ucbalumnus

The $7,500 electric vehicle tax credits in aggregate are likely tiny compared to the subsidies for corn farming, ethanol fuel requirements, use of foreign policy and military capabilities to handle oil-fuelled international political problems, etc..

Perhaps removing all of the subsidies would be a good thing. This would include an oil tax to pay for foreign policy and military costs of handling oil-fuelled international political problems (and a corresponding reduction in deficit spending).

kluge

I think the part that you and GladGradDad are missing, BCEagle, is that we're not paying the "real" costs we're incurring by burning fossil fuels for transportation right now.

Down in Ecuador there's hundreds of open pits full of grossly poisonous sludge left over from oil drilling. Corporations, governments, lawyers, etc. are all fighting over whose job it is to pay to clean it up (I don't have a quick answer for that, sorry) but in the meantime - the toxic stuff has been leaking into the environment, poisoning people for decades. And if the real scientists are right about global warming - how much will our kids and grandkids pay for the consequences of our continued dumping of carbon into the atmosphere? When do we pay for that?

Those are all "real" costs - they're just ones that are being subsidized by other people. In the modern era government subsidies have pushed along a lot of technologies which have proved pretty useful - like the internet. Government subsidies of one sort or another have played a big part in the development of industry and transportation, from the land grants which fostered the railroads in the 19th century to the zoning and planning standards I mentioned earlier which helped create our modern auto-centric society. All of those things had a cost; but they also had a benefit. Analyzing the net "real cost" of sticking with current technology vs. the net "real cost" of pushing along some competing technologies is a more subtle analysis than most people are interested in undertaking.

BobWallace

It worked well for hybrids - they were initially subsidized to get them into the market and accepted, and now we see that they can work in the marketplace without subsidies.

The wasted money is money spent on useless technology like fuel cells for cars.

SlitheyTove

Sounds like you're mixing this up with liquid natural gas. Compressed natural gas uses the same pipeline infrastructure that is used to bring natural gas to people's homes to run hot water heaters, cooktops, and other basic home necessities. There's already a very well developed pipeline infrastructure.

The subsidy addresses the chicken-egg problem. A new alternative energy vehicle needs a fuelling network. People who might be able to afford e-cars are going to be put off by the limited range because there aren't any quick-charge stations to use on the fly. But there's no incentive to build those stations because there aren't many people buying the cars. Goose sales of the cars, and you get enough of a critical mass to create a for-profit network of charging stations.

The subsidy is the same for someone buying a Leaf or a Tesla, with far fewer buying the upper-end Tesla. I suppose one could say that no car with a MSRP above, say, $50k gets the tax credit.

It was only a few years ago that small businesses (including incorporated professionals) discovered that they could get enormous tax deductions by purchasing enormous gas-guzzling luxury SUVs as company vehicles. I'm not even sure that that particular loophole got cut off.

GladGradDad

I don't think so and it doesn't even include all of the other subsidies these and associated companies are getting. On top of that, fossil fuels are still consumed (to create the electricity) and there are far more things that consume fossil fuels than cars (airliners, ships, and the list goes on) so some of the geopolitical side effects you mention would occur regardless.

This particular subsidy is way out of whack and when you consider that for the majority of people these aren't 'necessary' vehicles but rather second or third vehicles and they have the luxury and funds available to spend what it takes to buy one of these vehicles even after the subsidy. Again, why should we heavily subsidize someone to buy a $50k to $100k vehicle?

For people who think the $7,500 is fine, why not make it $15K, or $30K, or better yet, just give everyone one of these cars (rhetorical question)?

There's a huge amount of taxpayer dollars going to enrich individuals and companies to buy premature subsidized commodities rather than spending it in the R&D labs to actually improve the technology and achieve groundbreaking breakthroughs. When the time is right and people think the economic model exists to produce the commodity for a non-artificial profit then they're sure to take advantage of that. The problem now is that the economic models and business plans are dependent on the subsidies to be viable at all and even then they can fail (Solyndra is an example - Tesla's liable to be another one).

On the flip side - I can see myself driving an electric vehicle to work. I'd even be willing to drive a golf cart if I could do it safely but I can't. I think we'll likely eventually get there and we're likely close but let's improve the technology to the point where we don't need to pay people to use it.

BCEagle91

> I think the part that you and GladGradDad are missing, BCEagle, is
> that we're not paying the "real" costs we're incurring by burning
> fossil fuels for transportation right now.

It consistently amazes me to see that you think that everyone else
is dumb except for you.

> Down in Ecuador there's hundreds of open pits full of grossly
> poisonous sludge left over from oil drilling. Corporations,
> governments, lawyers, etc. are all fighting over whose job it is to
> pay to clean it up (I don't have a quick answer for that, sorry) but
> in the meantime - the toxic stuff has been leaking into the
> environment, poisoning people for decades. And if the real
> scientists are right about global warming - how much will our kids
> and grandkids pay for the consequences of our continued dumping of
> carbon into the atmosphere? When do we pay for that?

Hopefully the smart research folks in our universities will find a
quick and inexpensive solution to sludge.

> Those are all "real" costs - they're just ones that are being
> subsidized by other people. In the modern era government subsidies
> have pushed along a lot of technologies which have proved pretty
> useful - like the internet. Government subsidies of one sort or
> another have played a big part in the development of industry and
> transportation, from the land grants which fostered the railroads in
> the 19th century to the zoning and planning standards I mentioned
> earlier which helped create our modern auto-centric society. All of
> those things had a cost; but they also had a benefit. Analyzing the
> net "real cost" of sticking with current technology vs. the net
> "real cost" of pushing along some competing technologies is a more
> subtle analysis than most people are interested in undertaking.

You can't know what costs will be in the future though.

Where did you get the idea that I was against subsidies?

You make a lot of assumptions.

> The wasted money is money spent on useless technology like fuel
> cells for cars.

Fortunately it is the private money of Toyota, Honda, Mercedes Benz
and BMW wasting their money.

BobWallace

You might want to check the numbers on that - $100M in the DoE budget this year for fuel cell technology, and something like $2B in government spending to date. (Although in fairness that is not 100% waste - some of it is spent on non-useless applications for fuel cells.)

BobWallace

This is nonsense - the Tesla is a silly toy, but the electric cars selling in significant numbers are Nissan Leaf and Chevy Volt. Later this year the electric Fiat and electric Prius will be introduced - regular cars for regular people that are replacing gas vehicles.

GladGradDad

I disagreed with using a subsidy on the hybrids as well. I don't think they're needed and only distort the reality. Most hybrids have been a money loser for their producers even with the subsidies but if they believe there's a long term gain to be made, as it appears Toyota did, then it makes sense for those companies to do the investment and it shouldn't require heavy subsidies of the type I mentioned.

I don't know whether fuel cells make sense or not but I think it makes sense to do R&D in a lot of areas, perhaps including fuel cells. I just don't want to start having to pay people to buy them.

GladGradDad

What's 'nonsense' is my tax dollars being given to a rich person to buy a silly toy. We almost agree on the latter except I'd say the Tesla is a 'cool toy' albeit an expensive one. They're so expensive that I don't see how the taxpayer subsidy will be the deciding factor in someone buying a Tesla as opposed to something like the Leaf or Volt.

Neither of the Volt and Leaf models is selling in significant numbers and if they had to charge the non-subsidized amount it'd be far worse.

BobWallace

Too late - there was already a fuel cell car subsidy program several years ago (2 words: lead balloon).

BobWallace

If the cars aren't selling in significant numbers, then the subsidy isn't costing significant dollars ... So what's the problem?

I agree that subsidizing Tesla luxury cars is stupid, but so are a lot of tax breaks that we give to the rich.

GladGradDad

Seriously? You're fine giving each buyer of an expensive car $7,500? I'm not even if it were only a handful of cars. btw - Most of the Tesla models aren't actually for sale yet so it's hard to say what the numbers will be like.

When the word 'but' is used in this context it's the trigger to the phrase of 'two wrongs don't make a right'.

SlitheyTove

I agree, it's terrible! How To Take A 100% Tax Write-Off For A New Porsche, BMW or Cadillac - Forbes

We don't know what vehicles the IRS will approve for 2012 (Business Vehicles - Section 179 Deductions | Section179.Org), but the "must be above 6000 pounds weight" part still holds.

The Tesla is an expensive car, but it's certainly not a silly toy....unless "silly toy" refers to all similarly-priced luxury cars.

ucbalumnus

Not all fossil fuels have the same geopolitical side effects. Indeed, it is mainly transportation that is currently dependent on liquid fuels (i.e. oil for the most part) due to their relative convenience in small mobile objects as opposed to larger fixed power plants. Most people do not want to shovel solid fuels like coal into their cars or give up their interior or cargo room to fuel tanks for gaseous fuel or deal with leaks from the highly pressurized fuel systems. Airplanes and ships have similar constraints. Putting a nuclear power plant in your car does not seem feasable at the current time, while geothermal and hydropower needs to be in a particular place. Solar and wind powered cars need to be very small and light, and have some dependency on weather conditions. People in the US seem very lazy in terms of willingness to use their own power to move around even short distances (e.g. walking, running, bicycling, walking up/down stairs instead of using the elevator).

But electrical power generation does not have the same constraints as transportation, and some industrial uses of energy (not necessarily electricity) can also have their own power plants fuelled by something other than liquid fuel.

Of course, all transportation and other things using oil would have to bear the cost of an oil tax if such a thing were implemented to pay for foreign policy and military costs of oil-fuelled foreign policy and military problems.