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My colleague Steve always picks up good stories quickly. Steve! This time he beat us all to cover the electric car bill. Which is cool, because he did a really deep scan and now I don’t have to. On the other hand, my experience 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 major giveaway for car dealers. and will not help more electric vehicles to sell.
For those of you who won’t be reading Steve’s article (okay, I’m lazy some days too), here’s a quick rundown of what Bill will do:
- Eliminate the cap by manufacturer and allow consumers to access the tax credit for the next 10 years, regardless of which manufacturer they buy their car from.
- Allow buyers to use the tax credit over a 5-year period or apply the credit on the spot at the dealership to reduce the price of the vehicle, making the credit more applicable to those not subject to the tax.
- Provide 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 electric vehicle today, the credit is not refundable like the earned income credit. So if you don’t owe the federal government thousands of dollars at the end of the year, that doesn’t help you much, and might not even help you at all. So making it a point-of-sale discount / rebate that lowers the sale price by $ 7,000 will help Americans at all income levels use it to buy an electric vehicle and get lower payments.
Now, to remind you of car dealerships, here is Harry Wormwood from the 1996 movie Mathilde:
https://www.youtube.com/watch?v=QeeCIWCc4Ew
Anyone who loves money knows that the ‘price’ at the dealership is not what you should pay unless you buy a Saturn or a Tesla, and dealers are all out of Saturn, like John Nada is bubblegum. If you are not ready to haggle, they will kick your ass.
What the dealers will do is start at the MSRP, which is thousands of dollars more than what the car should actually sell, and then offer you the federal rebate which costs the dealer nothing. They’ll make it look like you’re getting a good price, but in reality, the dealer will be the one who gets almost all the discounts.
If the bill passes as proposed, make sure you take full advantage of it by not letting the dealers use it as a scam to rip you off. Negotiate based on the actual cost of the dealership (you can find it on Google), then subtract the $ 7,000. Start your negotiations there and pay no more than $ 2000 or so. You may have to go out and visit multiple dealerships to get this price.
Now, CleanTechnica readers know how not to get ripped off with their own tax credit, but there’s no way to tell the whole country how not to get caught by the dealers, so if passed as proposed we would basically give a huge giveaway for dealers while not really reducing the cost of an electric vehicle. So a lot of taxpayer money would be wasted.
To change that, we need to tighten the tax credit rules a bit.
How to fix this bill
To really make this bill drive tons of electric vehicle sales, we need to do things to make sure it has an impact and encourages consumers and dealer staff (especially salespeople) to come to you. sell an electric car.
First, we need to set a limit above the dealer cost for offers that qualify for the point-of-sale discount. Charge the customer a dollar more than the allowed amount, and you can’t get the federal money to cover the sale. Dealers do must be able to make a profit on each sale, so we can’t set it at the dealer’s cost, but there must be a reasonable limit to make sure the program isn’t just a giveaway to them. We could set it at $ 2,500 over the dealer’s actual cost (including holdback and other things they can play with), or set it as a percentage of the sale. This would prevent dealers from making any money while preventing the program from becoming anything more than a freebie for them.
We also have to think about the seller. If they think they can make a better commission on a gasoline car, they will push customers to buy the gasoline car. It’s about making money, and we’re ignoring it at the risk of the program. To solve this problem, we have to do what is called a “spiff”. Give the seller $ 300 to $ 500 in cash for each electric vehicle sold. Do that, and they’ll be sure all of their EVs are sold before they even consider selling a customer a gasoline car. Even so, they’ll tell them to please, please come back next week. “I have the perfect car for you when I arrive on Tuesday!”
Even if we lower the price of vehicles by $ 7,000, we still need more infrastructure. We need every small dealership in every small town to install charging stations. We can do this by enabling dealerships that host a fast charger to sell their cars for a little more. For all the months that they have a working DC fast charger available to the public 24/7, they can sell the electric vehicles for an additional $ 500 to $ 1,000. Only a few sales will cover the cost of the application fee and help cover the cost of the equipment.
However, the station must be operational. This can be applied with a required sticker on the charger / socket with a number where users can report that the charger has failed. If they don’t fix the problem ASAP, they’re losing that part of the sales pie this month.
If we want this to have a chance of making it through the Senate, we had better make sure it is not a “tax credit for the rich”. If we put a cap on the price of the vehicle, we can prevent it from being used for expensive electric vehicles. This will encourage manufacturers to come up with EVs that the average person can afford and not go overboard with luxury SUVs while still not offering anything within the reach of most people.
If we can do all of these things, the program will be a huge success. If we don’t, we are simply wasting money.
Featured Image: The U.S. Capitol Building, by U.S. Capitol Architect (Public Domain)
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