Your Rivian may cost you more in US than you were expecting ... maybe

[EyeOnEVs]

... that is, if the Koch brothers and their cronies get their way according to this Sierra Club article
"Who Wants to Kill the Electric Car This Time?"

One of the many groups the Koch brothers help fund to fight the EV tax credit have a slogan for EVs - "Built by billionaires, bought by millionaires . . . and subsidized by the rest of us." ... Hmm, they seem to be missing another slogan - "Kill the EV, increase ICE vehicle sales, so the super rich can get even richer."

 

[Poorpilot]

Interesting article, but you must take it with a grain of salt. The Sierra Club has been a strong Democratic Party supporter (to the tune of several million dollars versus about $150k to the Republican Party) over the last several years. The Koch brothers have a constant bullseye on their back when it comes to the Democrats.

 

[Jacob Szafranski]

Poorpilot, great point!

It is an interesting read, but the EV tax credit phase out as a back door means to keep ICE vehicles on the road making the petroleum kingpins more money kinda seems like a bit of a stretch.

However, if you believe that for every EV on the road mean less money for big petroleum, well then yes that's true (based on that lose definition). But I don't think that subversive motive is what's at play here. I mean I can see the logic in that argument, but I don't think lobbying for the end of the EV credit will deter all that many people from getting EV's anymore.

After all according to that article "EV owners make over 100k", and those with even more money would be even less deterred. Heck back in 2017 Tesla owners had a combined household income of 267k for Model S owners and 503k for Model X owners. They would've gotten a Tesla regardless of the tax incentive. Those numbers had my jaw on the floor when I first saw them (read link below).

https://www.teslarati.com/survey-model-x-owners-income-double-model-s/

I just think maybe it would have taken a bit longer for the EV revolution to gain as much traction as it has now, but eliminating the tax credit will not killed off EV's. Tesla still has the same lease offer for the Model 3 despite the reduction in the credit (which is given to Tesla in the case of leases) for even it's cheapest Model 3's.

Wealthy people will buy EV's not thinking as much about the credit, and look at the growing stock of high end car makers producing EV's. People who are considering a Porsche, Mercedes Benz, Audi, Jaguar, Tesla etc. can take the $7500 hit should credit go away.

EyeOnEv's, If the R1T doesn't have the credit next year will that effect your decision to get one?

 

[Jacob Szafranski]

I will admit in the early days of EV's (less range, poor performance, less refined) I do believed the EV credit gave people some additional motivation to make the switch, but that just seems so long ago.

EV's speak for themselves now and cater to a larger market with greater appeal.

 

[Domenick]

I don't think losing the $7,500 tax credit would affect most Rivian customer's decision to buy. It would be disappointing, though.

While the credit probably didn't factor into many Model S or X sales, I'm sure it has for the Model 3. There's lots of evidence that people have really stretched their budget to buy those, trading in much cheaper cars. And, of course, I think the credit helped sell a lot of Nissan LEAFs and Chevy Volts/Bolts.

 

[EyeOnEVs]

After all according to that article "EV owners make over 100k", and those with even more money would be even less deterred. Heck back in 2017 Tesla owners had a combined household income of 267k for Model S owners and 503k for Model X owners. They would've gotten a Tesla regardless of the tax incentive. Those numbers had my jaw on the floor when I first saw them (read link below).

Exactly. Tesla owner's do not represent the average income, vehicle owner in the US. Less than 2% of vehicles on US roads are BEVs. Factoring out hybrids and other alternative fuel vehicles, who do you think are driving the roughly 95% or so other vehicles? People who are barely able to make their car payments and those that fall between them and the one's that can afford a Tesla. That's a large population of vehicle owners that would want to have an EV but just can not justify the cost or may be on the fence. So $7500 is a lot of money to this large populous.

eliminating the tax credit will not killed off EV's.

Agree, if you isolate just this one tactic. However, I believe it would be rather shortsighted to think that there isn't other covert tactics in play to keep ICE vehicles on the road.

EyeOnEv's, If the R1T doesn't have the credit next year will that effect your decision to get one?

Very much so and I suspect for many others.
To clarify, it's the manufacture, not the vehicle, where the US tax credit is available. Once a manufacturer produces 200k qualifying vehicles (BEVs, PHEVs, etc) the tax credit phaseout schedule kicks in for any future qualifying vehicle sold by that manufacture. Currently being debated is the Driving America Forward Act, as it would extend the phaseout of the US EV tax credit by 400k vehicles per manufacturer, to a total of 600k vehicles each.

In a similar but more recent and updated Green Car Reports article provides an interesting read - "Battle over EV tax credit pits automakers against oil interests."

 

[Jacob Szafranski]

EyeOnEVs all good points, but isn't it an "overt" tactic to put EV's on the road by way of a $7500 tax credit (I kid )? And now that said tactic worked to offset petroleum subsidise for ICE vehicles and level the playing field, the public's eyes are wide open to this new means of transportation. I just feel like the cats out of the bag when it comes to EV's now and the technology has finally caught up.

As for the $7500 credit deterring you from a Rivian, I'm curious as to what alternate vehicle you would you get instead? And how the cost of ownership would compare over let's say a 5-7 year window?

I just got a lease quote for a Land Rover Discovery after discounts to the tune of 62k, minus $6500 in rebates and the gas and service costs compared to the R1T (69k) would dwarf $7500 in the first 3 years alone for me. I do drive 25-30k miles a year though . These two vehicles are what I'd consider comparable vehicles and the EV advantage is clear. I'm just curious as to what vehicle you'd opt for +/- $7500 on a 69k price point?

This phenomena is a really interesting to me, because I find it fascinating how some people will state they'd buy a relatively expensive EV in lieu of a credit, but in it's absence would buy a substantially cheaper and different vehicle all together. This I know is the same psychology used in sales marketing for decades and has always been proven effective in enticing buyers to spend more.

As for my beliefs that the waning tax credit isn't as deleterious as it once once regarding EV's, I truly believe EV's aren't slow and boring anymore. EV's are incredibly capable vehicles now, and best of all are only becoming cheaper, actually a lot cheaper... The P100D costs as much as my 90D did 5 years ago, not to mention the Bolt or Model 3 coming in at a third of that price. EV's cost less to own and operate and this savings multiplies over time (well beyond $7500 in many cases), and above all else the biggest players in the automotive world are all on board to not only adopt EV's among their product lines, but in some cases switch over to EV's exclusively. All of this goes very well in favor of EV's despite the efforts of the ICE/petroleum industry.

For once maybe the big guy and little guy are actually on the same side in this meta shift within the automotive world?

As for auto loan delinquency rates, I think that is an entirely different and complicated topic covered in this article on subprime auto lending to high risk borrowers.

https://amp.businessinsider.com/aut...e-now-than-during-the-financial-crisis-2018-4

But from here on out keeping ICE cars on the road is going to be a battle, but I do think they have a place in the grand scheme of things, together.

Maybe this will be like a gasoline, diesel or electric moment when you stop at you local transit depot 5-7 years from now to load up your car?

However, I'd seriously be more concerned about the prospects of electricity cost being unfairly manipulated to make EV's less cost effective then I'd worry about the EV manufacturer tax credit destroying the future electric vehicle market.

After all look what low gas prices did to sedans... only 31% of the US market now.

 

[ajdelange]

This phenomena is a really interesting to me, because I find it fascinating how some people will state they'd buy a relatively expensive EV in lieu of a credit, but in it's absence would buy a substantially cheaper and different vehicle all together. This I know is the same psychology used in sales marketing for decades and has always been proven effective in enticing buyers to spend more.

$7,500 is not to be sneezed at, even by people making $500K a year. A $7,500 discount on a Model X is appealing for sure but anyone can figure that if they are willing to sell you the car for x - 7500 it really isn't worth x. It's worth x - 7500. But this is different. It's not a discount from the manufacturer. It's an opportunity to get even, if just a little bit, with Uncle Sam. How sweet is that? Yes, I probably would have behaved just as the quote suggests were the credit not available. And were it to go away I probably would ask Rivian for my $1000 back.

The idea behind a credit like this is to encourage manufacturers to make more EVs by helping them to recover some of their ramp up costs. The car appears to cost the consumer $7,500 less than it would without the discount. The government is effectively covering some of those ramp up costs and is presumably wiling to do so because it thinks that there is long term benefit to the country when all is considered. I do believe that killing the credit will indeed slow EV production and sales appreciably. Look at the difference in Tesla sales between 12/18 and 1/19 (and yes, there are other factors such as normal seasonal variation involved). I also believe that doing so will lower the probability of Rivian becoming a viable auto manufacturer. I'd like to think that Congress would have the wisdom to understand the benefits of electrification to the public (including poor people outside of California) and extend the credit even beyond 200,000 vehicles. But whom am I kidding? "Wisdom" and "Congress" are not words that belong in the same sentence.

 

[Jacob Szafranski]

I do believe that killing the credit will indeed slow EV production and sales appreciably. Look at the difference in Tesla sales between 12/18 and 1/19 (and yes, there are other factors such as normal seasonal variation involved). I also believe that doing so will lower the probability of Rivian becoming a viable auto manufacturer. I'd like to think that Congress would have the wisdom to understand the benefits of electrification to the public (including poor people outside of California) and extend the credit even beyond 200,000 vehicles. But whom am I kidding? "Wisdom" and "Congress" are not words that belong in the same sentence

I can totally agree that the incentive is something potential buyers do consider and definitely will bring people over to EV's, but did anyone actually think the credit would last forever?

Now to that question I can absolutely say "no way I believed it would". Although now might not be the best time to end it, we all knew it will end (200,000 units and beyond).

Also states do have a big part to play in the whole EV incentive initiative. At the time I purchased my Model S I remember Colorado had a combine federal and state incentive of over 20k for EV's. So this incentive can still exist in other capacities, but the government as we all know operates at a deficit and needs every penny it can get before it can even get it. I laughed out loud with "wisdom" and "congress" ajdelange.

RJ is doing a great job at mitigating these setbacks when it comes to Rivian and his vision and forward thinking are a big part of why I'm getting a Rivian.

1. 400+ mile range (end of range anxiety)
2. Industry standard off the self parts (lessen the troublesome repair issues and more streamlined product development)
3. Major auto manufacturer partnership (lower product cost and expedited supply chain... and maybe basic dealership service agreements????)

Rivian is doing so many things to secure their place within the auto industry and bring their product to market and this is why I'm excited.

I loved my Tesla but an air strut and tie rod replacement took 8 months to fix! Yes... 8 months! Tesla was actually fabricating their own parts and was essentially custom making repair parts for their cars. That is just insane to even imagine a major auto manufacturer operating like that, but they did.

With problems like that it doesn't matter how cheap or expensive a car is, nor would an incentive fix it.

So again, I really believe cars are an extremely emotional purchase and rightfully so, but when you look beyond the EV tax incentive there are many other compelling reasons to preorder a Rivian. Otherwise a Ford Ranger is of course a lot cheaper, no question, but is that what you want, or rather what you need?

I would prefer the credit, I absolutely hope it's still available once the R1T comes to market, but if not I'm still getting a R1T. That part hasn't changed a bit.