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Tesla Will Cut Prices To Combat Tax Credit Phase Out (cnn.com)

Posted by BeauHD on from the slice-and-dice dept.

Tesla is cutting its car prices in the United States by $2,000 to combat a cut in a federal tax credit for its buyers. "Tesla triggered the tax credit phase-out in July when it became the first car maker in the United States to sell more than 200,000 plug-in vehicles," reports CNN. "The government designed the credit to be phased out for each automaker once it reaches that milestone." From the report: Before that benchmark, Tesla buyers were entitled to a tax credit of $7,500 for purchasing a plug-in electric car. But as of January 1, Tesla buyers will only get half that credit, or $3,750, for the next six months. The credit falls to $1,875 in July, and then disappears in 2020. The tax credit phase-out comes just as Tesla was preparing to sell a $35,000 version of its Model 3 sedan, the first time it will be taking aim at the price-conscious mass market. CEO Elon Musk said in an interview on "60 Minutes" that he expects the lower-priced version of the Model 3 to be available in five to six months.

Tesla also reported strong production and sales for the just completed fourth quarter. Total sales were up 8% and Model 3 sales were up even more, about 13%, to 63,150 vehicles. That works out to an average of about 4,900 Model 3s per week in the quarter, putting it in range of its goal of 5,000 Model 3's a week.

6 of 196 comments (clear)

  1. Doesn't that justify its phase out? by Anonymous Coward · · Score: 1, Insightful

    This is explicit evidence that the phase out of the tax credit is justified.

    The federal government should not be funding luxury car purchases that also quite literally increase the price of the car, just because the federal government will pick up the tab.

  2. Re:That's Unpossible by swillden · · Score: 5, Insightful

    The subsidies did the job they were designed for, got Tesla off the ground and to a place where they can sell the car on merits alone without any tax advantages.

    Maybe. Yes, they got Tesla going, but the goal of the tax credits was to incentivize Americans to shift to EVs. By that measure, the job is far from finished. It never made sense to me that the credit phased out on a per-automaker basis. It seems to me that if it makes sense to use tax credits for this purpose, the credits should continue until a certain percentage of all new car sales are EVs. Tesla, in particular, is on the edge of being able to really increase the EV numbers in the US. A $7500 credit on an $80K model S is nice, but the car is still far too expensive for most people. A $7500 credit on a $35K Model 3, on the other hand, drops the price to $27.5K, which is in range of a relatively large set of the US population.

    I'd like to see Congress restructure the credit to continue until, say, 10% of new passenger vehicles are zero-emissions.

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  3. Time for fair play. by Gravis+Zero · · Score: 5, Insightful

    Since we're no longer subsidizing electric cars, how about we stop subsidizing oil for ICE cars too? How about we stop subsidizing coal too? Putting tons of CO2 into the air is currently 100% environmentally subsidized and that needs to end before it destroys our ecosystem. Instead, people need to start paying so that every gram of CO2 released is also being extracted. It's a market friendly solution to pollution but wouldn't you know it there are people who are against accepting personal responsibility for their own actions.

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    1. Re:Time for fair play. by swillden · · Score: 5, Insightful

      So as the percentage of EVs on the road increases, the amount of money available to build and maintain roads decreases. States are thus experimenting with an extra vehicle registration fee for EVs.

      States should really take the opportunity to rationalize the road construction and maintenance cost allocation. According to the US GAO, road damage is proportional to the fourth power of per-axle weight, times the number of axles. They estimate that an 18-wheeler does 9,600 times as much damage as a passenger sedan, and that's on a per-mile basis. When you also factor in that many trucks cover 100K miles per year, vs, say, 15K for a car, that means the trucker's share is 64,000 times that of the car owner.

      This approach should be applied uniformly: every vehicle, large and small, should be assessed an annual tax based on miles driven and a * (w/a)^4, where a is the number of axles and w is the vehicle weight. That's not quite accurate because weight isn't distributed evently, but it's close enough. EVs would end up paying more than their ICEV counterparts, because they tend to be heavier.

      Oh, of course, with this system, all gasoline and diesel taxes that fund road maintenance should be dropped, and replaced with pollution taxes which attempt to compensate for the environmental damage caused by burning fossil fuels. CO2, particulates, NOx, etc.

      Also, forcing people to pay for every gram of CO2 they emit is a tax on breathing.

      Nonsense. Unless they're eating fossil fuels, people are carbon neutral. Every gram of CO2 they emit is a gram of CO2 that was absorbed by the plants they ate (or the plants that were eaten by the animals they ate, etc.). The problem isn't CO2 emissions, the problem is the emission of CO2 that was dug out of the ground where it had been safely locked away.

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  4. Re:That's Unpossible by sexconker · · Score: 1, Insightful

    People with brand new Teslas are having to send them back to the factory to get fixed for incredibly obvious shit. This is a trend that spiked in December.

    https://www.youtube.com/watch?...
    https://forums.tesla.com/forum...
    https://www.youtube.com/watch?...

    Sales went up because they absolutely gutted quality control in order to roll out more vehicles before the end of the year. I'd bet my life on it being a deliberate move to placate moronic investors who still swallow the the tripe and believe the hype. Oh, you wanted us to manufacture X number of ACCEPTABLE cars? Give us another year to get those numbers up.

  5. Re:That's Unpossible by RhettLivingston · · Score: 4, Insightful

    The performance of the Tesla Model 3 is better than that of my wife's BMW 330ci and you're comparing it to the Hyundai and Kia offerings? That is nuts.

    Many, many Tesla owners bought because they want an EV and love it because they got a fun family vehicle that outperforms most sports cars. This has been making a slow but sure change in the reason people really buy Teslas, for the thrill of it.