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I'm always skeptical of subsidies on a mass scale. All you do is increase demand and thus increase prices that offset the subsidy. It also incentivizes manufact

I'm always skeptical of subsidies on a mass scale. All you do is increase demand and thus increase prices that offset the subsidy. It also incentivizes manufacturers to float prices higher anyway. The Denver program at least limited it to low-income individuals which I think is the correct approach to avoid significant pricing disruption.

beachy 3y ago
We had the opposite effect in NZ. Putting an $8K subsidy on EVs sold for <= $80K caused manufacturers to drop their prices so as to be inside the subsidy range. It seems to have worked very well, looks like they got the numbers right. I have moral issues with the wealthier members of society getting an $8K handout from the govt for buying a new car, but that's a different matter.
- delfinom 3y ago
  Well the subsidy had a price cap which is also a smart move to try and counteract supply side issues
marcosdumay 3y ago
> All you do is increase demand and thus increase prices that offset the subsidy. No, it's not. Production is elastic, it grows to accommodate price changes. For most things you get a minuscule increase in price with a large increase in usage.
notatoad 3y ago
>"all you do is increase demand" yes, that's the goal here.
audunw 3y ago
By your logic the EV subsidy (or, tax cut relative to gasoline cars, but it should be the same effect) in Norway shouldn't have worked. Yet it has been wildly successful. Yes, it may encourage manufacturers to increase price, but that gives them more money to do marketing, and incentivizes them to try to sell more of the product since the margins are now so good. It was striking how fast all the car marketing in Norway changed towards pushing EVs. While in other countries the car makers still seem to be primarily pushing ICEVs. Considering that consumer awareness is an important aspect of transitioning to a new solution, this is a very good thing IMO. I think it's also good that Norway didn't try to limit the subsidy to cheaper cars, to not fall for the temptation to exclude luxury cars. (Until very recently, now that the transition is already nearly complete). Making sure nobody feels excluded or singled out makes political support much easier and simplifies everything.

beachy 3y ago

We had the opposite effect in NZ. Putting an $8K subsidy on EVs sold for <= $80K caused manufacturers to drop their prices so as to be inside the subsidy range. It seems to have worked very well, looks like they got the numbers right. I have moral issues with the wealthier members of society getting an $8K handout from the govt for buying a new car, but that's a different matter.

delfinom 3y ago
Well the subsidy had a price cap which is also a smart move to try and counteract supply side issues

marcosdumay 3y ago

> All you do is increase demand and thus increase prices that offset the subsidy. No, it's not. Production is elastic, it grows to accommodate price changes. For most things you get a minuscule increase in price with a large increase in usage.

notatoad 3y ago

>"all you do is increase demand" yes, that's the goal here.

audunw 3y ago

By your logic the EV subsidy (or, tax cut relative to gasoline cars, but it should be the same effect) in Norway shouldn't have worked. Yet it has been wildly successful. Yes, it may encourage manufacturers to increase price, but that gives them more money to do marketing, and incentivizes them to try to sell more of the product since the margins are now so good. It was striking how fast all the car marketing in Norway changed towards pushing EVs. While in other countries the car makers still seem to be primarily pushing ICEVs. Considering that consumer awareness is an important aspect of transitioning to a new solution, this is a very good thing IMO. I think it's also good that Norway didn't try to limit the subsidy to cheaper cars, to not fall for the temptation to exclude luxury cars. (Until very recently, now that the transition is already nearly complete). Making sure nobody feels excluded or singled out makes political support much easier and simplifies everything.