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If a manufacturer would maximize profits by selling a vehicle for X dollars, then they will sell their vehicle for X dollars regardless of a subsidy. Certainly

If a manufacturer would maximize profits by selling a vehicle for X dollars, then they will sell their vehicle for X dollars regardless of a subsidy. Certainly a subsidy makes a product more affordable and hence increases demand for that product, but a subsidy can never allow a manufacturer to charge more for a product than they otherwise would charge. A manufacturer will always charge the price that maximizes their profits and that price doesn't change because of a subsidy.

bryanlarsen 2y ago
If something is supply constrained then a subsidy allows a price increase. If something is demand constrained then maximum profits occur with a lower price. 2022 was supply constrained. 2024 is not.
doctorpangloss 2y ago
> but a subsidy can never allow a manufacturer to charge more for a product than they otherwise would charge ...right. What is the impact on prices of Teslas when there are 100% tariffs and import bans on Chinese EVs? Do you think those tariffs makes Tesla prices go up or down? Why do retailers offer coupons? How do they set their prices when coupons are "always available"? I think you can't give me an consistent explanation for all of these. I can. Once you figure out if something is actually a tax or a subsidy, taxes make prices go up, and subsidies make prices go down. In my opinion, the surprising thing here is that because of the way it is implemented, such as the existence of vehicle tariffs on other EVs, limited number of vehicles it benefits, their price caps, and the conditions on local manufacturing, the federal EV tax credit is functionally an ordinary tax, and prices on all EVs - the cars that qualify for the benefit and those that do not - have risen. It is really a tax in disguise, on other vehicles, that transfers US tax dollars to US-centered auto manufacturers. And honestly why does that surprise you? Did you buy an overpriced Tesla or something?
- Maxatar 2y ago
  >Do you think those tariffs makes Tesla prices go up or down? It would certainly make the price of a Tesla go up. >Why do retailers offer coupons? The decrease in price results in an increase in demand for the product. This is very beneficial for manufacturers who need to keep the rate of production consistent all year long while demand for their product may fluctuate. > How do they set their prices when coupons are "always available"? The increase in demand from the decrease in price due to the coupon or subsidy balances out, so the price without the coupon/subsidy remains the same. The effect of the coupon/subsidy is strictly to increase the demand, it doesn't allow the manufacturer to charge a higher sticker price. >and prices on all EVs - the cars that qualify for the benefit and those that do not - have risen Except there's a way to test for this and it isn't consistent with your expectation. Tesla along with pretty much all car manufacturers charge the same amount for an EV in places that offer an incentive such as California versus places that don't, such as Texas. Based on your logic a Tesla should be more expensive in California, which offers a $7500 credit compared to Texas. But that's not the case.
  - doctorpangloss 2y ago
    > Tesla along with pretty much all car manufacturers charge the same amount for an EV in places that offer an incentive such as California Did you do your research? Are you aware that the incentive in California has been suspended for a while now? Regarding the coupon question... I'm sure you've heard of the phenomenon of raising a price, then offering a coupon. It's not just some brittle hallucination. It's just to say that it isn't so black and white. A coupon isn't a tax or a subsidy, it's a marketing gimmick. Does any of this matter? If the BYD were sold in America for $10,000, is there any doubt that prices on other EVs would go down, beneficial for all Americans, including the ones affected by layoffs due to high interest rates responding to inflation... even if nobody bought the BYD?

bryanlarsen 2y ago

If something is supply constrained then a subsidy allows a price increase. If something is demand constrained then maximum profits occur with a lower price. 2022 was supply constrained. 2024 is not.

doctorpangloss 2y ago

> but a subsidy can never allow a manufacturer to charge more for a product than they otherwise would charge ...right. What is the impact on prices of Teslas when there are 100% tariffs and import bans on Chinese EVs? Do you think those tariffs makes Tesla prices go up or down? Why do retailers offer coupons? How do they set their prices when coupons are "always available"? I think you can't give me an consistent explanation for all of these. I can. Once you figure out if something is actually a tax or a subsidy, taxes make prices go up, and subsidies make prices go down. In my opinion, the surprising thing here is that because of the way it is implemented, such as the existence of vehicle tariffs on other EVs, limited number of vehicles it benefits, their price caps, and the conditions on local manufacturing, the federal EV tax credit is functionally an ordinary tax, and prices on all EVs - the cars that qualify for the benefit and those that do not - have risen. It is really a tax in disguise, on other vehicles, that transfers US tax dollars to US-centered auto manufacturers. And honestly why does that surprise you? Did you buy an overpriced Tesla or something?

Maxatar 2y ago
>Do you think those tariffs makes Tesla prices go up or down? It would certainly make the price of a Tesla go up. >Why do retailers offer coupons? The decrease in price results in an increase in demand for the product. This is very beneficial for manufacturers who need to keep the rate of production consistent all year long while demand for their product may fluctuate. > How do they set their prices when coupons are "always available"? The increase in demand from the decrease in price due to the coupon or subsidy balances out, so the price without the coupon/subsidy remains the same. The effect of the coupon/subsidy is strictly to increase the demand, it doesn't allow the manufacturer to charge a higher sticker price. >and prices on all EVs - the cars that qualify for the benefit and those that do not - have risen Except there's a way to test for this and it isn't consistent with your expectation. Tesla along with pretty much all car manufacturers charge the same amount for an EV in places that offer an incentive such as California versus places that don't, such as Texas. Based on your logic a Tesla should be more expensive in California, which offers a $7500 credit compared to Texas. But that's not the case.
- doctorpangloss 2y ago
  > Tesla along with pretty much all car manufacturers charge the same amount for an EV in places that offer an incentive such as California Did you do your research? Are you aware that the incentive in California has been suspended for a while now? Regarding the coupon question... I'm sure you've heard of the phenomenon of raising a price, then offering a coupon. It's not just some brittle hallucination. It's just to say that it isn't so black and white. A coupon isn't a tax or a subsidy, it's a marketing gimmick. Does any of this matter? If the BYD were sold in America for $10,000, is there any doubt that prices on other EVs would go down, beneficial for all Americans, including the ones affected by layoffs due to high interest rates responding to inflation... even if nobody bought the BYD?