>That's a subsidy to purchase the car, not manufacture it. It's a subsidy for the manufacturer, as the manufacturer sees you got a credit from the government,

>That's a subsidy to purchase the car, not manufacture it. It's a subsidy for the manufacturer, as the manufacturer sees you got a credit from the government, and simply raises prices accordingly. Done as a way to meet demand and ensure the manufacturer works for the money. This is also fundamentally why college and house prices keep going up, as the government subsidizes student loans and mortgages, and so colleges and such simply raise prices.