My colleague Steve is always taking good stories quickly. Steve! This time, he beat us all in covering the proposed Electric Cars Law. Which is cool, because he gave a very thorough analysis and now I don’t need to. On the other hand, my experience of working with dealers tells me that the bill needs some changes if we are to be successful, because as it is written, it will be a great gift for car dealers and will no longer help sell EVs .
For those of you who are not going to read Steve’s article (it’s okay, I’m also lazy a few days), here’s a quick summary of what the account will do:
- Eliminate the limit by manufacturer and allow consumers to have access to the tax credit for the next 10 years, regardless of the manufacturer from which they purchased the car.
- Allow buyers to use the tax credit for a period of 5 years or apply the credit on site at the dealership to reduce the price of the vehicle, making the credit more applicable for those without major tax liability.
- Offering a 10-year extension of tax credits for alternative fuel vehicles and charging infrastructure to encourage the construction of this important infrastructure across the country.
If you buy an EV today, the credit is not refundable like Earned Income Credit. So if you don’t owe the feds thousands of dollars at the end of the year, it doesn’t help you much and may not help at all. Therefore, making it a discount / rebate at the point of sale that reduces the foreign price by $ 7000 will help Americans of all income levels to actually use it to buy an EV and get lower payments.
Now, to remind you about car dealerships, here’s Harry Wormwood from the 1996 movie Matilda:
Everyone who likes money knows that the “price” at the dealer is not what you should be paying, unless you are buying a Saturn or Tesla, and all dealers are Saturns, like John Nada has no gum. If you don’t get in there ready to haggle, they’ll kick your ass.
What dealerships will do is start with MSRP, which is thousands of dollars more than the car should be sold, and then give you the federal discount that costs the dealership nothing. They will make it look like you are getting a great price, but in reality the dealer will be the one who will benefit from almost any discount.
If the account is approved under the proposal, be sure to make the most of it by not allowing resellers to use it as a scam to deceive you. Negotiate based on the reseller’s actual cost (you can find this on Google) and then subtract $ 7,000. Start your trades there and pay no more than about $ 2,000 more. You may have to go out and go to several retailers to get that price.
Now, CleanTechnica readers know how not to be stolen with their own tax credit, but there is no way to tell the whole country how not to be taken away by the resellers, so if approved as proposed, we would basically be giving the resellers a huge gift, although in fact it doesn’t reduce much the cost of an EV. Thus, a lot of taxpayer money would be wasted.
To change that, we need to tighten the rules for tax credit a little.
How to fix this bill
To really make this bill promote tons of EV sales, we need to do things to make sure it has an impact and encourages consumers and dealership staff (especially salespeople) to sell you an electric car.
First, we need to set a limit above the reseller’s cost for businesses that qualify for the point of sale discount. Charge the customer a dollar more than the allowable amount and you will not be able to get the federal money to cover the sale. Dealerships Does they need to be able to profit from each sale, so we can’t set that at the reseller’s cost, but there should be a reasonable limit to ensure that the program isn’t just a gift to them. We could set this at $ 2500 on the reseller’s actual cost (including retention and other things they can play with), or set it as a percentage of the sale. This would prevent resellers from making money and, at the same time, prevent the program from becoming just a gift to them.
We also need to think about the seller. If they think they can earn a better commission for a gasoline car, they will force customers to buy the gasoline car. It’s all about making money, and we ignore it at the program’s own risk. To correct this, we need to do what is called “Spiff”. Give the seller $ 300–500 in cash for each VE sold. Do this, and they’ll be sure that the lot has all of their EVs sold before they even consider selling a gas-powered car to a customer. Anyway, they will tell them to please, please come back next week. “I have the perfect car for you on Tuesday!”
Even if we reduce the price of vehicles by 7 thousand, we still need more infrastructure. We need every small dealer in each small town to install charging stations. To do this, we can allow dealers that host a fast charger to sell their cars for a little more. For every month that they have a publicly available fast DC charger available 24 hours a day, 7 days a week, they can sell EVs for $ 500-1,000 more. Only a few sales will cover the cost of demand fees and help cover the cost of the equipment.
The station must be operational, however. This can be applied with a mandatory sticker on the charger / plug with a number where users can report that the charger is off. If they don’t get it fixed as quickly as possible, they’ll lose that part of the sales pie that month.
If we want this to have any chance of approval in the Senate, it is better to make sure that it is not a “tax credit for the rich”. If we put a limit on the price of the vehicle, we can prevent it from being used for expensive electric vehicles. This will encourage manufacturers to offer EVs that the average person can afford and not to stuff themselves with luxury SUVs while offering nothing within the reach of most people.
If we can do all these things, the program will be a great success. If we don’t, we are just wasting money.
Featured image: the US Capitol building, by the US Capitol architect (public domain)
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