Tags: electric | vehicle | tax | credits. ev

Don't Extend Electric-Vehicle Tax Credits

illustration of red car with power plug, electric car concept
(Madmaxer/Dreamstime)

By
Tuesday, 27 November 2018 03:21 PM Current | Bio | Archive

Over the past several years, luxury electric car companies have become the rage of the ultra-wealthy. With price tags of over one hundred thousand dollars, Tesla vehicles have become one of the trendier statements for the rich.

However, despite being one of the favorite purchases by the better off in the country, the growth of electric vehicles has yet to take hold amongst middle-class buyers. Of the units that have been sold, they’ve done so by the support of American taxpayers.

As new businesses, electric vehicles (EV) have been the beneficiaries of lucrative tax subsidies to boost their sales and get EV companies off the ground. Due to the high costs to build and maintain EVs, these tax subsidies have been crucial to launching them as a consumer product.

Just like most tax subsidies meant to help new businesses get off the ground, those subsidies are set to expire once certain milestones are met.

In the case of electric vehicles, 200,000 units sold marks the point that those subsidies expire. But a new effort by outgoing Senator Orin Hatch would continue the government welfare of vehicles that have failed to attract middle-class purchasers, the very customers the subsidies were meant to support.

Instead, the effort by Hatch, would make subsidies permanent that overwhelmingly benefit the very richest in our country, to purchase cars that have been widely rejected by mainstream consumers.

This means companies like Tesla, which have already sold over 244,000 units will continue to sell their cars to the uber rich.

The simple fact is these vehicles just aren’t consumer friendly, have a faulty business model, and only appeal to a small customer base. So why would we continue to interfere in the free market and prop up failing companies?

Again, as of now, the vast majority of folks using these subsidies are the rich, with 78% of claimers making over $100,000 a year.

It also makes sense that these vehicles haven’t appealed to the less well-off due to their high insurance rates. For example, the batteries are extremely expensive to produce and therefore extremely expensive to replace. They don’t operate as well in cold weather, ruling out much of the Midwest and farm country.

If you live in a rural area, would you want to rely on an electric truck that could shut off at any moment the temperature drops? Or can’t handle whatever load you’re hauling? No.

There just simply isn’t a good business argument for buying these vehicles.

Now with the higher costs of production, it’s hard to convince someone living in rural Iowa to accept the higher costs, which is why their entire business model is based around the government propping them up.

Which then returns us to the futility of doing so. The purchasers of these vehicles can afford them without the subsidies. The folks that would benefit from these subsidies, don’t want these vehicles. These vehicles don’t service their needs.

So instead of locking up taxpayer dollars to help the rich buy their statement cars, why wouldn’t the government use those dollars to help other companies looking to innovate, and create a better product, improve roads and bridges that will service consumers and help the environment?

This effort by Hatch, on his way out the door, to lockup federal in a failing business model is misguided at best and even potentially harmful for future creative developments in cleaner cars down the road. This money would also be better served investing in updating our roads and bridges.

A lame duck Congress should not be making this decision for future generations of manufacturers.

Lauren Fix, The Car Coach® is a nationally recognized automotive expert, media guest, journalist, author, keynote speaker and television host. Post your comments on Twitter: @LaurenFix or on her Facebook Page.
 

© 2019 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
LaurenFix
So instead of locking up taxpayer dollars to help the rich buy their statement cars, why wouldn’t the government use those dollars to help other companies looking to innovate, and create a better product, improve roads and bridges that will service consumers and help the environment?
electric, vehicle, tax, credits. ev
631
2018-21-27
Tuesday, 27 November 2018 03:21 PM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved