back to article Tesla share crash amid Republican bid to kill off electric car tax break

Tesla's share price took a dive Thursday morning as Republicans in Congress revealed they were planning to kill off a US federal tax credit for electric vehicles. The proposed US House tax bill calls for an immediate repeal of the $7,500-per-vehicle credit: something that would have an immediate knock-on impact for Tesla given …

Re: Tax Law - I doubt MANY who qualify for the credit can use it.

Perhaps you made a typo when you put in your screen name. Look to me like your moniker should be Captain ObLIvious.

Whether or not you are due a refund is a function of how much you've had withheld, not a function of your tax liability. So, if after deductions I have a tax liability of $47,900 single/$56,200 filing jointly (using 2016 tax tables) and I got the $7,500 tax credit I'd still be eligible for the tax credit, assuming the vendor didn't exceed their quota of tax credits. Given a standard deduction of $6,300/$12,600 plus personal exemptions, that puts the gross income at $54,300 single/$68,800 minimum. Given the US Census Bureau puts the median US wage at $56,516 there's a roughly 50/50 chance a random person would qualify for the deduction.

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not so fast

EV registration fees.road taxes are punitive. In Georgia, it is 3x that of a Corolla and even more than a Hummer

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ga tax

The Georgia tax credit was seen as a "free car"--which with leasing it was virtually free. Then all of those leases came up, they turned the car in and the resale plummeted. For example, that "free car" was $32k, the residual was $17K. Used leafs are anywhere from $6k-9.5K 2 years old. I bought my '15 for $9,300 with 4800 miles. From some discussions with the Dealer, who had lines of lease turn-ins, most did not buy another EV. Some bough PI Hybrids from other manufacturers but most went back to oil burners.

To equate the sales in Georgia to be true EV converts would be misguided. There is no demand for the cars and only sell with low lease rates. The $7500 is important, but a bad taxpayer investment in what is now a mature technology that is not being accepted by the market.

California's mandates will require OEM's to lose money on each car sold to comply. That cost will have to be passed to oil burners to recover the costs.

The $7500 is insulating OEM's from facing up to the reality they have to make EV's with range, charging times and cost close to the oil burning counterparts and any Fed credit should be moved to technology that needs investment, such as fuel cell cars

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Anonymous Coward

No

No, this isn't because most people believe in climate change, or even that everyone wants an EV...it is the liberal elites jamming it down our throats. Please explain to me where the electric will come from when all those evil coal fired electric plants no longer produce power, what then. Like all Liberals, your logic isn't ever rooted in science. It is your ideology, that the government should rule all things. Period.

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Anonymous Coward

You're right of course...

You are absolutely correct in that most people cannnot afford these stupid inefficient cars even with the current tax credit. But the one thing about liberals is, that at no point will they ever be satisfied with you making your own decisions. Consider all the things we can no longer say, otherwise you'll be charged with some criminal offense, or at the very least, lose your job because you like the Redskins' name, or dare you say Muslim terrorist...there is no end. So, I can foresee the day when those who cannot afford the electric car will simply be given one, like they are now with food, housing, healthcare, Obama phones, the list is endless...all by our benefactors, which really means, all of you who pay taxes. Kind of like how the EIC is called a credit, when it is in fact another welfare payment.

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Unhappy

Re: RE: 4bn divided by 7500 gives me a bit over 530k.

"It's a government run program. There will be $1bn in credits and $3bn in administration."

Fixed: It's a government run program. There will be an indeterminate "few $million" in claimed credits, $3bn in administration, and the rest "just disappears" into the 'establishment black hole' in the forms of kickbacks, money laundering, and various illegal and/or unconstitutional activity.

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Unhappy

Re: and only electric CARS

about electric motorcycles...

Motorcycles still don't have catalytic converters on them, as far as I know This means they pollute way more than cars do [and I do ***NOT*** consider CO2 to be "pollution"], by producing the kinds of gasses and particulates that a typical catalyst system would burn up before going out the tail pipe.

Given THAT factoid, electric motorcycles make WAY more sense than all of that money thrown at electric CARS.

If the issue is cutting down on traffic jams and also saving on fuel usage [to help keep fuel cost down, let's say], then electric motorcycles make more sense.

But gummint is *NEVER* about sensible solutions. It's about MANIPULATION and CONTROL of "the masses", power retention, getting re-elected, and "skimming off the top".

So they do what they've always done: give tax breaks for cars that MOST people cannot afford to buy, that ONLY apply to people who pay a lot of taxes already, but make it SOUND like "they care" and "they feel" and "they want to help". But it's just another lie. They ONLY want their power, control, and money.

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Re: Tax Law - I doubt MANY who qualify for the credit can use it.

Ah, the median wage fallacy....

When you take out the people earning $M's per year, you average person is really earning south of $30k

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Musk has been living on government welfare all along?

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"Musk has been living on government welfare all along?"

Pretty much. The US has an inverted system - socialism for bankers and CEOs, red in tooth and claw competition for the proles.

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The US has an inverted system

Particularly for Tesla, up to this point. You have taxpayers helping to foot the bill for cars only the well off can afford.

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Re: The US has an inverted system

I believe there are also tax breaks for installing solar systems, which I'd guess are mostly built into second homes in remote locations. Again, the wealthy liberals getting tax breaks in the name of the green movement.

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Re: The US has an inverted system

"Again, the wealthy liberals getting tax breaks in the name of the green movement."

You mean wealthy conservatives aren't allowed to get them?

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Re: The US has an inverted system

The wealthy conservatives are probably running coal powered generators on their remote properties

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Re: The US has an inverted system

What Tesla is doing today will be copied and made cheaper by somebody else next year. That R&D has broad value in the long run. Besides, don't forget the enormous gasoline subsidy in the form of military intervention in areas of oil production.

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Anonymous Coward

Re: The US has an inverted system

That's not how subsidy works.

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Re: The US has an inverted system

It's true, we are likely to get electric or other non-polluting-at-point-of-use vehicles sooner because of Tesla, so whatever becomes of the business we still have the American tax payer to thank for kick starting the move away from diesel.

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Re: The US has an inverted system

It's Big John.

Wealthy conservatives have "earned" that money by correctly either inheriting it, or by allowing us the pleasure of working for them. Their wealth is morally just, and is not at all any sort of socialism, redistribution of wealth or unfair playing field. Their tax breaks are rightly earned, since tax is basically theft.

Liberals are automatically wrong. Thus their money must have always come from dubious provenance, with not nearly enough exploitation or forelock tugging that adds moral heft to wealth. Since we wouldn't have liberals in any proper capitalist system, they must only exist by having been given unfair benefits. Thus any tax breaks for liberals are a double theft, since they clearly could only have money from government handouts, so they must need a second dose.

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Anonymous Coward

Re: The US has an inverted system

And of course, Republicans love socialism, just not for the "little people"

Want to sell more weapons?, decrease your tax obligations? are you a banker wanting to reduce your liabilities, or an oil baron wanting more subsedies, and mineral rights from *our* land? Or a millionaire farmer wanting the same?

If so, the Republicans are your socialist friends! Just don't expect them to behave fairly to people that don't bribe donate to them!

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Re: The US has an inverted system

Your jealousy and envy of the "wealthy liberals" is getting rather tedious and unremarkably predictable. You really are starting to sound like the "looney left" of the seventies and eighties.

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"Musk has been living on government welfare all along?"

Yes - but the same could be said of many defence and aerospace companies.

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Re: The US has an inverted system

Tesla have always made their own batteries, its the only way they could get the performance they needed, and why the roadster took a long while to build.

What do you think they are doing in that gigafactory?

Tesla have also released all their patents for anyone furthering the technology

https://www.tesla.com/en_GB/blog/all-our-patent-are-belong-you

the subsidy is not that much compared to the cost of a tesla, you're talking $70k-135k for the model S, $90k-140k for the X which has basically funded the ramp up, so they can now produce the 3 at $35k+

the $7500 is a drop in the ocean, for the S or X, but as the 3 comes in the range of the normal person, the subsidy is a big percentage of the price.

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@JohnG - Are you seriously trying to compare tax credits for a novelty consumer product to products of government and national security? Really?

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Are you seriously trying to claim that everything defense contractors do is strictly in the interest of national security? Everything they do is strictly in the interest of their bottom line. Any benefit to the nation, or the poor suckers using their expensive kit, is incidental.

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Re: The US has an inverted system

Coal powered generators? Are you seriously that stupid or are you just trying to prove a idiotic point?

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re: usk has been living on government welfare all along?

Depends what part of his empire you're talking about and when you're talking about it.

His original money, no. But pretty much all of his business ventures since then have the strong scent of corporate welfare, even his SpaceX venture which I like (who buys the most space vehicles? Governments and corporations working on government projects or at least what use to be "highly regulated" monopoly-like public services i.e. phone companies).

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Re: "Musk has been living on government welfare all along?"

Which is why Trump was elected. The people are looking to overturn the top echelon without resorting to violence. You can easily make the case that Trump isn't the right one for the job, but look at the other choices - Clinton, Bush, Sanders, Biden, Kasich, Christie, Cruz, Romney? All career politicians and supporters of the status quo. Better hope that he succeeds. The average hard-working American is on the verge of doing something drastic.

And those of you in the UK? What are your choices? A quasi-liberal half-heartedly orchestrating Brexit, and a Marxist. Good luck to you. I fear you are about to engage in a nation-destroying adventure of Socialism. I hope I am wrong. If I'm not, there's a religious sect ready to move in after the collapse (and likely will help it happen).

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Re: The US has an inverted system

Inheriting from your parents is somehow wrong now?

This isn't the 15th century. The wealthy aren't the Royal families who get money from the peasants just for existing, you simpleton.

Try critiques and arguments from the 21st, or at least the 20th century.

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No it cant. Those industries work FOR the govt , The don't get tax breaks for their own enterprises.

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Unhappy

Re: The US has an inverted system

"The wealthy conservatives are probably running coal powered generators on their remote properties"

If I could do it, I would. I'd have a scrubber on the exhaust and sell the byproducts as raw materials for other things [it tends to offset the cost considerably when you do that].

But to do that I need: a) wealth [higher tax rates on higher incomes "keeps me from getting ahead" aka "keeps me in my place"], b) land [can't afford it, too expensive], the necessary gummint approval, permits, etc. to build the thing and hook it up to the grid [good luck doing that in Cali-fornicate-you with Demo-rats controlling EVERYTHING these days...]

but yeah, power on the grid is a GOOD thing.

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Re: "Musk has been living on government welfare all along?"

" The people are looking to overturn the top echelon without resorting to violence"

more like...

"The people are looking to overturn the RULING ELITE without resorting to violence"

Fixed it for ya! [it's supposed to be a government OF THE PEOPLE, and not a bunch of elitist politicians sticking it TO the people]

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Black Helicopters

Billionaire Wars....

<gets popcorn>

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Re: The US has an inverted system

"Liberals are automatically wrong. Thus their money must have always come from dubious provenance, "

I find it incredible that many career liberal politicians are multi-millionaires. It goes to show that crime does pay, and pays well.

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Re: The US has an inverted system

"Tesla have always made their own batteries, its the only way they could get the performance they needed, and why the roadster took a long while to build.

What do you think they are doing in that gigafactory?"

Tesla puts cells into battery packs, but Panasonic makes the cells for Tesla with a Tesla brand wrapper. 1/3 of the Gigafactory is leased to Panasonic.

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Yes!!!

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Anonymous Coward

As Woody Allen said ...

... take the money and run !

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Anonymous Coward

I bet he's regretting leaving that advisory board now.

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Awesome logic

Take away the tax break - sales plummit (as per evidence stated in article - 1400 to 100)

So, lets do that so we can earn a heap of imaginary tax on sales that no longer happen?

PS - did you not get the memo commentors re "tax breaks for rich" - oil running out, polluting planet to hell, electric is an answer, leading rather than following usually is where the profits are. Anyway, that is the American way isn't it, you despise the poor inside your country, don't you?

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Anonymous Coward

Re: Awesome logic

... that is the American way isn't it, you despise the poor inside your country, don't you?

Get off your high horse. We are totally fair, and despise the poor wherever they are.

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Anonymous Coward

Re: Awesome logic

Before the changes 1400 x $7500 worth of tax credits were being handed out every year in Georgia. After the changes 0 x $7500 worth of tax credits will be handed out - the savings aren't dependent on the number of future electric car sales at all.

You may be right that *sales* tax revenues go down, depending on whether the people affected choose to buy other goods instead of an electric car. But that's the individual state's problem, not a federal one.

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Re: Awesome logic

Democrats love the poor . and want to keep them that way.

Republicans hate the poor, and want tem to start making their own money.

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Re: Awesome logic

LOL. If they don't buy electric cars will they walk? Come on, they will buy a gas or diesel car. Most are

very efficient these days. Oil is not running out and natural gas is also abundant.

And where do you think the electricity is produced....in nuclear, gas and coal generating plants.

Besides, have you ever seen the ecological disaster a lithium mine is? Check out Chile.

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No surprise

Trump is oil and coal friendly and doesn't believe in pollution or climate change. After he gutted the EPA, it was only a matter of time before this happened.

I'm fully aware that the tax breaks, on the whole, benefit the better off and are effectively subsidised by everyone, but if you need to kickstart an industry quickly, subsidy seems to be the only way to do it. If you wait for competition to do it or for the resources to reduce, pushing up the prices, it can take many times longer before economies of scale start to kick in and bring the prices down. Not subsidising your local industry so they can tool up and compete globally when much of the rest of the world is doing so puts you at a long term disadvantage.

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Re: No surprise

As someone who has dealt with the USEPA in professional capacity, I have found them to be remarkably incompetent with little details. Details that are not difficult to get right (like publishing a valid detection limit for a test method) that one should question their competence on larger issues.

EVs tax cuts were always a boondoggle as most could not afford the price of one. So the benefit was to the wealthy who could afford an EV even without the tax break.

Also, EVs have had a much longer history than their promoters bother to mention. They were among the first cars made back around 1900 and remained in production until the mid 20's. What killed them off was the long recharging time and their very short range at the time. The range problem is partially solved by bigger and hire capacity batteries but the recharging time is still an issue. So the real question for the promoters, is what really has changed since 1910?

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Re: No surprise

What killed the early EVs was the cost of electricity back then. They were much more expensive to run (gasoline was a waste product and cheap to buy) and the electricity infrastructure was much more limited. Charge time was, for the most part, unimportant as they charged in their owners garages over night.

Henry Ford’s wife owned an EV. Even then they were recognised as cleaner, quieter and more reliable than gas powered vehicles.

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Re: No surprise

"...the[se] tax breaks, on the whole, benefit the better off and are effectively subsidised by everyone..."

I agree on the need to jump start challenger industries. It is very hard to compete against an entrenched and effective product choice without both an appealing product and some sweeteners to make the leap.

The way the USA tax credit works does favour high earners because of their income tax amounts and their ability to consider premium priced vehicles. Though it seems that those high earners are also the biggest contributors to the tax base. Perhaps lower-rate tax payers can console themselves in that their contribution to the choices of the wealthier is modest. http://money.cnn.com/2013/03/12/news/economy/rich-taxes/index.html

The picture is similar in the UK with the current £4,500 government subsidy on the purchase of new extra low emission vehicles. https://www.gov.uk/government/publications/plug-in-car-grant/plug-in-car-grant-eligibility-guidance and the way the tax base is built https://www.theguardian.com/news/datablog/2014/jan/27/how-many-pay-top-rate-of-income-tax-uk

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Re: No surprise

"So the real question for the promoters, is what really has changed since 1910?"

Well, we don't hand crank our cars anymore. We use an electric motor, powered by a battery.

There's also been a few advances in battery technology. Here's a paper on energy density increases in batteries:

http://pubs.rsc.org/en/Content/ArticleLanding/2011/EE/c0ee00777c#!divAbstract

Roughly a 10 fold increase in battery density over the last 100 years.

There are also plenty of EVs that have been in use the whole time, that somehow don't count, because they ween't for general road consumption. Used to have my milk delivered by one, and the forklifts at the first warehouse I worked in where all electric. Something about combustion engines suffocating you in an enclosed space or some such.

Framing this as EV vs combustion is foolish. We'll still need both, hybrid designs are going to more practical for many situations, and it's going to be a while before batteries match the energy density of a hydrocarbon. Commuting could be done with all EVs, but I wouldn't like to try farming or forestry without petrol.

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Re: No surprise

"What killed the early EVs was the cost of electricity back then"

And batteries. The lead acid cells of the day had a short life and limited discharge rate. As a result electric buggies could compete with horses, which had a very heavy power plant with a limited lifespan and range, but not with the Benz engine which even in those days had a comparatively light power plant and fuel.

A horse weighs around 3/4 tonne and needs ancillary gear (harness etc.). That weight of batteries in those days represented only around 3.6kWH, (if you wanted a reasonably long life), equivalent to one small horse power for 4 hours but running at 10-12mph, well beyond the range of the horse. Once a car with an engine and transmission weighing 1/4 tonne could do 30mph on 20kg of fuel or so, lead acid buggies were done.

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