Is California Bailing Out Tesla through the Backdoor?(wolfstreet.com)
wolfstreet.com
Is California Bailing Out Tesla through the Backdoor?
http://wolfstreet.com/2017/07/16/california-bail-out-tesla-ab1184-ev-incentives/
47 comments
FYI, in case the reference to Business Insider in the above seems odd, the mods have apparently not only changed the headline to a more clickbait one than it used to be, but also ibexplicably changed the source article from a BI article to a nearly-identical (to the point that if they were turned in in a the same class in school, the putative authors would probably be hauled in to answer questions about plagiarism) WolfStreet article.
Is this the Business Insider article you're referring to?
http://www.businessinsider.com/tesla-stock-price-california-...
If so, it's written by Wolf Richter, the owner of the Wolf Street blog, and has a link to his "original article on Wolf Street" at the bottom. Not plagiarism.
HN Guidelines ask you to "submit the original source", so this is probably why the HN headline was changed.
http://www.businessinsider.com/tesla-stock-price-california-...
If so, it's written by Wolf Richter, the owner of the Wolf Street blog, and has a link to his "original article on Wolf Street" at the bottom. Not plagiarism.
HN Guidelines ask you to "submit the original source", so this is probably why the HN headline was changed.
Good to hear, as the way they phrased this was as a blanket invitation for electric vehicle manufacturers to raise prices (if they add $x to their prices, their revenue would go up by $x, but customers wouldn't complain, as they would get $x more rebate)
I don't understand why they are singling out Tesla here. There are currently 4 other large volume production EV's being sold in California (Nissan Leaf, Hyundai Ioniq, Chevy Bolt, BMW i3).
EV's make good sense both economically and environmentally for California in the long run, but we still need the tax incentives for the next few years until battery costs come down with new production capacity.
EV's make good sense both economically and environmentally for California in the long run, but we still need the tax incentives for the next few years until battery costs come down with new production capacity.
> I don't understand why they are singling out Tesla here.
Because clearly the included plug-in hybrid subsidy is obviously a handout to Tesla, which doesn't even participate in that market.
Or because it's a hit piece that doesn't cite anything in the actual bill, only claims in an email from a hostile legislator and reporting by other news outlets.
Because clearly the included plug-in hybrid subsidy is obviously a handout to Tesla, which doesn't even participate in that market.
Or because it's a hit piece that doesn't cite anything in the actual bill, only claims in an email from a hostile legislator and reporting by other news outlets.
Why would any govt want to subsidize hybrids? isn't their goal to be all electric by 2050 something?
> Why would any govt want to subsidize hybrids?
Because for many common usage patterns, plug-in hybrids get nearly all the emissions benefits of full-electric vehicles, but a practical for people to use who have a small fraction of use where a full EV would not currently be suitable for reasons of range and state of fast-charging infrastructure.
> isn't their goal to be all electric by 2050 something?
The real goal is reducing greenhouse gas emissions. But, a subgoal of that cited by the governor's executive order that this bill cites is a target to have “virtually all” personal vehicle transportation be zero-emission by 2050. Some (possibly even significant) share of personal transport being by PHV that are used mostly within their all-electric range would not be incompatible with that.
And, in any case, the PHV subsidy in the bill phases out more than 25 years before 2050, because PHVs are seen mostly as a bridge, not a end-goal solution.
Because for many common usage patterns, plug-in hybrids get nearly all the emissions benefits of full-electric vehicles, but a practical for people to use who have a small fraction of use where a full EV would not currently be suitable for reasons of range and state of fast-charging infrastructure.
> isn't their goal to be all electric by 2050 something?
The real goal is reducing greenhouse gas emissions. But, a subgoal of that cited by the governor's executive order that this bill cites is a target to have “virtually all” personal vehicle transportation be zero-emission by 2050. Some (possibly even significant) share of personal transport being by PHV that are used mostly within their all-electric range would not be incompatible with that.
And, in any case, the PHV subsidy in the bill phases out more than 25 years before 2050, because PHVs are seen mostly as a bridge, not a end-goal solution.
Probably nothing to do with decision makers being aggressively lobbied by major car-makers that would prefer to make the easier-to-sell hybrids than full-blown electric cars.
But this is the main problem right? The companies are not allowing other companies to grow, they have done so successfully since a few decades, if they had not lobbied so aggressively, we'd have practical electric cars long time ago. It was purely due to Tesla's brand that Electric cars are now alive. nothing else.
[deleted]
Trickle-down environmentalism is not real environmentalism, and the ruse is becoming clearer by the day.
Because the benefits of the subsidy are disproportionately given to companies that exhaust federal subsidies. And Tesla will be the only one to do that for some time.
EV's don't make good sense "economically" for California yet. It's not unreasonable to wait until battery costs come down so mass adoption comes naturally.
They do make sense environmentally, but there is a far better way to compensate them for the actual value of their environmental benefit rather than a politically decided subsidy. California is already discussing doing it's own Cap and Trade market. Instead of subsidizing "zero emission" cars, it creates a market cost for carbon emissions, and raises the prices of gas engined cars, and not just newly purchased cars, all cars.
And it's fair, if your Tesla gets all of it's electricity from coal fired plants, you'll pay your fair share for that plants emissions.
EV's don't make good sense "economically" for California yet. It's not unreasonable to wait until battery costs come down so mass adoption comes naturally.
They do make sense environmentally, but there is a far better way to compensate them for the actual value of their environmental benefit rather than a politically decided subsidy. California is already discussing doing it's own Cap and Trade market. Instead of subsidizing "zero emission" cars, it creates a market cost for carbon emissions, and raises the prices of gas engined cars, and not just newly purchased cars, all cars.
And it's fair, if your Tesla gets all of it's electricity from coal fired plants, you'll pay your fair share for that plants emissions.
>It's not unreasonable to wait until battery costs come down so mass adoption comes naturally.
But how will battery costs come down if no one invests in it? You sound like the people in my country, forever waiting for the price of wind turbines to drop.
The Danish, German and Dutch government handed out massive subsidies for the first wind parks. Now, because of those subsidies, subsequent wind turbine parks can be built without any subsidies.
But that would've never been possible without those initial investments.
But how will battery costs come down if no one invests in it? You sound like the people in my country, forever waiting for the price of wind turbines to drop.
The Danish, German and Dutch government handed out massive subsidies for the first wind parks. Now, because of those subsidies, subsequent wind turbine parks can be built without any subsidies.
But that would've never been possible without those initial investments.
How did light bulbs ever become cheap enough to use without anyone using them? It's called research and development. Throwing out subsidies for specific technologies helps those technologies develop faster, but doesn't necessarily help the best technologies succeed. President Grant might have funded better technologies for getting more whale oil.
Just putting in a cap and trade system makes carbon neutral power generation much more attractive. But it doesn't pick the winners, and maybe some technology you and I are skeptical of turns out to be far better than the others.
Just putting in a cap and trade system makes carbon neutral power generation much more attractive. But it doesn't pick the winners, and maybe some technology you and I are skeptical of turns out to be far better than the others.
> How did light bulbs ever become cheap enough to use without anyone using them?
They didn't, which is why adoption was gradual.
Had there been a concern for a major global environmental catastrophe which more rapid adoption of electric lighting would help stave off, public subsidies to encourage adoption and accelerate development might have made sense.
They didn't, which is why adoption was gradual.
Had there been a concern for a major global environmental catastrophe which more rapid adoption of electric lighting would help stave off, public subsidies to encourage adoption and accelerate development might have made sense.
There is no guarantee that battery costs will come down naturally. The point of the subsidy is to help drive demand long enough so that the market forces have time to work on bringing those costs down. And even then, there is no guarantee that this will work. But batteries are a critical technology for many reasons (particularly the grid), so it makes sense to target this technology specifically. Look at what the CSI program did to CA's solar industry for an example of how fast a well planned incentive program can bootstrap an industry.
Also, CA already has a cap and trade program (a bill just passed to extend the program another 10 years). It has been around since 2012.
Also, CA already has a cap and trade program (a bill just passed to extend the program another 10 years). It has been around since 2012.
I don't understand why there's a need for complex cap and trade schemes to deal with carbon emissions from vehicles when there is a perfectly simple way of adding a cost to driving a carbon-emitting vehicle. Just add more taxes to gas. Taxing the vehicles unfairly punishes people who drive gas vehicles but organize their life in such a way that they don't need to drive many miles. Who is more environmentally friendly, someone who drives 60 miles per day in a vehicle that gets 60 miles per gallon or someone who drives 10 miles per day in a vehicle that gets 20 miles per gallon? For that matter, electricity isn't 100% renewable, even in CA, so even people driving fully-electric vehicles will also have some carbon impact, which should be, likewise, taxed. Carbon emissions are an externality and we should be treating them as such.
Taxing vehicle sales and offering subsidies are dumb ways to incentivize reducing environmental impact. Instead, just tax that environmental impact directly and don't punish people who figure out how to live environmentally friendly using older, less environmentally friendly technology. People and companies will adjust their behavior accordingly. As a bonus, instead of costing the state billions, the state will collect billions, so they can spend the money building out renewable energy infrastructure, planting trees, creating more state parks and other programs that benefit the environment.
Taxing vehicle sales and offering subsidies are dumb ways to incentivize reducing environmental impact. Instead, just tax that environmental impact directly and don't punish people who figure out how to live environmentally friendly using older, less environmentally friendly technology. People and companies will adjust their behavior accordingly. As a bonus, instead of costing the state billions, the state will collect billions, so they can spend the money building out renewable energy infrastructure, planting trees, creating more state parks and other programs that benefit the environment.
Carbon taxes are imperfect solutions because you don't where to set the tax at. A good cap and trade market will find the right price, and even better, it should use the same price to compensate people for building carbon sinks, ie. planting trees, etc.
It's really unlikely we can get anywhere near the reductions we need simply by limiting carbon emissions, returning lots of carbon from the air into sinks likely can be far cheaper than stopping the last X% of emissions.
It's really unlikely we can get anywhere near the reductions we need simply by limiting carbon emissions, returning lots of carbon from the air into sinks likely can be far cheaper than stopping the last X% of emissions.
What about the carbon emissions in order to manufacture the car, dig up mines for lithium etc? Surely that needs to be accounted as well.
That's what a well designed cap and trade system should do.
[deleted]
[deleted]
> EV's don't make good sense "economically" for California yet.
Presumably, the scare quotes around “economically” are recognition that this argument is based on ignoring emissions-related externalities, management of which is almost the entire cited premise of the bill.
Presumably, the scare quotes around “economically” are recognition that this argument is based on ignoring emissions-related externalities, management of which is almost the entire cited premise of the bill.
You are exactly right. I'm just saying that having a market set the price like cap and trade should do is far more efficient.
Is Tesla in trouble financially? And I mean actual can-no-longer-be-profitable type trouble? That seems an odd call given that they've so far planned pretty comprehensively, and delivered pretty much on their plans, and those plans would have included the existing subsidy ending as soon as they hit higher volumes.
The fact that they're hellbent on hitting those higher volumes ASAP indicates to me that they know they'll still be profitable after the subsidies are gone. In fact, they'll probably gain some advantage from the fact, as the only EV manufacturer operating at any kind of volume, because it will raise the barrier to entry for newer, still-lower-volume manufacturers.
So yeah, nice windfall for Tesla, but 'bailout' seems somewhat loaded.
The fact that they're hellbent on hitting those higher volumes ASAP indicates to me that they know they'll still be profitable after the subsidies are gone. In fact, they'll probably gain some advantage from the fact, as the only EV manufacturer operating at any kind of volume, because it will raise the barrier to entry for newer, still-lower-volume manufacturers.
So yeah, nice windfall for Tesla, but 'bailout' seems somewhat loaded.
They raised a ton of money recently to cover the continuing investment they forecast needing to make it to profitability. But they then turned around and bought hemorrhaging Solar City, so it's unclear how long the cash will last and whether it's long enough.
So if a P100D has the 0 to 60 of an exotic, but all the interior fit and polish of a base trim CLA, taxpayers should... cover the difference in price to a CLA? There has to be something missing here.
Nope, you got it. Small group of people get to decide which products get how much in subsidies, and by extension, which companies get how much taxpayer money. Also, since it's a per-vehicle subsidy, it rewards large companies over small ones. (Not to mention wealthy consumers over poorer ones.)
[deleted]
The Chevy Bolt got great reviews, and it was supposed to be big competition for the Tesla 3, but so far sales have been disappointing.
https://cleantechnica.com/2017/07/18/chevy-bolt-production-r...
Anybody have an idea why?
https://cleantechnica.com/2017/07/18/chevy-bolt-production-r...
Anybody have an idea why?
> http://vidak.cssrc.us/content/district
Wow what is it about Visalia and Tulare that would cause something like this?
Wow what is it about Visalia and Tulare that would cause something like this?
Wow, if they're giving that much away to EV buyers, just think how much they'll hand out to people who walk to work!
> Wow, if they're giving that much away to EV buyers, just think how much they'll hand out to people who walk to work!
Well, if you walk (or bike) to work, your public subsidy is not paying gas taxes (and, having the option to not even pay regular sales tax on your fuel.) If your personal vehicle choice is “I walk or bike everywhere, so I don't need a car”, your additional public subsidy is not paying Vehicle License Fee.
Sure, those are actually public levies on those making the alternative choice, but that's equivalent to a public subsidy for your choice, just with a shift in what is the baseline case.
Well, if you walk (or bike) to work, your public subsidy is not paying gas taxes (and, having the option to not even pay regular sales tax on your fuel.) If your personal vehicle choice is “I walk or bike everywhere, so I don't need a car”, your additional public subsidy is not paying Vehicle License Fee.
Sure, those are actually public levies on those making the alternative choice, but that's equivalent to a public subsidy for your choice, just with a shift in what is the baseline case.
yeah as someone that bikes 25 miles per day for commute it kinda bothers me how many tax breaks are given to other forms of commute like trains, buses, vansharing, EV, etc.
I bike as well and never thought of this. Now, I'll never be able to forget it.
One solution is to simply treat everyone equally and not give anyone a tax break.
I know this is not what most people think, but in the context of good governance, my view is that no (legal) behavior is any more or less meritorious than any other.
I know this is not what most people think, but in the context of good governance, my view is that no (legal) behavior is any more or less meritorious than any other.
[deleted]
Why would you think this? For illegal activities there is a hierarchy -- why would there not be for legal activities?
There are lots of perfectly legal things that are bad for everyone if too many people do them (the tragedy of the commons). Trying to reduce bad things happening to citizens is arguably the entire purpose of government.
Never really noticed it until I started a new job and they were pitching all these federal and company commuter benefits and didn't see a single one for bikes.
But hey.. my work has a nice locker room that makes biking possible so it's not all bad! I also ride about half the way on bike paths under high voltage lines so I do get some benefits :)
But hey.. my work has a nice locker room that makes biking possible so it's not all bad! I also ride about half the way on bike paths under high voltage lines so I do get some benefits :)
Wait, we are talking push-bike here, right? Because subsidies for electric motorcycles should totally be a thing.
It's hardly a "bailout" when Tesla generates more revenue for the state than these tax credits are worth. The sales tax alone on many of the current models exceeds this tax credit.
> Tesla generates more revenue for the state than these tax credits are worth
California collects a 7.5% sales tax on the purchase of new vehicles [1]. A $40,000 car would thus generate $3,000 of state sales tax income. That appears to be much less than the value of the proposed credits.
[1] https://www.salestaxhandbook.com/california/sales-tax-vehicl...
California collects a 7.5% sales tax on the purchase of new vehicles [1]. A $40,000 car would thus generate $3,000 of state sales tax income. That appears to be much less than the value of the proposed credits.
[1] https://www.salestaxhandbook.com/california/sales-tax-vehicl...
> A $40,000 car would thus generate $3,000 of state sales tax income. That appears to be much less than the value of the proposed credits.
Tesla sells expensive cars, revenue per car is currently near $90.000.
Tesla sells expensive cars, revenue per car is currently near $90.000.
As I said, current models. Those are future models. And this is not the only revenue the state gets from Tesla.
And even then, absent the existence of Tesla, similar money would be spent on a competing vehicle anyway.
The rebate plan does not do at all what the article claims; specifically, for instance, it does not establish a new general rebate that is designed to match the difference between an electric vehicle's price and that of a non-electric vehicle with similar features. Instead, it establishes a declining rebate for compact electric vehicles that starts at an initial level that would provide an approximate net purchase price after all existing incentives equal to the most commonly sold compact vehicle in the State, but where the rebate level would decline with EV penetration by income segment. (Health and Safety Code 44215.4, as added by the bill.)
In fact, there was no specific rebate plan in the version passed by the Assembly, which notionally is the subject of the article; there was a requirement for the PUC to adopt incentives. The sources the article relied on (assuming BI doesn't misrepresent then) were either inventing bill content from whole cloth or speculating about what the PUC might do; in any case, the bill has been significantly revised already in the Senate, to address the same broad purpose but to be more specific about program parameters and move the primary administrative responsibility for programs to the Air Resources Board rather than the PUC.