By on May 19, 2011

Speaking at Nissan’s Smyrna, TN electric car factory, Transportation Secretary Ray LaHood noted that his staff is working with Congress to make federal tax credits for plug-in car purchases available as a rebate on the dealer level, saying

We’d like for people to get a $7,500 rebate on the day they buy the Leaf. We’re doing a lot of talking about it. When you give people that incentive to buy a battery-powered car, they’ll do it. We know these incentives help.

Speaking to Automotive News [sub], LaHood even went as far as to argue that the new direction for the tax credits, which were previously only claimable when filing taxes, would be successful for the reason that it would make the credits more like the Cash For Clunkers program. Apparently LaHood has completely forgotten how riddled with waste, inefficiency, fraud, confusion, delays, unintended consequences and all-purpose madness that program was. And that’s just scraping the surface. Foolish as it is to subsidize vehicles during the “fleecing the early adopters” phase of a new technology rollout (perhaps we should be saving stimulus for the inevitable “trough of disappointment”?), making those credits available at the dealer level is even worse, increasing the hype and incurring C4C-like downsides along the way.

 

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18 Comments on “Feds Moving EV Tax Credits To “Cash For Clunkers” Model...”


  • avatar
    windswords

    Speaking of Feds, Chrysler is paying back their loans, and they didn’t do it with another government loan like GM did.

    http://www.autoblog.com/2011/05/19/chrysler-repaying-all-7-5b-in-government-loans-by-next-week/#aol-comments

  • avatar
    Domestic Hearse

    Ed,

    I get that LaHood proposing that the 7,500 become a cash rebate, rather than a tax credit — and thereby goes immediately to the buyer. However, C4C required the trade-in of a, um, clunker. You had to have a trade-in. And that trade-in had to be scrapped.

    Will this C4C-based concept also require a trade-in? Which will need to be scrapped? And if so, will it have to be of a certain vintage or hit minimum efficiency-when-new criteria?

    And is this new proposal only for all-electric vehicles like Leaf, or can electric-then-ICE vehicles like Volt get in the act? Or can hybrids like Insight and Prius cash in as well?

    Lastly, and this one’s hypothetical…aren’t we out of money? Isn’t the deficit high enough already? Or does the administration realize what the car makers have been saying all along: Americans SAY they’d like more efficient cars with their mouths. But when it comes to their wallets, not really. They (we) still prefer our cars big and/or powerful. The only way for us to buy into proposed CAFE targets (literally, buy into) is for the government to sweeten the pot.

    • 0 avatar
      aristurtle

      Nobody’s saying that anything needs to be clunked. The idea is that by paying the money at the dealer rather than as much as a year later with your tax return, the price you’re paying at the dealer might actually be a little closer to the dealer’s advertised (“after rebate!”) price.

      I’m not sure why this is such a terrible idea, really.

      edit: Let me correct that: I know why some people are going to say that any rebate at all is a terrible idea. But if you are going to have a rebate, why require the buyer to front the money and then wait a year to get it? Why is that part controversial?

  • avatar
    Demetri

    The main benefit of this is that everyone is going to be able to take advantage of it. Under the current system, the amount you get back depends on how much you’re paying in at the end of the year. I remember reading that the minimum you have to make per year to possibly get the full 7500 was 55 grand.

    If this goes through, it’s going to make the difference for a lot of people I think, and I’m one of them.

    • 0 avatar
      MikeAR

      When will you people understand that it is not free money. It has to come from somewhere, either from people who pay taxes or from moeny raised by selling debt. Do you think that it is ok to take money from total strangers so you can indulge your electric car fantasy? Or if from debt, should taxpayers have to pay interest for years plus the principle eventually so you can get a car sheaper?

      Maybe you don’t pay taxes and receive a check every month from the government. In that case it is all free money to you. But it isn’t for the rest of us. I do not expect you to buy me a car and I do not want to buy you one. Grow up something for nothing does not exist.

      • 0 avatar
        Demetri

        I agree, but if they’re going to do it anyway I might as well take advantage of it and get a little something back. God knows I pay for all kinds of stuff that I don’t use through taxes. Why does the local school district take an ungodly chunk of my property taxes when I don’t have kids? Why does the local junior college get a piece? How about the library or public transportation unit? At least this is something that I can actually use.

      • 0 avatar
        MikeAR

        Cynicism wins out every time. Someone, somewhere has to have the self respect to say no, I’m not going to hurt other people by stealing their money. That is exactly what you are doing, stealing. Remember two wrongs don’t make a right.

      • 0 avatar
        hreardon

        Demetri –

        That, unfortunately, is the new religion in America: “everyone else got theirs, why shouldn’t I get mine?” Followed to its logical conclusion it leads America to a dead end where everyone is broke and nobody cares about anything.

        The library, public roads, public schools and public hospitals are all part of “the commons” – they are things which everyone, as taxpaying citizens (or not, in some cases), receive as part of paying into the system via income and property taxes. These are shared goods, not owned by any one individual but by the state.

        LaHood’s plan essentially enriches a few select groups: auto dealers and auto manufacturers of select makes and models and rewards a select few individuals who now get private ownership of a car. Unless you are willing to share your car with the community, Demetri, this is substantially different from public transport or the public library.

  • avatar

    If 1 million people took advantage of such an incentive (the number of EVs O’b wants on the road by 2015, that would cost $7.5 billion, or about $24 per American citizen. Put that way, it doesn’t sound like so much, but it probably would be more effective–given the current unsuitability of batteries to cars–to put that money into R&D.

    • 0 avatar
      Demetri

      It would make a lot more sense if they funded it with a gas tax, provided that you agree with the government that it’s important for the nation as a whole to reduce our usage of fossil fuels.

  • avatar
    Zackman

    I believe the government is trying to find ways of embracing and encouraging new technology as a way to lessen the reliance on oil as a major expendable energy source. This is just one way of doing it, right or wrong. Whether there are practical alternatives that will fully replace what we now heavily rely on is anyone’s guess at this point. Fact is though, that burning gasoline and choking the roads with vehicles in so many places is the only way for the majority at present to get around.

    Like the three-part Nissan Leaf series, where certain technology makes the most sense right now, is where the infrastructure to support it will be developed, and like a hub-and-spoke system, expansion will follow.

    Governments will do what’s in their best interests. If an individual or many individuals don’t like it, it really doesn’t matter. The only issue I have is in so many areas, some people learn to “game” the system for selfish advantage, and that’s truly what offends me.

  • avatar
    jmatt

    Why is nobody asking why consumers have to be bribed to purchase these vehicles?

    Someday, I’m going to move to a free country where I am not forced to pay for other people’s shit. This country died in 1913 when they instituted the income tax and we all got the “right” to take other people’s stuff.

    And when the government realized it needn’t be constrained by taxes and could steal money from the future with debt, it dug up the country’s corpse and had a necrophiliac field day with it.

  • avatar
    Mike Kelley

    I saw another semi load of smashed “clunkers” go by the other day. As usual, the cars still had their tires and rims on them when they were crushed. That wasteful program was stupid, even by government standards. Our budget deficit is now running at $1.5 trillion per year. Since it is insane to blow a bunch more cash trying to get folks in politically correct cars, I imagine that is just what we’ll do. Check out the graph at this link to see where we are headed with all the spending: http://www.powerlineblog.com/archives/2011/05/029026.php

  • avatar
    ciddyguy

    Right now with the lack of charging station infrastructure, I’m not buying into this technology as it would not work for my needs and I could not take advantage of the C4C deal either due to my income which, even after the $3500-4500 rebates offered could not handle the payments of a new car, such as a basic, bare bones Yaris or Accent hatchback as I was about to get a loan to upgrade my PC for one powerful enough to what I need to do in order to move ahead and make more money with new skills, which was MUCH more important than a new car, but that WAS 2009 and today is well, today and I’m ready to try and upgrade the car, but for now, another ICE based vehicle will be mine soon.

  • avatar
    Koblog

    Tell me again why the Feds have to bribe car buyers with borrowed money future taxpayer need to pay back in order to get people to buy electric cars today?

    If electric cars are such a slam dunk good idea, why won’t people buy them?

    Don’t forget, Obama INTENDS for electricity prices to go up, so whatever savings you get early will disappear later.

    And some states have already decided to lay an extra “road” tax on electric vehicles because they won’t be paying the gasoline tax.

    All that, for a 50 mile radius.

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