The problem with getting hooked on something – whether it’s booze, or subsidies – is that it’s hard to quit once you are.
Just ask the car industry.
It has become dependent on subsidies – in the form of “tax breaks” – to get people to “buy” electric vehicles; the “buying” in air-fingers-quotation marks to mock the fact that when someone else is paying, you’re not really buying.
Tesla built its business model on this form of grift, elaborated in several ways. The way most people don’t even know about was using federal/state regulations that required other car companies – which at the time did not build any electric vehicles – to either build electric vehicles, in order to to satisfy “zero emissions” vehicle manufacturing quotas – or buy credits from Tesla that satisfied the requirement without having to actually build (and try to sell) EVs themselves.
In this manner, Tesla got his rivals to finance his business.
Not unlike having to pay salary of the cop who “pulled you over” via the “fine” you are made to pay for some conjured “offense.”
The lesser offense was using the government to make it easier to “sell” electric cars by paying the “buyer” a large sum of money – via tax rebates – to offset their otherwise unmarketable prices. Take $7,500 off the price (or cost) of any car and it is probable you’ll sell more of them.
Conversely, do not take $7,500 off and fewer people will buy them.
Chiefly because they can’t.
You can perhaps see why the industry got hooked on subsidies. Not just Tesla. The rest emulated Tesla’s business model, which – courtesy of the subsidies – was guided by glitz as well as grift. Market forces were subverted. Massive subsidies allowed Tesla to forget about cost and by dint of that, pursue an almost-cost-no-object approach to designing its cars, which have always emphasized power/performance primarily, with very little thought given to whether people can afford to buy that.
A few can, of course.
But the whole point – ostensibly – of the EV juggernaut is to largely replace existing non-electric vehicles with electric ones, in order to stave off the supposed “climate crisis.”
But – thanks to the subsidies – most electric cars cost as much or even more than non-electric luxury cars, with the average EV price tag just shy of $50,000. Put another way, subsidies have resulted in a juggernaut of $50k-plus electric vehicles flooding a market for which there are simply not enough market. Because there are only so many people who can afford $50k-plus vehicles – electric or not.
Replacing the existing fleet of internal-combustion powered Lexus, BMWs Porsche and Mercedes-Benz vehicles – which combined represents less than 20 percent of new vehicle sales because most people cannot afford a BMW, Porsche or Mercedes – is not going to stave off “climate change.”
The good news there, of course, is that the “climate” isn’t “changing” – at least not in the catastrophic way that serves as the artificial fuel of this artificially engendered hysteria.
The bad news – for the car industry – is that it’s hard to sell people on a Hyundai budget an electric Lexus.
Much less a $100,000 electric Hummer.
But the industry has bought into this cost-no-object business model – and the rest of us get to pay for it. Via the subsidies – which just got expanded – after the industry roused itself from its stupor and realized that, under the rubric of the recently passed “Inflation Reduction act” (which had as much to do with “inflation” as Social Security has to do with an annuity) the subsidies for many EVs would no longer apply to many EVs that cost more than $55,000.
This being dangerously close to the price of a Tesla Model 3 or Ford Mach3. Add a few options – including the optional “long range” battery” – and many EVs exceeded the subsidy threshold. The would-be buyer discovers he’ll be paying the full price – as opposed to getting a $7,500 kickback from the government – and decides not to buy.
Cue the hue and cry.
And it was heard. The subsidy qualification has been expanded by redefining which EVs qualify.
Guess which ones?
The very ones that cost too much for too many people to buy without the subsidies – i.e., models like the Model 3 and Mach-e “Mustang” (which is a “Mustang” to the same extent that Rachel Levine is a “she”). Sales were decreasing because the price of these models increased once the subsidy was no longer available.
Right on cue – as a result of the cry – the previous (very temporary, as it turned out) $55,000 “cap” – on subsidization of electric coupes, sedans and crossovers – has been lifted.
One can “buy” an $80,000 electric truck or SUV and still qualify for the $7,500 subsidy.
The time is probably not far distant when people who buy $800,000 homes will qualify for subsidies, too – if they use “green” building materials.
But the point – as regards EVs – is that the subsidies have turned the industry into a lumbering junkie who has become dependent on subsidies, just the same as a heroin addict is on his “fix.” Both get excitable when they think they might not be able to get their next one, too.
The great irony here is that the subsidization of EVs has badly hurt the case for EVs, if there ever was one to begin with.
If you believe that “climate change” is an existential crisis, it won’t be solved by encouraging the manufacture of $50k-plus EVs that emphasize luxury and performance (often at the cost of practicality) that most people can’t afford to indulge – rather than economy, efficiency and practicality.
The problem with the latter, of course, is that economy, efficiency and practicality aren’t as appealing as luxury and performance, especially to the affluent – who aren’t interested in making “sacrifices” to stave off the supposed “climate crisis.”
They just want to look as if they are.
And they want you to “help” them pay for it.
. . .
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There is an effort to construct a organization in opposition to and to compete with the WEF.
The WEF is a leftist/marxist/communist organization in complete control of the G7 today, all the G7 politicians just put in place legislation in their countries dictated to them by the WEF.
The politicians in the G7 don’t work for the people that elected them, they work for the WEF only….traitors… their salaries and pensions should be frozen….
just fire all the politicians…let the w ef run the country directly, that is the future plan anyways….and today’s reality
https://www.youtube.com/watch?v=L_cjujecPsE
I have offered homeless people on the move food to eat. They have declined the offer, they want money. They don’t want to eat, they want money to purchase booze and drugs.
You’ve seen and heard enough, to hell with them.
They want to be subsidized, not fed.
Give me money, you have probably more than me by five o’clock in the afternoon.
When you see a panhandler, think Joe Biden ready to grab it all plus tax plus ten percent.
The reality is people in Warshington need to starve, they’re on their own. They’re off their rockers, so it is time. There is a place for them, that place hasn’t been dug yet. Good riddance, nobody will miss any of them.
Putin has a lot of work to do.
OT: The Biden Thing would LOVE to roll out CBDC this year. Critics of the sinister plan call it “Biden Bucks”. Should this go into effect, the government will effectively have TOTAL control of your money and can trace and track what you do and what you spend money on. They could also shut it off for various reasons. Didn’t get the latest “vaccine” from Pfizer? Your Biden Bucks will likely be SHUT OFF. Got too much DIRTY gasoline for your car? Your digital money will likely also be shut off because “Carbon!” “Climate Change!” Same with saying things critical of “The Great Joe Biden” or the government. Got too much Biden Bucks in the bank? The government will likely impose NEGATIVE INTEREST RATES on your money, penalizing saving money in the bank. The things the government could do with that kind of power are unimaginable to sane people…..
https://dailyreckoning.com/warning-shot-fired/
Good morning, John!
If CBD happens, I’m done being any part of this system, even on the fringes. Time to go Amish – or live off-grid, entirely on our own. My personality is such that I cannot abide such micromanagement. The idea of them knowing everything I do, down to the purchase of a can of soda (if I drank soda)… and being able to control everything I do… insufferable. The CBD thing must be fought – literally, should that become necessary.
Hi Eric,
There was someone who actually said that digital currency should be implemented because paper money is “untraceable”. I forget who it was that said that.
I also read a story on technocracy.news last year that the use of CASH is growing, which would indicate that people are waking up to the evils of CBDC, though the government will likely advertise it as “convenient” or even “Saaaaaaaaaaaaaaaaaaaaafe”. Reminds me of their claim of “Safe and Effective COVID vaccines”.
Two other things that must be resisted are Digital vaccine passports and Digital ID, though there’ll likely be a propaganda campaign around them too like there was about the “vaccines”.
Hi John,
Yup! Remember – during the first year of the “pandemic” – how many businesses refused to accept “dirty” cash? Any establishment that tries this is in need of immediate correction. As far as I am concerned, if they refuse to accept cash – legal tender – then you are not obliged to pay. Just walk out with your coffee or whatever.
Eric,
I do remember some businesses refusing to accept “dirty cash” in 2020. Another reason that they gave for refusing cash was a coin shortage. Remember that? Given that we’re now aware of this push for CBDC, I’m not sure if there actually WAS a coin shortage then, or if that was just a lie designed to get people used to using plastic.
Even cash is nothing more than a pastiche of real money. My personal preference would be to return to precious metal coinage, but I know this isn’t happening in my lifetime. To think that a major policy debate in the nineteenth century was between the Silverites and the Goldbugs, the former supporting an archaic version of the inflationary policies we have today, MMT but still backed by *something,* and the latter stressing the importance of stability and maintaining a tether to economic reality.
Although gold and silver coins and/or bullion are more real than the “Monopoly Money” known as Federal Reserve Notes, they still have limited intrinsic value. Precious metals, while desired since antiquity, can’t be eaten nor planted, and the ability to make useful tools or objects of them is not a common skill.
LAND, and what can be produced from it, is TRUE wealth. So are commodities. But the greatest wealth of all? KNOWLEDGE, and its companion, INTELLIGENCE.
We’ve lost focus as to what constitutes wealth and have left ourselves at the mercy of those who have not.
Hi Eric
Agree 100%
If there is no cash then you could barter…… if you have something of value like, firewood or food you grow, harvest, fish you caught or game you hunted…….or a skill you could trade for food, etc..
you can pan for gold in streams/rivers….another source of money….the only real money…
The downside of being part of the system is starting to far outweigh the upside….
John B,
Makes one wonder, why are the US Psychopaths In Charge so vehemently opposed to China, while they push us ever closer to being just like them.
Their effort to “reduce” population would be so much easier if they could lock up your money and starve or freeze you to death. Just think, if you oppose them, they can simply erase you.
I’ve often said that the gravest threat to our liberty, prosperity, and indeed our very lives is not in China or Russia. It’s in Washington DC, and here we are.
Hi John K,
Good question. Why is DC so opposed to China while at the same time trying to make US more like them, unless it’s a competition to see who can be the #1 authoritarian government or the “Top controller of the world”, as Klaus Schwab openly said not too long ago that he considers China a role model for the WORLD.
Professional jealousy and envy, John K. Professional jealousy.
The ccp helped them win the last election….
All the push for EV’s and pushing the injections….mostly benefited china….
During the lockdowns a lot of the small businesses were shut down/bankrupted….all their business went to walmart and amazon….which are just outlets for chinese junk….
climate change…..the push for wind turbines, solar panels, EV’s with lithium batteries, most of that crap comes from china…..more money for china….
it is obvious this leftist/marxist government works for china…..
Hi John,
Because the US Psychopaths are not opposed to us being like China. That is their wish. Lots of cameras, facial recognition, control of the money supply, social credit scores…this is what they want…for us, not them. This keeps the little people in line.
The “weather” balloon that the Biden Administration allowed to tour over our US military bases and to gather information on our weaponry for a week should be the final sign that both countries are in bed with each other, and China is on top. China doesn’t have to fight the USSA, they already own us. Biden and his Administration are traitors to our country. In the old days we used to hang those who practiced treason against our nation, today we hand them the keys to the White House.
Anyone else notice that that not one news outlet has raised the question that Biden called for the balloon to be brought down on Wednesday, but our military commanders overrode him? When has the Commander in Chief ever been downvoted and disregarded by his miliary? We know Biden isn’t running the show, the question arises…who is?
Given their fecklessness over dealing with a fucking Chicom BALLOON, I’d say the morons presuming to be in charge are in the CCP’s hip pocket.
Every locale has its local junkie.
Every locale has a few Zombies, it’s a cultural thing.
Putin is ‘de-neoconificating’ Warshington, District of Cowards.
Warshington has capitulated, the war is over, surrender is necessary.
Stop doing stupid stuff, you stupid dumbfvcks.
Hows ’bouts that?
Ya dumbasses.
C40 cities…where they ban cars, rip up all the roads and plant grass….
This is part of the agenda the wef told your local politicians to enforce.
When you elected your local politician they didn’t inform you they don’t work for you they work for the wef…..
politicians just sign into law any legislation the WEF sends them that is their only purpose….
just fire all the politicians…let the wef run the country directly, that is the future plan anyways….and today’s reality
https://www.youtube.com/watch?v=9FLOXp7jumE
C40 cities
https://www.youtube.com/watch?v=L9yRYYz3mNY
Slightly OT but relevant to EV’s, I don’t think anyone up here in the northeast is going to have much “range” today since it’s been negative degrees farenheit with some seriously dangerous windchill. I hope all the climate hysterics who bought into the “natural gas is evil” BS enjoy wearing parkas inside their homes while their virtue signaling heat pumps try to keep up. My gas furnace has been running basically nonstop but at least it’s keeping me toasty warm.
Amen, Mike!
I have the fire in my wood stove roaring… it’s 74 degrees inside my office right now.
It’s become very apparent the wise household will have multiple heat sources in this modern age. WA is pushing all electric + ban that gas for heat, hot water, cooking; no thanks.
Our place has dual source, a heat pump plus gas furnace. The heat pump is useless in the winter I don’t even bother with it. There is minimal effort to fix the electric grid here so I’m keeping my dual fuel generator. The gas hot water heater has a pilot light as does the gas fireplace so both function with no electricity. I can wire the furnace to run off the generator if needed. When we lived in Western WA that house had a wood stove which saved us several times when the power failed for multiple days.
Good luck heat pump users, beating itself to death trying to heat your home. Come summer I need the a/c function I’m not going to use up it’s useful life heating the house.
Hopefully with sweat running down your face.
One of the biggest if not the biggest share of subsidies is Big Medicine. From all its accompanying tentacles, Insurance, Medical schools, Pharma, and various other pieces, it seeps into everything and pollutes the productive economy. By far, the amount we pay for Illegal alien trespassers, along with owning the worlds printing press, could be used to give everyone here legally, free shit for life.
We could easily have a utopian society that worked well. Just not in the middle of a Great Replacement run by psychopathic grifters.
As I’ve pointed out in the past; if it’s not fair to expect someone to pay for someone else to go to college if they did not themselves then expecting someone to subsidize someone else’s EV purchase when they drive an old car themselves it is then both morally and unconscionably wrong. Of course the tax payer is only there to be mulcted by his betters in the .gov.
Some have said that it is all part of the social compact, myself I say f*ck you.
OT: Ford CEO whining about missing target by $2B. He blames everyone and everything but the obvious. The comments are way more interesting than the article. I think people are more aware of the EV scam, the DEI and ESG scams, and the role of government that we give credit for.
See: https://www.dailymail.co.uk/news/article-11711507/Ford-CEO-Jim-Farley-slams-absenteeism-warns-make-cuts.html
We tend to view the welfare state as lazy people living off the dole. We forget big business are often giant welfare queens.
The root cause is the usurped power the federal government wields. One where almost every single federal law & agency is unconstitutional, yet we can’t imagine a world where it is kept within its limits.
The current US Constitution is an abject failure, since it in no way prevented its own demise. Aside from it being illegal per the Articles of Confederation, it does not provide for its own enforcement at all. Even the SCOTUS self appointment as the arbiter of it is nowhere mentioned in it. Likely by design. Before 1860, the States could enforce it, “if you don’t play by the rules, we’re leaving”. Lincoln solved that little problem.
Dan you are correct, “We tend to view the welfare state as lazy people living off the dole. We forget big business are often giant welfare queens.” as far as it goes.
What you don’t mention in all this is the GovCo apparat that comes along with it. With that you get thousands, perhaps TENS of thousands of mid-level over-payed jobs. They are almost always paid double or triple the local median income. E.g. a few years ago two health department lackeys got fired for malfeasance. Our county has a median income of
$30k-ish, these two hirelings were taking down over $110k each.
Yes, GovCo always takes from one and gives to another but, they always get their cut along the way.
Based on the tax deduction discussion below, it seems to me that this maneuver will probably not move the needle at all in terms of stimulating additional sales of EVs. Those that want and can afford them will still buy them. They will collect their chit and hand it to the accountant and maybe, if the stars align properly, get a small, in the grand scope of things, reduction in their overall tax burden. A lot of sound and fury signifying nothing but a silly and overwrought economic intervention by the watermelons in gov’t. Because they can.
I noticed that you left Audi off of your list of luxury manufacturers. Maybe that was unintentional or you felt as though the other examples were more appropriate or whatever. And that’s fine!
BUT!
I wanted to dispel the myth that some folks have about Audi being the understated luxury brand. It’s a common perspective that I’ve read, even in comments on this site, e.g., that Benz is the “in your face, I’m rich, HAHAHA” brand where Audi is more of the “sure, I’m well off but I’m not bragging” sort of thing.
Baloney.
I recently called up Mercedes and asked them about the costs of dealer service for a 2020 GLE 43 AMG. The “E” series is equivalent to the Audi A6 line. The AMG modification makes it equivalent to the “S6” (Audi sport line).
Without going into specific numbers: The GLE (and Benz in general) has “A” and “B” services which alternate every other year at different prices (the “B” service is more extensive than the “A”).
The GLE 43 AMG “A” service is about 1/3 of the price of my 2015 A4 Allroad yearly service and the “B” service is under 1/2. My 2014 A8 is nearly double the yearly cost of the A4.
All these years, I had told myself, part of the mythology, that “at least I’m not getting fucked as hard as Mercedes!” Well whattaya know? I have been for about 15 years now.
Go ahead, I double dog dare people to get an Audi EV!! You better be loaded, cause you’re gonna get fucked. I guarantee it. (MensWearhouseGuy.jpg)
Hi XM,
My not mentioning Audi was indeed inadvertent – and your points about repair/maintenance costs spot on!
Mercedes…Audi at one point the two were the same…
Like all the new cars….. Audi today makes over complicated computerized abortions that are too heavy and too expensive….
All the cars were better in the 1950’s…1960’s
Daimler- Benz had acquired a majority share in Auto Union in 1958 and took full control in 1959.
Auto Union was formed in 1932 with its four-ring badge standing for the constituent marques of Audi, DKW, Horch and Wanderer and in the early 1950s,
In 1958 Daimler-Benz’s Chief Engineer Fritz Nalliger asked Ludwig Kraus of the “Construction Development” to develop an in-house mid-sized car, and the result was an extremely elegant FWD saloon in two or four-door guise. The initial idea was for it to be powered by a 1.5-litre “boxer” engine (no boxer engine was developed…. the car would be called the (the Mercedes W118)
Kraus was seconded to Ingolstadt to take charge of a product modernisation project, and he was appointed Technical Director in late 1963.
but the prototype would eventually gain a newly developed a 1.7-litre in-line high-compression engine the M118……
The M118 was developed earlier by Daimler-Benz as part of a military project
The engines of the F103 series were a development of Daimler-Benz for a military project that never came into being. They were dubbed the Mitteldruckmotor (medium-pressure engines) because of their unusually high BMEP (mean effective pressure, as calculated from brake torque) values, which led to a good thermodynamic efficiency.
the car was called the Mercedes W119. When it was unveiled circa 1960, it seemed logical that it would be made by Auto Union as they had extensive experience of building small cars.
Instead of building the W119 Mercedes……. the design was tweeked to make the DKW F102 was built instead………..(later rebadged as an Audi)
The result was the 1963 DKW F102 …later called the Audi F103…sedan, an uncluttered three-box design with thin pillars and a large greenhouse note………(a modified mercedes W118 design).
curb weight, 910 kg / 2006 lbs
and such technological developments as the inboard front disc brakes…..but….. Under the bonnet was a 1.2-litre two-stroke unit but this was now too associated with ageing machinery built in the DDR. ……the M118 engine wasn’t available then….it was used later on in the Audi F103….
In 1964 Daimler-Benz sold its subsidiary – it wanted the funds to construct a commercial vehicle plant – to Volkswagen
But two key assets were also transfered to VW: the M118 engine project and its creator, Ludwig Kraus.
Kraus remained with Auto Union and to revitalise the F102;
his solution was to longitudinally mount the 1.7-litre M118 engine from the Mercedes W119 in the bay of the DKW……DKW’s F102 now renamed the Audi F103…..
The Mercedes M118 four-cylinder four-stroke medium-pressure engine…….. was installed in Audi 60, Audi 75, Audi 80 and Audi Super 90…..it was called the EA827 in the Audi 80….then in the Audi 100… EA831…..from 1968, with a displacement of 1.9 liters and 100 hp…….in the Audi 100 the M118-derived 1.9 -litre was called the EA831 ….,
Later, the EA831 with an overhead camshaft driven by a toothed belt, ended up in the Audi 80, the VW LT, the VW Golf, the AMC Gremlin, the Porsche 924..in the 924 it was called the 047…in the 924 turbo it was called the M31…. and served as the basis for many VW engines…like the famous 1.8 20vt….evolving into today’s VW Audi 4 cyl engines….the EA888
Audi “Audi” F103 – Audi 60, 72, 75, 80 & Super 90
https://www.youtube.com/watch?v=b7NJtry5PAI
Any “stealership” will pick your pocket clean. It’s not a new business model. In the computing days of yore, IBM once had most of the corporate and government agency accounts as their fiefdom. Then along came competitors like Sperry, Burroughs, Tandem, Digital, who often undercut them on hardware. Big Blue had to slash prices, acquisition managers could only justify “no one ever got fired for buying IBM” for so much. The service contracts were where the money waS, the idea being to get them on your platform and then you could ride that gravy train for years
Hence why the deliberate complexity of most vehicles these days; it does away with the “shade tree” mechanics and independent garages…even IF you could get the necessary parts. Or, the vehicle is ebgineered rhat, with little upkeep, it will run just long enough until the payments are done…then, so is the car, being impractical to repair.
All kraut cars are that way. Even the VWs.
To replace an alternator on a 1st gen Scion TC, it’s as low as $95 for a reman at rock auto. And takes 15 minutes with a 10 mm wrench. Same year VW bug, it’s $2000 to take the front end off and partially pull the motor. Being that the alternator is German and electric, you’ll be doing that repeatedly.
“Go ahead, I double dog dare people to get an Audi EV!! You better be loaded, cause you’re gonna get fucked. I guarantee it. (MensWearhouseGuy.jpg)”
The electrics on German vehicles are barely one step above Lucas – stress on the word “barely”. The EV push will bury every single one of them.
Yep Horst, especially with this green energy bullshit punctuated by the Ukraine war and the respective German industrial suicide, I’m selling my Audi and getting a Genesis. Admittedly, I’ve long lusted over AMG anything and, if the Koreans can’t get me a GV-70, I might still get a used GLE AMG SUV (cheaper service than any Audi I’ve ever owned, come to find out!).
But otherwise, I’m all in on quitting German anything. Especially VAG because they’re the hugest virtue signallers that are trying to literally (in their own words) outperform Tesla and become the leader in EVs. Go ahead! See ya later and any suckers going long into an Audi (or any VAG) EV, are gonna be sorry!
If/when the day comes that I have no other choice than EV 🤢🤢🤢 it will be Japanese or Korean. I want to see both American and German manufacturers self-immolation from a distance. It’s gonna be grand!
This was why, in 1944 and 1945, so many Panther and Tiger tanks were found, not destroyed by enemy action, but scuppered by their own crews after they broke down, and they had no ARV (“Bergepanzer”) to fetch it. The Henscel and MAN factories even sent civilian technicians to the Panzer division assembly areas to fix the troublesome panzers, but there was only so much they could do. What few tanks that were intact enough to run had to likewise be abandoned by their captors, as they simply couldn’t fix them either. Post-war, the French, Poles, and Czechs made use of leftover German tanks, offering German POWs that knew how to work on them well-paying (for the period) jobs in their depots, which was better than a grueling existence in a POW camp
Audi dealer servicing is indeed expensive; however, please look into local VW shops. Being a VAG car, Audis use many of the same tools and have the same design philosophy. Indeed many of the parts are shared. Interestingly, I’ve also seen where parts on my VWs that are also used on Porsches such as the Cayenne and the Macan are less expensive when buying with the Porsche branding…go figure.
I was burned by Daimler by their early-to-mid 2000s cars, so I’m biased I’ll fully admit, but Mercedes was quick to mandate vaccines for their employees in the U.S.; not so as far as I know for VAG. Toyota was the vanguard here in resisting the vaccine insanity, flatly stating they would never mandate vaccines for their staff! This fact alone truly transformed how I viewed the brand.
XM I found that owning an Audi was like entering into a marriage. Better like the inlaws (dealer), because you’re going to spend a lot of time at their house.
It is morally wrong to take money from someone who earned it & give it to someone who didn’t. But doing so has been dogma for America ever since the dubious Alexander Hamilton was given any kind of political authority.
Mike,
Which is why Aaron Burr is my hero, for shooting him dead.
Just make sure you’ve got plenty of milk on hand if asked to pronounce his name.https://youtu.be/0Gkqzxss8Ss..
‘the $55,000 “cap” – on subsidization of electric coupes, sedans and crossovers – has been lifted.’ — eric
Yesterday I looked up the text of the Inflation Protection Act of August 2022. Its 1,100-page PDF is posted online. Roughly in the middle of it, the caps on EeeVee subsidies are stated in words — $80,000 for vans, trucks and sport utility vehicles; $55,000 for cars, including crossovers. That’s the statutory language.
So if you’re a corporate grifter, your mission is to … change the definition of crossovers so they can migrate to the $80,000 cap on SUVs. With a talentless, mercenary hack like Janet Yellen heading the Treasury, this is very easily done.
The bug-eyed old lady’s explanation is weirdly vague: “Treasury is updating the vehicle classification standard to use the consumer-facing EPA Fuel Economy Labeling standard, rather than the EPA CAFE standard. This change will allow crossover vehicles that share similar features to be treated consistently.”
https://home.treasury.gov/news/press-releases/jy1245
Treasury’s new guidance from the IRS [linked in the MSN article], in Section 3(ii), defines sport utility vehicle as classified under “40 CFR 600.315-08(a)(2)(v) and (vi), or otherwise
so classified by the Administrator of the EPA pursuant to 40 CFR 600.315-08(a)(3)(ii).”
The final citation is critical. Look up 40 CFR 600.315-08(a)(3)(ii) online — it’s posted at Cornell Law School. It reads: “(ii) All automobiles which possess features that could apply to two classes [cars or light trucks/SUVs] will be classified by the Administrator based on the Administrator’s judgment on which class of vehicles consumers are more likely to make comparisons.”
And there you have it: a perfect “kitchen sink” provision, which allows the EPA administrator to decide by executive fiat whether a crossover is a car [$55,000 cap] or SUV [$80,000].
Ergo, the Tesla Model Y is now, to our surprise, a “sport utility vehicle.” And it’s all legal! 🙂
Hi Jim,
This change will allow crossover vehicles that share similar features to be treated consistently.” So I guess because they all have tires that’s enough “shared features” to qualify 😆. Gotta love those multi thousand page bills with all the legalese that Clowngress passes; not one of them will read the whole thing but as long as they get stuff in there for their own grifters they will sign off on it
Every large business gets subsidized in one way or another. They all do it because they’ve convinced the governement that it has to be done. “China subsidizes their industry!” they cry. So the politicians, believing they are helping (and getting something to bring back to voters), open up the treasury.
That’s all well and good if we want a mercantilist economic system. Worked great for Europe for nearly a thousand years. But eventually everyone wants in on the act. And Europe no longer has a monopoly on guns, so that’s a problem for extraction of raw materials.
China has a quasi-mercantist system, actually it’s morphed into something more like fascist Germany. And, like the early days of Das Dritte Reich, intellectuals, politicans and elites still think fascism is better than the sloppy, inefficient US economy – what with its random things happening all the time and no overarching central plan. Why listen to the mob when there are experts in the room? Works great until the experts are wrong, then they gotta go hunt down scapegoats.
But you can’t fight physics or human nature. If something doesn’t work, it doesn’t work no matter how much money you throw at it.
Years ago, when John Murtha was still around, he got a pork barrel project pushed through to prototype an electric Humvee in his district. “Only” cost a few million bucks, so why the hell not? Of course it was a joke, only able to move a hundred miles or so, under ideal conditions. But several researchers and engineers got employed to work on the project, and produce stacks of reports and Powerpoint presentations. Good resume’ builder too. Some of that data might have been used by Musk to sell the Tesla to investors. For sure every car company had a look at it.
Eric,
Some time ago, Raider Girl explained the true nature of the tax credit; hopefully, she’ll do so again here.
Anyway, as I understand it, the $7,500 is a tax credit, not a direct subsidy to the EV buyer; that is, it’s subtracted from your taxable income. It’s not a $7,500 check from the gov’t. Furthermore, if your income isn’t high enough, then you can’t use all of the tax credit. When subtracted from your taxable income, your tax bracket will be lowered, which means that your tax liability (i.e. what you “owe” Uncle Sam) will be less. That lesser amount won’t be anywhere close to $7,500 though.
Again, that’s as I best understand the tax credit as a non-accountant or someone who isn’t a tax professional. Hopefully, RG will help us out here… 🙂
Hi Mark,
The essential point is that the government is using its taxing power to favor rich people who buy expensive EVs. This is a subsidy by any fair definition of the term.
What next? Tax credits on ski chalets in Aspen and Vail, with a price cap of $5 million?
Never has the stereotype of “limousine liberals from Hollywood,” taking care of their own, been more vividly illustrated than with the crass subsidy of $80,000 EeeVeeees, now including crossovers thanks to venal J-Yel’s administrative legerdemain.
La-di-da, it’s good to be rich. Now I’m leaving my dacha and heading down for a spa day. Ta ta, all!
Hi Mark,
I have thought about that, having had a lot of 1040 long form experience myself for many years. So, while Eric is correct in it being a subsidy, sponsored by common (even poor) people, for the rich, it absolutely has dramatic limitations in terms of getting less affluent people into EVs.
And maybe that’s not really the goal but they do make it sound like that. They make it sound like, if they can just give “everyday Joe” a leg up into an EV that the market would finally take off.
However, unless “everyday Joe” is either financially illiterate/suicidal or is literally planning on bankruptcy sooner than later it is a hugely bad idea to take the bait IMO. Primarily for the reason that you’re stating too.
In other words, sure you get a coupon for “dollars off your current tax bill” but what you don’t get is a lower purchase price and, for many/most people, a lower monthly payment on the same loan that it would be without the subsidy.
So I do agree with Eric’s reply, “[it] is a subsidy by any fair definition of the term” but it’s a trap! Unless you fully able to afford the same vehicle subsidy or not, it’s bait and people are gonna over-extend themselves and be sorry.
I could afford a moderate EV with or without the subsidy today. I don’t want one but let’s say that I did. Reducing my taxable income by $7500, sure I’d take it, but that isn’t reducing my bottom line tax by $7500. The reduction is $7500 x N% where “N” is my tax bracket rate. That would save me just over a couple grand on my tax bill or, because I have deduction against wages, would increase my return by a couple grand, etc.
Like every single thing were govt. inserts itself, it would be better (in so many ways) to just be left alone to natural causes. It’s smoke and mirrors and people are gonna get fucked by it. Apparently people these days aren’t that bright unfortunately.
Mark,
Perhaps RG will chime in and correct me, but I believe a “tax credit” comes right off of your tax bill, as apposed to a “tax deduction” which comes off your taxable income.
Either way, it’s completely devoid of any moral foundation or ethical standard.
But so are taxes, for that matter.
Hi Mark,
There is a loophole to get around the $7500 tax credit for those who are over the $150K single/$300K MFJ threshold. They can actually sign the tax credit over to the dealership and the dealership will take if off of the auto price. Of course, why wouldn’t everyone that wanted an EV do this whether they were above (or below) the income brackets? Take the $7500 upfront off the price of the car. For those who wished to pay cash you don’t have to write a check for $7500 more and then wait a year for your refund (or a tax credit on your tax return liability) and for those that financed you don’t have to pay interest on another $7500.
The entire tax code subsides someone, somewhere.