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If Tesla Would Stop Selling Cars, We’d All Save Some Money
- quotha 13y agoThey should get those tax credits for driving the car - not just buying it - cause then they help lower the cost of gas for us all!
- sp332 13y agoThey already get an effective tax break by not paying gas taxes.
- eatmyshorts 13y agoSo, if I get you correctly, you're saying they get a tax break by not paying taxes on something they don't use? Why stop with them not paying gas taxes? Since they are American-built, they also don't pay import taxes. They aren't luxury yachts, so they don't need to pay a luxury yacht tax, either. Why, there's all sorts of taxes they don't pay. Claiming they get an effective tax break by not paying gas taxes is absurd.
- deleted 13y ago[deleted]
- jaynos 13y agoGas taxes are used to build and maintain the roads that electric cars drive on. Electric car owners reap those benefits without paying the gas tax. That said, the CATO article was beyond biased for all the reasons already mentioned.
- steveklabnik 13y agoThe Cato institute is not exactly without bias. Doesn't mean they're wrong, just something to think about as you read this piece.
- jshen 13y agoIt's rather odd to hear Cato complaining about tax breaks. It's even odder to hear them talk about one persons tax break as another persons tax burden. They seem to be very selective with where they apply this logic.
- jerf 13y agoWhy? Tax breaks are just a subsidy. I'd call it a subsidy in disguise, but it's hardly even "in disguise". When they aren't going to the Good Guys (TM) people have no problems calling this corruption.
- jshen 13y agohttp://www.cato.org/publications/commentary/why-bush-tax-cuts-worked http://www.cato.org/publications/commentary/why-bush-tax-cut... Notice how they don't apply the logic that these tax cuts were someone else's tax burden.
- danielweber 13y agoI have no idea about Cato's overall position on this, but broad tax cuts are a different policy beast from targeted tax cuts for the connected. C.f. the best way to repeal an unjust law is to make it get applied everywhere. If the governor's son has to spend 2 years in jail for pot possession, the pro-legalization should want him treated like every other person; if he gets a special exemption, then what they see as an unjust law can continue.
- jshen 13y agoYou seem to conflate targeted cuts with corrupt cuts. They aren't necessarily the same. Cato has supported targeted cuts in the past.
- Kequc 13y agoWhat a rag. Here they are talking about the Keystone Pipeline, a proposed way of pumping oil in north america to the shore where it can be exported at a profit. They cite job creation as a benefit of public funding for the pipeline, as well as the environment. I can't believe this is on the front page of hacker news. http://www.cato.org/blog/climate-impact-keystone-xl-pipeline http://www.cato.org/blog/climate-impact-keystone-xl-pipeline
- revscat 13y agoThis is only true if you do not factor in the longer-term costs of carbon emissions. Those emissions will eventually need to be dealt with, and the costs will be substantial. If those costs are addressed today via tax subsidies for zero-emissions vehicles then the future costs will be lower. It is an "ounce of prevention" thing.
- sp332 13y agoDo you think the future costs are $7,500 per car though? Seems like we're still losing money on that. The actual argument, I think, is that this is just funding R&D for Tesla to make a better car in the future. That might actually be a good long-term investment.
- dm2 13y agoNope, but it does influence adoption rates, which was the goal of the subsidy. If .01% of cars are electric and the chargers are not conveniently placed, then everyone will continue purchasing a ICE vehicle. If 5% of cars are electric, then people will see the benefits and that the cars are practical, then people will be significantly more likely to consider an electric vehicle for their next purchase. 75 million per 10,000 electric vehicles? It's costly but it's necessary, and in my humble opinion, it will be well worth it. The sooner we eliminate oil tankers and oil rigs, the better.
- revelation 13y agoI don't know, what is the estimated monetary cost of destroying whole eco systems and the earth to boot? Whats the opportunity cost in fighting wars over oil instead of developing regenerative energy sources? What did it cost society to use leaded gas? Lead is one of the most neurotoxic substances on the planet, and an ever so slightly increased concentration in the blood can seriously hamper intellectual development. What price tag can we put on costing someone 10 IQ points? The answer to all these questions, of course, is that it's impossible to correctly account for these things in the market without causing unfathomable transaction costs. This is after all the definition of a negative externality. But I can tell you as much, $7500 is a freaking bargain.
- LandoCalrissian 13y ago"Tesla can’t increase demand by dropping the price very much. " That's a pretty big leap on the Authors part, one that isn't really justified from facts or information. We know basically nothing about Tesla's plans for their cheaper models or what they have/will do to reduce the cost. It's really bizarre to me how much certain groups are just itching for Tesla to fail.
- justina1 13y agoMight be those that jumped on the short TSLA bandwagon after Fisker blew up.
- LandoCalrissian 13y agoFisker was never really building their own stuff though. They were just bolting together a bunch of parts from different suppliers. Tesla has real technology, especially in the battery department that they are already beginning to licence to other auto manufactures.
- beatpanda 13y agoCato's funding comes from a fortune made on fossil fuels. They have a job to do.
- bhb916 13y agoI'm not a Cato Foundation supporter, but I can't seem to find a single article on their website advocating fossil fuel subsidies. To the contrary, I found four articles articulating opposition (one even congratulated the President!) to them. Am I missing something?
- uvdiv 13y agoThe criticism is that they similarly oppose subsidies to oil competitors (such as electric cars). And more significantly, regulation or taxes on CO2.
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- drawkbox 13y agoThe subsidies and tax breaks are minuscule to the subsidies of oil companies which cato backs. I wish we could just tax all companies equally and much much lower. But we should always give breaks to encourage competition.
- jcampbell1 13y agoWhat? Here is Cato praising Obama for proposing the end of oil subsidies: http://www.cato.org/publications/commentary/eliminating-oil-subsidies-two-cheers-president-obama http://www.cato.org/publications/commentary/eliminating-oil-... I tend to disagree with Cato's brand of libertarianism, but they are consistent.
- drawkbox 13y agoWell I stand corrected, had not seen that. Glad they posted that. However still the breaks for electric/green tech is still not a comparison at all and oil/gas/manufacturing are well established. I'd be for kicking taxes down to the subsidy levels so there aren't any major costs to remove it, just a tax break for other industrie. It would be great for revenues for companies for a while and they might pay their taxes actually. In a perfect world taxes would be 10% maybe and companies could bring their money back to the US.
- stephengillie 13y agoThis article was written with an edge. I would not be surprised if the author is among the people who consider taxation to be theft. I wonder how he felt about Lee Iacoca getting Congress to bail out Chrysler in the 80s.
- jjtheblunt 13y agoWas the author even born then?
- tlrobinson 13y agoI'd guess "yes": http://www.cato.org/people/patrick-michaels http://www.cato.org/people/patrick-michaels
- glenra 13y agoOne would naturally assume he was opposed to the bailout. Michaels was opposed to the most recent auto bailout too - here's him being snide about it: http://abcnews.go.com/Politics/story?id=7622306&page=3 http://abcnews.go.com/Politics/story?id=7622306&page=3 It's really weird how many people don't grok libertarianism and assume Cato couldn't possibly be consistent about just not wanting stuff subsidized in general.
- RestlessMind 13y ago> but it would be more comfort if we weren’t all compelled—completely against most of our wills—to shell out around somewhere around $10K Tax subsidies are decided by legislators who are elected by us. So the claim - "completely against most of our wills" - is utterly false.
- jessriedel 13y agoDoesn't have to be. Legislators elected with small majorities can easily vote for legislation that is supported by less than 50% of the constituency.
- RestlessMind 13y agoIts possible in one of the following cases: 1. The issue is insignificant enough (or else, opponent would hammer the electorate with ads highlighting this issue) so voters don't care about it. 2. The issue comes up after the election and stance of candidates regarding that is not known before one votes. #2 is not applicable since green energy / electric cars are pretty old issues and voters (should) know what their candidates think about those. #1 might be more applicable, in which case the original point in article ("against most of our wills") is still moot - voters simply don't care about this as much as they care about some other stuff.
- icebraining 13y agoThe fact that there are more important issues doesn't mean voters don't care, it just means the system is unfit to take them into account.
- RestlessMind 13y agoIf majority of voters care about some not-insignificant issue, current system will ensure that its taken into account. And thats my main point - this issue is simply not significant for a majority of the population.
- kiba 13y agoThe tax credit and carbon dioxide emission credits compensate for the negative externality of petrochemical products.
- mchanson 13y agoCause you know the big three never got any government money...
- uvdiv 13y agoWho do you think the Cato Institute is? https://www.google.com/search?q=auto+bailout+site:cato.org https://www.google.com/search?q=auto+bailout+site:cato.org
- nawitus 13y agoThe article should take sales tax into consideration, ranging from 3 to 8 percent, while the average is 5.75%[1]. That's pretty close to the $7.5k federal taxback bonus. Another critique of the article is that Leaf's sales numbers are not good evidence for future sales. Electric cars will make a lot more sense when fast charge stations become more commonplace. It's like saying (in 2004 or something) that nobody ever wants to buy a smartphone because there's only a few apps available. 1. http://auto.howstuffworks.com/under-the-hood/cost-of-car-ownership/cost-of-taxes-on-your-car1.htm http://auto.howstuffworks.com/under-the-hood/cost-of-car-own...
- aaronbrethorst 13y agoThe total cost of the referenced program in California is $55.7m spread over four years, or just under $14m per year[1]. In a budget that measures into the billions of dollars per year, that's nothing. [1] http://energycenter.org/index.php/incentive-programs/clean-vehicle-rebate-project http://energycenter.org/index.php/incentive-programs/clean-v...
- danielweber 13y agoI'm not saying the program should end, but your argument is how we get death by 1000 paper cuts.
- aaronbrethorst 13y agoI'm guessing we probably disagree on the sequester too, then, huh?
- mncolinlee 13y agoAs I pointed out in the other thread[1], this argument is pretty silly as the Cato Institute and most electric car critics have openly advocated subsidies for the industries they support. These "subsidies" are paid for by companies who CHOSE to pay them to continue participation in the California market without producing zero emissions vehicles. In the minds of these critics, the fact that Tesla is a niche startup today in a small, renewable transportation sector changes the entire dynamic about the deal. One needs look no further than Cato's full-throated endorsement of oil subsidies[2]. Despite admitting externalities exist, they put their stamp of endorsement on oil industry subsidies while opposing far smaller industry-paid subsidies for Tesla, a company whose product harms profits of oil companies. [1] https://news.ycombinator.com/item?id=5753993 https://news.ycombinator.com/item?id=5753993 [2] http://www.cato.org/publications/policy-analysis/big-oil-public-trough-examination-petroleum-subsidies http://www.cato.org/publications/policy-analysis/big-oil-pub...
- uvdiv 13y agoOne needs look no further than Cato's full-throated endorsement of oil subsidies[2]. [2] clearly does not endorse subsidizing oil.
- enoch_r 13y agoYour Cato link is not a "full-throated endorsement of oil subsidies," it is a discussion of whether government interventions in energy markets benefit oil companies on net, and if you'd done a cursory google search for "Cato oil subsidies" you would have found that Cato has repeatedly argued against them[1][2]. This sort of thing is why I'm tired of political news on HN. [1] http://www.cato.org/publications/commentary/eliminating-oil-subsidies-two-cheers-president-obama http://www.cato.org/publications/commentary/eliminating-oil-... [2] http://www.cato.org/publications/commentary/oil-subsidies-dock http://www.cato.org/publications/commentary/oil-subsidies-do...
- aasarava 13y ago> This sort of thing is why I'm tired of political news on HN. Because someone interpreted information differently than you, or did not do the same research as you? I think you'll tire quickly of political discussion anywhere, in that case. From my perspective, your reply to the parent's comment is exactly why HN works. Someone makes an assertion, and another person comes along and adds additional information to better round out the issue. (Thank you for that, btw.)
- uh_oh 13y agoThey mentioned Honda, of all companies! http://www.sourcewatch.org/index.php?title=Cato_Institute#Corporate_sponsors http://www.sourcewatch.org/index.php?title=Cato_Institute#Co... American Petroleum Institute, ExxonMobil, General Motors, Honda North America, Toyota Motor Corporation, Volkswagen of America
- trotskylives 13y agoComparing apples to apples, I would figure out what % of the US military budget is spent defending oil supplies for gas powered cars which is another unseen subsidy.
- andrewtbham 13y agoElon Musk says the ZEV credits are likely to go to 0 by Q4. The car is also projected to 25% gross margins in Q4. Battery energy density and cost improve about 7-8% each year and there will be a $30k car in 2016 or 2017. I suspect the oil and car industries and their PR departments will push hard to repeal the tax credit as they are in this article. Also expect Tesla will push hard to tax carbon emitting vehicles. Should make for plenty link bait like this.
- dm2 13y agoThere will be a tipping point thought. Hopefully sooner rather than later, the major auto companies are going to have to jump on board with the electric vehicle industry and fully support EVs. What year do you think the last ICE vehicle will be sold in the US? At some point, gas stations will stop selling gasoline. I honestly don't know if it'll be in 10 years or 50 years.
- andrewtbham 13y agoI think within 10 years we will see an explosion in the popularity of EVs. However, it's possible as EVs increase in popularity, Lithium prices could go up and gasoline prices could fall.
- crazcarl 13y agoIt doesn't seem all that strange or bad that the non-tesla car producers are passing along the costs to the consumer. If a company is putting their own profits into R&D for a new product they are developing, is that not same thing as passing on the costs to the consumer? Except in this case, Honda is paying for Tesla's R&D instead of their own.
- icebraining 13y agoI'm pretty sure their disagreement is with the exceptional nature that you pointed out.
- jasonkolb 13y ago". Then there are generous state subsidies ($2500 in California, $4000 in Illinois—the bluer the state, the more the taxpayers get gouged)" I live here, and I am no fan of Illinois, but the sales tax rate is 6.25 on autos right now, which mean the state makes back 98% of that subsidy every time a Tesla is sold.
- ptlu 13y agoThe author blames a company which is able to take advantage of laws rather than blaming the lawmakers for creating such laws. 1. Tesla is able to sell carbon credits it earns from selling its cars. Due to California law, other car companies must buy these credits to offset the sale of their fossil fuel burning cars. 2. Its customers get a lower price on their vehicles due to tax-credits for electric vehicles. These are the laws in place which help a company like Tesla grow. I would imagine these laws are designed to do exactly what they are doing, which is helping an electric car manufacture grow and compete in a world dominated by vehicles using fossil fuels. The hidden argument he is making is that fossil fuels and climate change surely cost us nothing and should not be included at all in the cost of items which generate a third of CO2 emissions.
- beat 13y agoFirst draw your curve, then plot your data. Cato isn't so much a "conservative think tank" as a mouthpiece for certain established financial interests, such as the oil industry. So Cato's job is not to produce facts and logic, but rather to produce propaganda that bears a surface resemblance to facts and logic, in order to put a thumb on the political scales. Tesla is what we in our little corner here call "disruptive innovation" - in this case, disrupting the automotive sector's dependence on the oil industry. This is a technically difficult and very expensive proposition, in the face of some extremely powerful vested interests at both the national level (Cato Institute for oil) and the local level (mandatory dealer laws in Texas, etc). Tesla is tackling this in part by relying on tax subsidies to consumers, based on the public good. Now, if tax subsidies benefit Cato's backers, then Cato is all for tax subsidies. But if tax subsidies threaten their backers, then Cato is suddenly all righteous about "free markets". Cato doesn't give a crap about free markets. And their backers are scared... Detroit and other non-US auto manufacturers are sorta-neutral third parties here. They're not in the oil business, they're in the car manufacturing business. If Tesla's disruption is successful, they'd much rather adopt Tesla's model and cut Big Oil loose, than go out of business manufacturing dinosaur-fart burners. So this post is mostly interesting in that grumbling about consumer tax subsidies on high-end luxury goods is the BEST they have.
- icebraining 13y agoWell, the fact that they may be hypocrites doesn't make them wrong, but a look at their arguments for tax breaks on the oil industry could help better understand where they're coming from. Do you have some links to those? Thanks.
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- salimmadjd 13y agoPutting Cato's credibility and biased views aside, this article it's first of its kind that doesn't just republish Tesla's PR as news! You can view Tesla as tax on the middle class. You can argue most middle class families will not buy a Tesla but they are paying the rich to buy one. I think the tax credit should be tied to income.
- jcampbell1 13y agoThe argument is deeply flawed, but not because libertarianism is inconsistent. Reducing dependency on petroleum is a trillion dollar issue. Tesla has made some major innovations in this area, including the multi-cell floorpan battery, and all the money they have spent buying batteries is used by suppliers to innovate on making them cheaper. Innovation only has to be done once, and right now every car company on the planet has Model S's on racks and are doing engineering tear downs. Tesla's engineering will probably pay dividends to the world in the amount of billions over the next 30 years. A few hundred million in state subsidies seems a small price to pay. From the article: > About the only way they can do this (barring some—currently remote—major battery technology improvements) is by cutting the vehicle’s range. It is completely lost on the author that one reason batteries get better (both directly and indirectly) is because Tesla builds cars.
- vec 13y ago> As the company sold 5,000 cars in the quarter, though, $13,600 per car was paid by other manufacturers, who are going to pass at least some of that cost on to buyers of their products. The article compares pollution credits to bribery and a shakedown, but I don't quite get the case. Tesla doesn't get them for free, it actually has to produce low emission vehicles. And no one is forcing Honda to buy them from Tesla specifically (or technically at all). Honda isn't prepared to produce low emission cars, so the carbon credits market means they don't have to, so long as they're willing to bear the external costs in some other way. Pollution credits are a relatively lassiez faire mechanism for converting a specific type of external costs to internal ones, and they seem to function pretty well. Not a leading question, but I'm honestly curious. What is the conservative or libertarian argument against them, and what approach would conservatives or libertarians prefer we took to the problem of large externalities?
- icebraining 13y agoWell, there are multiple capitalist libertarian schools of thought, not to mention left-libertarian, but from what I've understood the Rothbardian position (which, I believe, is pretty hardcore in general) to be, it boils down to: 1. It's impossible to calculate the true costs of an externality like "air pollution", therefore any number that the government chooses is arbitrary and unjust. 2. When an externality can be defined concretely as in "Action by person A harms person B or her/his property", then B can sue A to stop it and get compensated (e.g., a factory dumping chemicals to someone's land). 3. On the other hand, it's unreasonable for people to individually identify and sue car owners, therefore the best solution is to privatize roads, and then the road owner would be liable for the pollution, so he would have an incentive to raise prices or ban high polluting cars. That said, this is not necessarily the position of the CATO Institute; I'm not sure where they stand.
- dragonwriter 13y ago> what approach would conservatives or libertarians prefer we took to the problem of large externalities? For focussed negative externalities, a fairly common libertarian position is that they should be handled through civil damages in cases brought by those harmed. For diffuse negative externalities, there's a mixture of a civil damages approaches and assumptions that, on balance, assessing and addressing diffuse negative externalities from market actions by any other means (even acknowledging that the civil damages approach is far from complete) creates additional negative externalities that are more significant than the original negative externalities, so you just have to give up.
- Shorel 13y agoSave some money on a very short term. I'll put my hopes in Tesla. Long term thinking is where the future becomes reality.