My colleague Steve always takes the good stories quickly. Steve! This time, he beat us all to cover the proposed law on electric cars. Which is cool because he gave it a very thorough analysis and now I do not have to. On the other hand, my experience of working with dealers tells me that the bill needs a few changes if we want it to succeed, because as written, it will be a great gift for car dealers and will not help more electric cars to sell.
For those of you who do not want to read Steve’s article (it’s okay, I’m lazy some days too), here’s a quick review of what the bill will do:
- Remove the ceiling per. Manufacturer, and give consumers access to the tax rebate for the next 1
- Allow buyers to use the tax rebate over a period of 5 years or use the credit on the spot at the dealer to reduce the price of the vehicle, making the credit more applicable to those without large tax liability.
- Providing a 10-year extension of tax deductions for vehicles with alternative fuels and charging infrastructure to stimulate the construction of this important infrastructure around the country.
If you purchase an EV today, the credit will not be refunded as the credit earned. So if you do not owe the feds thousands of dollars at the end of the year, it will not help you much and may not even help you. So by making it a sales rebate / discount that lowers the price out the door by $ 7000, Americans of all income levels will actually use it to buy an EV and get lower payments.
To remind you of car dealers, here is Harry Malurt from the 1996 movie Matilda:
Anyone who likes money knows that the “price” at the dealer is not what you have to pay unless you buy a Saturn or a Tesla, and the dealers are all out of Saturn, just as John Nada is out of bubble gum. If you do not go in there ready to haggle, they will kick you.
What dealers will do is start at MSRP, which is thousands of dollars more than what the car should actually sell for, and then give you the federal discount that does not cost the dealer anything to give you. They make it look like you are getting a good price, but in reality, the retailer will be the one who benefits from almost the entire discount.
If the bill goes over as suggested, be sure to take full advantage of it by not letting dealers use it as a scam to rip you off. Negotiate based on the actual dealer cost (you can find this on Google), then withdraw $ 7000. Start your negotiations there and pay no more than approx. $ 2000 in addition to that. You may need to go out and go to more retailers to get that price.
Now, CleanTechnica readers know how not to be ripped off with their own tax credit, but there is no way we can possibly tell the whole country how not to be taken off by the dealers, so if they were approved as proposed, we would basically give the dealers a huge gift while not actually lowering the price of an EV much. Thus, many taxpayer money would be wasted.
To change this, we need to tighten the rules for tax deductions a bit.
How to settle this bill
To really get this bill to promote lots of electric sales, we need to do things to ensure that it has an impact and encourages both consumers and dealers (especially salespeople) to sell you an electric car.
First, we must set a limit on dealer costs for offers that qualify for a discount at the point of sale. Charge the customer one dollar more than the allowable amount and you can not get the federal money to cover the sale. Dealers do must be able to monetize each sale, so we can not set this for reseller costs, but there must be a reasonable limit to ensure that the program is not just a gift to them. We could set this at $ 2500 over the actual dealer cost (including holdback and other things they can play with) or set it as a percentage of sales. This would prevent retailers from making money while the program becomes nothing more than a gift to them.
We also need to think about the seller. If they think they can make a better commission on a gas car, they will push customers to buy the gas car. It’s about making money, and we ignore that at the expense of the program. To solve this we have to do what is called a “Spiff”. Give the seller $ 300-500 in cash for each EV sold. Do this and they will be sure that the party has all its EVs sold before considering selling a customer with a gasoline powered car. Even then they will ask them to please, thank you, come back next week. “I have the perfect car for you coming in on Tuesday!”
Even if we lower the price of vehicles by 7 grand, we still need more infrastructure. We need every retailer in every small town to put in charging stations. To do this, we can allow dealers who host a fast charger to sell their cars for a little more. In the months when they have an operational DC quick charger available to the public 24/7, they can sell the electric cars for $ 500-1,000 more. Just a few sales cover the cost of demand fees and help cover the cost of the equipment.
However, the station must be operational. This can be enforced with a required label on the charger / connector with a number where users can report that the charger is down. If they do not fix it ASAP, they will lose that portion of the sales cake that month.
If we want this to have any chance of passing the Senate, we better make sure it’s not a “tax credit for the rich.” If we put a cap on the price of the vehicle, we can prevent it from being used for expensive electric cars. This will encourage manufacturers to offer electric cars that the average person can afford and not sit on luxury SUVs while offering nothing within the reach of most people.
If we can do all these things, the program will be a wild success. If we do not do that, we are just wasting money.
Featured Image: US Capitol Building, by US Architect of the Capitol (public domain)
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