They are gutless, noisy and the transmissions jerk like crazy. When you get up to the Audi's price range ($50K +) then the worst features of ICE drivetrain's are tamed, a turbo 4 has good acceleration and the Audi's transmission was relatively smooth. There is one more bad feature of AWD ICE cars and that's the transmission hump that protrudes into the passenger's space. My old 300C had it and the Audi has it, the Volt doesn't, my girlfriend finds that hump to be very uncomfortable so her vote was for the Volt on that feature alone. From my point of view if the choice was between the Audi at $50K and the Volt at $40K I might have gone with the Audi because AWD is a really important feature and it isn't available on the Volt. However the Audi at $50K and the Volt at $30K made the decision much easier, AWD is worth $10K to me but not $20K, plus I'm a techy and once I'd experienced electric drive I knew that was the drivetrain of the future and I really wanted it.

 

[Ziv]

The month the credit goes away, or gets reduced, the Volt and Bolt prices will drop by nearly the same amount. GM is using the credit to get back a lot of the investment they made in developing electric vehicles. Nissan is probably doing the same thing.

 

[Bacardi]

The month the credit goes away, or gets reduced, the Volt and Bolt prices will drop by nearly the same amount. GM is using the credit to get back a lot of the investment they made in developing electric vehicles. Nissan is probably doing the same thing.

Except the actual GM offerings tell a different story...Gen2 Volt since launch has had very generous incentives and could be purchased under invoice through Costco...Not the case at all with the Bolt EV, qualifies for almost no incentives and even the "deals" aren't as good...

 

[AtomicPowered]

Tax credits don't suddenly end. They phase out over a year and only for the manufacturer who hits a sales target. If GM hits 200000 electrics sometime next year buyers can get a reduced credit for the year after. GM then has to decide to lower their price since the competition's vehicles still have tax credits. Some companies have sold so few electrics that the tax credits will be around for them for many years. The established electric makers like GM, Tesla and Nissan should be able to match price with the laggards. Sales crash very unlikely.

 

[ItsNotAboutTheMoney]

The month the credit goes away, or gets reduced, the Volt and Bolt prices will drop by nearly the same amount. GM is using the credit to get back a lot of the investment they made in developing electric vehicles. Nissan is probably doing the same thing.

That's one of the problems: the market is artificial so we really have no idea what the real costs are.

The other problem in judging the market is that the Model 3 reservations have locked up hundreds of thousands of potential buyers. We should have a much better idea by next year.

 

[ItsNotAboutTheMoney]

Tax credits don't suddenly end. They phase out over a year and only for the manufacturer who hits a sales target. If GM hits 200000 electrics sometime next year buyers can get a reduced credit for the year after. GM then has to decide to lower their price since the competition's vehicles still have tax credits. Some companies have sold so few electrics that the tax credits will be around for them for many years. The established electric makers like GM, Tesla and Nissan should be able to match price with the laggards. Sales crash very unlikely.

Within a period of 15 months, credits will drop from $7,500 to $0. That's a _huge_ difference. For a 36 month lease that's over $200 per month. Given that plug-ins have had high lease rates we really should _hope_ that manufacturers are using the credits to maximize margins.

 

[Ziv]

That is a good point AP.
The 2 main US electric car companies (Tesla and GM) will each see their tax credits cut in half 3-6 months after they sell their 200,000th electric car, but they can sell an unlimited amount of cars in that 3-6 month period and ALL of them get the full credit. Obviously this will probably help Tesla more than GM because I just don't see the Volt and the Bolt selling that many cars in a relatively short period of time.
Or Congress may decide that the credit should go away as soon as the credit gets cut in half for Tesla and GM. And I really don't think it will be missed at that point. It could hurt the Bolt a bit, but the Volt is going to continue to outsell the Bolt in all likelihood. And by that time the Bolt will probably be seeing some better deals after having been produced for more than a year and a half, at least.

Tax credits don't suddenly end. They phase out over a year and only for the manufacturer who hits a sales target. If GM hits 200000 electrics sometime next year buyers can get a reduced credit for the year after. GM then has to decide to lower their price since the competition's vehicles still have tax credits. Some companies have sold so few electrics that the tax credits will be around for them for many years. The established electric makers like GM, Tesla and Nissan should be able to match price with the laggards. Sales crash very unlikely.

 

[JStrnad]

I don't know how analogous the situations are, but I remember the big transition to digital TV about a decade ago. The government subsidized converter boxes with a $40 rebate on devices that cost around $60-70. Once the rebate ended, those same boxes dropped to the $30 range.

Still, I expect the loss of the $7500 credit to be a blow.

As for gas prices, I expect they'll go up. It's what they do, go up and down, and they're down now, so.... And the current administration likes fossil fuels, so I expect the price will go up to profit their cronies.

 

[Ladogaboy]

It would appear plug in EVs have 2 types of buyers. #1 those who consider themselves environmentally responsible and feel good about not burning gasoline, divorcing themselves from big oil, etc. #2 those who did the math, especially back in the $4 a gallon era and purchased in large part on economics.

Don't forget those who want to eradicate the fossil fuel industry as the primary source humanity's energy because they see that industry as a corrupt, warmongering agency that puts us all in danger.

For me, it really doesn't matter how much gasoline costs because it will still be more than I am willing to pay (and not an industry I am willing to support). My end goal is a self-sufficient homestead with ~ 10 kW solar, battery back up, etc. Under that model, $0.00 a gallon would still be too much to pay to keep driving an ICE vehicle.

 

[bjrosen]

I don't know how analogous the situations are, but I remember the big transition to digital TV about a decade ago. The government subsidized converter boxes with a $40 rebate on devices that cost around $60-70. Once the rebate ended, those same boxes dropped to the $30 range.

Still, I expect the loss of the $7500 credit to be a blow.

As for gas prices, I expect they'll go up. It's what they do, go up and down, and they're down now, so.... And the current administration likes fossil fuels, so I expect the price will go up to profit their cronies.

It's not analogous at all. The adapter box subsidy was aimed at the very poor who didn't have cable and who couldn't afford new HD TVs which were very expensive at the time. The government mandate which discontinued analog broadcasting placed a burden on the poor, the subsidies were a means of compensating for that. The EV subsidies are aimed encouraging the adoption of a new technology without mandating it. My guess is that Tesla might have done fine without the subsidies because they were selling $100K cars, but there would have been no Volts or Leafs without it. People don't pay $40K for small Chevy's, a small Chevy sells in the low 20s. By pushing the price down to 30K, still high for a Chevy, it created a market which helped drive the cost of batteries down.

 

[llninja]

Yes I completely forget the average Tesla buyer is making 7 figure salary and burning way more fossil fuel cooling a couple of California mansions, than will be saved by an EV! LOL

You don't need a 7 figure salary to afford a Tesla. There are plenty of 6 figure salaried people who overextended themselves or leased because they think they can make the payments. Heck, once my mortgage is done, I should be able to buy one with no problem at all.

 

[PilotAlan]

I've rented/test driven some ICE vehicles lately that showed some very impressive MPG figures.

Yep. I just drove a new Mercedes C300, its turbo 1.8l has surprising power, and gets over 40mpg at 75mph. Typical commute city/highway it was getting over 30mpg.

Pretty darn good for AWD luxury sedan. Smooth, quiet, insanely comfortable seats. A hybrid is coming, I bet that one will get near 50mpg combined city/highway commute.

 

[voganni]

I dunno, I think a Volt and Road King are the perfect combo! (see my Avatar) The Hog ('97 fuel injected EVO) still delivers 47-50 mpg, which is better than most current touring motorcycles. Motorcycles have pretty much maxed out in efficiency, so not much point in upgrading IMHO. And of course the Volt is still way ahead of the competition.

To the OP who was comparing with the Audi, look at those cars a few years down the road. They do not age well, and maintenance costs get astronomical nearing 100k. Transmission costs in particular can relegate one to the junkyard.

 

[madmike]

All I can add is that I am taking the likelihood of the expiration date into consideration for the timing of buying my next EV.

 

[llninja]

All I can add is that I am taking the likelihood of the expiration date into consideration for the timing of buying my next EV.

I dunno, the article was all speculative given all the activity coming from the White House in tossing out anything the smells environmental and doing anything possible to drill baby drill. I'm not going to let the conjecture of the end of the federal tax credit warp my thinking. If the credit is there when I'm ready for my next EV, I'll take advantage of it. But if I'm not ready to buy, doing so will either hurt the pocketbook or cause me to buy something that I might regret later.