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Eliminate, Don't Expand, Electric Vehicle Credit

Congress should resist the call of special interests.

For manufacturers of electric vehicles, you might expect the accomplishment of moving their 200,000th unit to be met by celebration. However, because the threshold triggers the reduction of a juicy federal handout that props up electric vehicle sales, we're getting hand-wringing instead. There's even a push to expand the giveaway and keep taxpayers on the hook in perpetuity.

The $7,500 tax credit applies to the first 200,000 electric vehicles sold per manufacturer—a threshold both Tesla and General Motors are about to hit—at which point it is then phased out over the course of the subsequent year. The tax credit, along with many other renewable-energy inducements and incentives, unfortunately survived last year's tax reform. But that's not enough for its beneficiaries.

Tesla's chief executive, Elon Musk, has managed to make his company sound like a victim of the whole thing. Amazingly, he said during an earnings conference call that "it drives (him) crazy" for Tesla to be perceived as dependent on government subsidies and that "those fools don't realize" that "Tesla has succeeded in spite of the incentives, not because of them."

He must truly be an impressive leader for his company to survive under so terrible a burden as benefiting from taxpayer-funded subsidies for those who buy his products. But how are we taxpayers supposed to feel, knowing that we have been subsidizing some of the most expensive cars out there for the sole benefit of the richest Americans (a 2017 Tesla Model S sedan costs between $69,500 and $140,000) under a bogus excuse that it would help the technology develop?

Musk further argued, "What matters is whether we have a relative advantage in the market, and in fact the incentives give us a relative disadvantage." To a degree, he has a point, but he's ignoring the benefits his company has reaped from the tax credit and focusing narrowly on the downsides.

Musk is also right that California's Zero Emission Vehicle program gives an advantage to companies manufacturing both electric vehicles and traditional vehicles, because they can use the California Air Resources Board credits awarded for producing electric vehicles to offset their dirtier products, whereas manufacturers of EVs alone must sell them at reduced value on the market. Such perverse incentives are why governments should be wary of trying to steer markets in the first place.

Federally, when the credits for Tesla and GM are reduced or eliminated, they'll be at a disadvantage compared with other EV manufacturers. However, that's a problem that only exists because of the benefits received up to this point. For most consumers, Tesla's products are competing against all vehicle types, not just EVs. And the tax credit has afforded the company's products a tremendous advantage over nonelectric vehicles.

In other words, any downside of being among the first to hit the end of the federal tax credit pales in comparison with the benefits of receiving the credit at all. So for the sake of taxpayers, legislators should resist falling for Musk's crocodile tears if it means prolonging availability of the credit. Eliminating it altogether, on the other hand, would both serve taxpayer interests and address some of Musk's competitive complaints, though it would also mean that electric vehicles would have to compete with non-EV models on flatter ground.

EV manufacturers aren't the only ones pushing for expanding the tax credits. Utility companies hoping to boost demand for electricity also want to keep the handouts flowing.

Some argue that utility rates would benefit by better using the underutilized capacity during off-peak hours that must be generated to meet peak load demands, especially during summer months. Making use of currently underutilized capacity would allow fixed capital costs to be recovered over a larger volume of electricity sales and thus at lower prices. However, that would require EV owners to charge their vehicles when utilities want. If owners instead charged when arriving home after work, as they often do, it could instead exacerbate peak demand issues.

In either case, the entrance of utilities into the debate over EV handouts is a reminder of how quickly special interests can overwhelm the collective voice of taxpayers and mold the tax code to their benefit. Congress failed to fully utilize the opportunity afforded by last year's tax reform to end the electric vehicle tax credit and other programs that force all taxpayers to subsidize the activities of a tiny few. At a minimum, Congress should avoid compounding that error and resist the call of special interests to expand electric vehicle subsidies.

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  • Yellow Tony||

    Congress failed to fully utilize the opportunity afforded by last year's tax reform to end the electric vehicle tax credit and other programs that force all taxpayers to subsidize the activities of a tiny few.


    If they ended many of those programs, it probably wouldn't have passed. Much like retardation with asukafags/reifags, you can't divorce special interests from politicians.


    Unrelated, but I went to a McDonalds to take a shit and clogged the toilet. Not only that, but some of my boys got really attached to the insides of the bowl; it was as if the porcelain surface was breast-feeding my little brownies. It was cute.
    What was not cute, however, was the spectacle of one of the employees placing an "out of order" sign on the door of the stall of the toilet I raped. It's said that the malefactor always returns to the scene of the crime, and I did several times, and I will do so in the future. I might sound like a rapist, but I will not be deterred; I will not let those hateful employees shame me and my body for what was an unavoidable dispensing of fecal matter. Hell, some people would pay to be under my anus when the show starts! (Ever see those pieces of art where a girl or boy is turned into a toilet?) They should send in one of their weirdos (There's always at least one working at these places.) to clean up my accident. He can get off and earn his paycheck simultaneously. Win-win!

  • EscherEnigma||

    You need more fiber in your diet.

  • hello.||

    Better make sure your "science correspondent" Ron Bailey doesn't read this.

  • Longtorso, Johnny||

    And conservatives pounced:

    We've reached the 'conservatives pounce' portion of the Alfie Evans story
    If there's a news development that reflects poorly on the state, you better believe national media will follow up eventually with coverage not of the story itself, but of how conservatives are supposedly exploiting it.

    The "GOP overreach" narrative is so common a response from media to major stories, that it is now a bit of a worn-out cliche. But don't expect newsrooms to abandon this particular genre of reporting anytime soon, even if it is fodder for so many punchlines....

  • Longtorso, Johnny||

  • Longtorso, Johnny||

    Mark R. Levin

    @marklevinshow

    It was the Clinton administration that settled a lawsuit in 1997 resulting in the release from detention of illegal alien kids in 20 days, thereby separating them from the adults who are being processed through the immigration system.

  • perlchpr||

    You're in the wrong article's comments.

  • aajax||

    Also missing a few key details.

  • TGGeko||

    Tax credits should be extended. They should be extended to everyone.

  • Rossami||

    Sarcasm?

    In case it wasn't (because I have heard my economically-illiterate friends suggest scenarios just like this in the past), that proposal takes your money but just gives it straight back to you. So it's a wash, right? Wrong because it takes time and effort to collect the money, track the collections, figure out the allocations and give the money back. All those intermediate steps are overhead and must be paid for. Non-profit solicitation agencies like the United Way do exactly this. For them, an overhead rate of 10-15% is considered very good. Having the government do the same? You'd be lucky to get half your own money back.

  • mtrueman||

    Subsidizing transportation is an honoured American tradition going back to the 1700s with the construction of the Erie Canal. The Interstate highway system is another example, being almost entirely funded by tax payers. The security of world wide oil exports is thanks to the entirely tax payer funded US navy. Without their generous support we'd be walking a lot more.

  • MatthewSlyfield||


    Tesla's chief executive, Elon Musk, has managed to make his company sound like a victim of the whole thing. Amazingly, he said during an earnings conference call that "it drives (him) crazy" for Tesla to be perceived as dependent on government subsidies and that "those fools don't realize" that "Tesla has succeeded in spite of the incentives, not because of them."

    What a joke. Tesla has never turned a profit. Tesla hasn't succeeded either because of or in spite of the incentives, because Tesla just plain hasn't succeeded.

  • Rich||

    For manufacturers of electric vehicles, you might expect the accomplishment of moving their 200,000th unit to be met by celebration.

    "If only our car carriers didn't use internal combustion engines."

  • TxJack 112||

    Sorry but the entire issue of electric vehicles cracks me up. Okay so electric vehicles eliminate a source of CO2 by reducing carbon emissions from cars but they still rely on electricity which is generated primarily by burning fossil fuels. The only thing electric vehicles do is change the source of the pollution. You may have less from cars, but charging those cars means more electricity has to be generated which in turn means more CO2 and other pollution. Unless every plant using fossil fuel to generate electricity is eliminated, electric cars are nothing more than a way for their owners to feel morally superior to those of us driving traditional vehicles.

  • ||

    The only thing electric vehicles do is change the source of the pollution.

    Not really change, but add. They also don't have the range of plenty of gasoline vehicles and take considerably longer to return to a ready state. Even if they aren't better on a strict CO2/mi. basis, there could be a case to be made for them giving more people free time or greater mobility to do more productive work. Things that may not free you from fossil fuels going forward, but at least diminish the amount of fossil fuels you would need and/or enhance the control you can exert over the fossil fuels you do produce. Unfortunately, that battery technology still seems to be coming 'sometime in the next 10 yrs.'.

  • NoVaNick||

    Just wait until the econutz mandate that all vehicles be electric, and all energy be only solar or wind-you will see a lot of EVs stuck on the side of the road, assuming they will even have enough electricity to keep producing them. Meanwhile, you won't be able to heat your home if you are stuck there on a winter day, because they will only allow electric heat (Norway is already looking to do this, and ban gas cooking stoves too).

  • perlchpr||

    +1 remote emissions vehicles

  • perlchpr||

    As I've said numerous times, I occasionally consider buying an electric vehicle because I've always wanted a car that ran on coal.

  • Cynical Asshole||

    Unless every plant using fossil fuel to generate electricity is eliminated, electric cars are nothing more than a way for their owners to feel morally superior to those of us driving traditional vehicles.

    That's the end game, of course - to replace dirty, filthy, icky fossil fuels with solar and wind (or pixie dust and unicorn farts, whatever). And don't you dare suggest that nuclear energy should be used instead.

    And driving electric cars will still be used as an excuse for their owners to feel smug. All electrics produce twice the smug of hybrid cars.

  • EscherEnigma||

    C'mon, how many Tesla owners *don't* have rooftop solar as well?

    So sure, the grid *as a whole* still relies on fossil fuels, but the homes of *Tesla owners* are increasingly on residential solar.

  • BYODB||

    Of course, rooftop solar panels are inefficient and don't have the surface area to really matter much but on the plus side they do require rare earth's materials and strip mining using fossil fuels.

    Thankfully, it only occurs in places that are notably not our backyard so it's totally kosher.

  • EscherEnigma||

    Seriously dude? You can get rooftop solar that'll provide your entire household needs (including electric car) these days. Yes, the upfront cost ($ and CO2) is higher, but the long-term cost is significantly lower.

  • aajax||

    Upfront cost is not even much of a factor if you lease the system.

  • aajax||

    "Over their lifetime, battery electric vehicles produce far less global warming pollution than their gasoline counterparts—and they're getting cleaner." Union of Concerned Scientists

    Of course, for any one vehicle, the level of reduction is highly dependent on how the electricity is generated.

  • ||

    in fact the incentives give us a relative disadvantage

    Remember, this guy's an engineering genius.

  • MatthewSlyfield||

    If he's such an engineering genius, how come so many of his ideas are so impractical/infeasible? Hyperloop anyone?

  • ||

    He's actually a sort-of physicist. Which makes sense because lots of his ideas seem to run out of gas once they encounter the fact that cows aren't spherical.

    Hyperloop anyone?

    "Yes please!" - The Loop

  • chemjeff radical individualist||

    Yeah it's just welfare for the rich. Get rid of it.

  • EscherEnigma||

    Cool story. End all energy subsidies. That's a stated preference I can get behind.

    But if you can't or won't do that, then your revealed preference is that you're not anti-subsidy, you're just anti-electric cars/anti-renewables. And that I won't get behind.

  • BYODB||


    Cool story. End all energy subsidies. That's a stated preference I can get behind.

    Yup, here we agree.

    But if you can't or won't do that, then your revealed preference is that you're not anti-subsidy, you're just anti-electric cars/anti-renewables. And that I won't get behind.

    Honestly, I don't really get how anyone could be particularly anti-electric cars or renewables. There's nothing inherently wrong with them so I'm not sure if this criticism is actually aimed at anyone who actually exists. I mean, they do have downsides but so does everything.

  • ||

    The term 'renewable' is fraudulent and, as otherwise indicated, the link between electric cars and renewable energy is between tenuous and fraudulent. I don't oppose the derivation of energy from wind or the sun or using electricity to propel vehicles and I don't imagine there are many who do. But being 'anti-electric cars/anti-renewables' hasn't meant anything like this in quite some time.

  • BYODB||

    Yeah, but I'm on a kick lately where I at least try to use the bullshit words that idiots will understand and be familiar with. Obviously a solar panel is in no way 'renewable' as it should be commonly understood.

  • EscherEnigma||

    Whether you are speaking "honestly" or not, you don't have to "get" why people act the way they do to recognize that they do indeed act that way.

    Or are you going to pretend that the GOP hasnt signed on to bashing renewables (and electric cars) as a way to prop up fossil fuels?

  • Rossami||

    Before we get into your rant, let's test your knowledge of GAAP and tax law. Define "subsidies" as they apply to the energy industry.

  • Diane Reynolds (Paul.)||

    So until we end ALL energy subsidies, I'm stuck with subsidizing my neighbor's $100,000 Tesla? Is this really what your'e saying?

    So, no gay marriage until the government gets out of marriage entirely?

  • mtrueman||

    "I'm stuck with subsidizing my neighbor's $100,000 Tesla? "

    The gay next door is subsidizing your gas consumption. The more you drive, the more you can punish him.

  • ||

    The gay next door is subsidizing your gas consumption.

    You mean when the FedGov tacks on $0.18/gal. and the state tacks on another $0.34/gal. that's really my neighbor paying me to use gasoline? And when Maine and Georgia raises registration fees for electric and hybrid vehicles it's subsidizing my gasoline consumption?

    Taxation = private individual subsidization the new libertarian platform! Vote Bill Weld.

  • EscherEnigma||

    "So, no gay marriage until the government gets out of marriage entirely?"
    That was the position of many libertarians. Should illustrate why libertarian positions on these topics aren't particularly persuasive.

  • ||

    More Veronique please.

  • Robert||

    tax credit and other programs that force all taxpayers to subsidize the activities of a tiny few.


    How does allowing some taxpayers to keep more of their own $ force all taxpayers to subsidize them?

  • aajax||

    Presumably they are getting some of the same government "services" while paying less or nothing for them.

  • mondo_cane||

    "Some argue that utility rates would benefit by better using the underutilized capacity during off-peak hours that must be generated to meet peak load demands, especially during summer months."

    Well, perhaps. But taken to the next level of consumer use, it could use nearly all the electricity produced by coal-burning electric providers. Studies have shown that if every vehicle in the US was electric powered, there would not be enough electricity for total consumer use.

    And worse, the need for electricity for vehicles creates its own paradox -- more coal burning emissions are put into the atmosphere than by current fossil fuel use, which is exactly the opposite of the declared primary benefit of electric vehicles.

    Something to think about in our mad dash for electric vehicles.

  • gah87||

    Carbon extraction from the atmosphere is now able to produce synfuels at about $4/gallon. That is down from about $24/gallon a decade ago.

    That assumes using natural gas. Instead, run solar-powered plants in deserts to extract the carbon and make fuel.

    Estimates of the cost of building out carbon extraction infrastructure to address all vehicles are equivalent (under current technology) to building out charging infrastructure for electric vehicles... not to mention the cost of added electrical grid to handle the load from EVs.

  • Roger Knights||

    WaPo ran an editorial several months back similarly calling for the end of the EV tax credit.

  • Bramblyspam||

    My wife and I got an electric car this year (a 2018 Leaf). We have friends with a Tesla, and might have gotten one ourselves if it weren't for the production delays. While I'm totally on board with eliminating EV credits, I'm strongly of the opinion that Teslas are amazing cars, and I'm convinced that electric vehicles are the wave of the future. Our plan is to get a Tesla in a few years, once true self-driving technology is ready for prime time (and the production delays are a thing of the past). By then, I expect vehicle range will also no longer be an issue. Range is already a non-issue for a second car, but I still like having the gas powered vehicle for long distance driving.

    The environmental angle is a nice bonus, but it's not the deciding factor for me. I really appreciate never having to bother with gas stations. Electric vehicles also require much less maintenance in general. This probably has something to do with the engine not needing thousands of controlled explosions per minute.

    If you're in the market for a new car, you should at least test drive some electric vehicles. You might just be amazed at how good they are.

  • Online Pharmacy Pills||

  • Online Pharmacy Pills||

    Cool story. End all energy subsidies. That's a stated preference I can get behind. https://www.onlinepharmacypills.com/

    But if you can't or won't do that, then your revealed preference is that you're not anti-subsidy, you're just anti-electric cars/anti-renewables. And that I won't get behind.

  • ||

    I will do so in the future. I might sound like a rapist, but I will not be deterred; I will not let those hateful employees shame me and my body for what was an unavoidable dispensing of fecal matter.
    https://tanktrouble3.games
    https://happywheels3.games

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