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California running out of money for EV rebates

Interesting article in today's Wall Street Journal here.

Quote:

California's green regulations often drive national policies, so it's worth pointing out how its programs to cut vehicle emissions have become a gravy train for the 1%.

Well, yeah. But it gets better:

According to state survey data, the typical rebate recipient earns over $150,000 and owns at least one other non-electric car. About 80% hail from the Bay Area, Los Angeles and Orange County. The most popular car among rebate recipients this year has been Tesla's Model S sports sedan, which runs between about $70,000 and $100,000.

As a side note, California last year also awarded Tesla a $10 million grant to develop its Model X SUV and $756,000 in funds for "workforce training." As a recent state assembly analysis of the vehicle subsidies notes, "everyone benefits from clean air, but some of the beneficiaries are more equal than others."

Meantime, demand for rebates among the well-to-do is surging, which has created a funding squeeze. In March, the state had to create a waiting list. While the legislature appropriated an additional $15 million for rebates in June, the program is already running on empty and needs at least $30 million more to meet demand in the coming year.

In other words, so many rich people are buying Teslas that California's run out of rebate money. Pity the poor suckers who bought Leafs!

I imagine I'll love my car, even though Nevada does not offer EV rebates. As for California...well, something that can't go on forever, won't. Not that this has stopped them in the past.

I guess the only technology that can be supported is the kind of technology that's simple to develop, dirt cheap, and exists already.

No, just ones that the author is going to benefit directly from.

Give me a break. It's only $2500 I don't think that makes a difference for people who buy a $100000 car. Either way the benefit of cleaner air is shared by everyone rich or poor equally. More rich people who buy the car the better.


Give me a break. It's only $2500 I don't think that makes a difference for people who buy a $100000 car.

You know, that's exactly the argument I made here some weeks back, but I was treated to heart-rending tales of people who, solely due to their love of Mother Gaia, had stretched their finances as far as possible to afford a Model S.

(OK, that was mean of me, but it's not that far off...)

But that misses the point. It's not that most Model S owners don't need the rebate, 'cause that's really obvious. It's that California's paying it anyway, and has exhausted the funds allocated to do so.


I guess the only technology that can be supported is the kind of technology that's simple to develop, dirt cheap, and exists already.

Depends on what you mean by "supported." If you mean "receives government funds", then I'd argue very, very few technologies should be. Space exploration, maybe, although NASA has been dead to me ever since they decided to use a brand new Saturn V as a lawn ornament.

As one of Libertarian bent, I think that if a technology can't support itself on the market without assistance, then it doesn't need to be on the market. That said, would I have been able to buy my Tesla had Musk not been the recipient of Federal largesse, and indeed today benefits from being able to sell their ZEV credits? Possibly not.

The HOV lane access is a good benefit - perhaps worth the $2500 itself.

@Dramesey - there are plenty of things which are useful and can stand on their own once developed, yet never would have been without government research funding. The internet you are using to post here, for example. Transistors for another.

The sales tax collected by California on the Model S far exceeds the $2,500 rebate. State can just move the sales tax over to the rebate fund and the problem is fixed.

I paid about $9,400 in sales tax on my P85+. That's still $6,900 net proceeds to the state of California after giving me back the rebate.

This is no doubt more money in net tax than the average Californian pays on their car. So I'm certainly subsidizing the average Californian, not the other way around.

Something that I thought was strange and weird is that the same day I closed on my car (August 28) I sent in the application online. They emailed me asking me to send in the copy of the Registration, paperwork from Tesla, etc.

Supposedly all was great. I fed ex'ed it the same day that they requested it and the office happened to be here in San Diego. Then weeks went by and a few days ago they email me and sent this:

"Thank you for applying for the Clean Vehicle Rebate Project (CVRP). Upon review of your vehicle contract, we found that the date of purchase or lease was after the date of your CVRP application. Per the project guidelines specified in our implementation manual, “A sale is deemed completed when the purchaser of the vehicle has executed and signed a purchase contract or security agreement, and taken physical possession or delivery of the vehicle.” At any time following a vehicle purchase or lease transaction, the purchaser or lessee may submit a rebate application. We have canceled your current application because you were not in line with the aforementioned program guidelines.

In order to continue the application process, please reapply online at www.energycenter.org/cvrp. The only step that you need to repeat is the online application. Once you have reapplied online, please notify us via email and we will update the timestamp on your original application to match your reapplication date.

Please note that because you are reapplying your spot in the queue will change. Please keep in mind that applications are processed in the order in which they are received, so please allow between 3-5 business days for processing.

If you have any additional questions, please feel free to contact us."

I emailed them back to tell them that I did NOT apply earlier. I applied after the closing. Oh well, I filled out the application online again as requested but thought that was odd of them.

California has done quite well with its latest income tax increases so everyone who is crying about this rebate can kiss my S.


As one of Libertarian bent, I think that if a technology can't support itself on the market without assistance, then it doesn't need to be on the market.

I assume you will be selling your ICE cars and buying some horses then? Which makes sense since you will obviously want to forgo the interstates in favor of trails. I assume you will also be disconnecting you internet and unplugging your phones. Perhaps, before you unplug, you might want to download and read http://thebreakthrough.org/blog/Case%20Studies%20in%20American%20Innovat...

O

Libertarians always seem to forget that the status quo was once the radical.

A few day ago I read an article about the rebates/incentives being extended through 2023.

Here is the link: http://insideevs.com/california-passes-historic-2-billion-clean-vehicle-...


there are plenty of things which are useful and can stand on their own once developed, yet never would have been without government research funding. The internet you are using to post here, for example. Transistors for another.

ARPANet was certainly government funded, but essentially nothing about the modern Internet is.

And transistors? Not that I can find.

I think the real difference in some of these different technologies is whether the government spigot is "eternal" or "just at the start". As far as I know there hasn't been any direct Federal funding of the Internet for decades. Electric car subsidies, however, may continue for decades.

California is always out of money, yet the state keeps spending. I wish I could do the same.

I guess the only technology that can be supported is the kind of technology that's simple to develop, dirt cheap, and exists already.

Apparently:

@ blue shift

Thanks for this bar graph. It's highly illustrative of the way government picks the "real winners and losers". Now, when will the subsidies for fossil fuels run out?!?! can't wait for the day we can have true marketplace competing on merits. Alas, it will never come ...

guess tesla will just have to be a disruptive force instead of a competitive one.

@soma

"Libertarians always seem to forget that the status quo was once the radical."

Yeah but status quo feels so good, cozy and warm. To question it, is too inconvenient.

Re the bar chart: I went to earth-policy.org, and although they have a lot of Excel spreadsheets, I'm having trouble finding primary data. And the numbers look funny: according to that chart, the U.S. spent upwards of $600 billion on fossil fuel subsidies in 2011. However, according to this article on Bloomberg, the entire world spent less than a tenth that amount in 2011.

So, someone's figures are...wrong. Really, really wrong.

I suspect the difference in in deciding what to call a "subsidy". My definition is "the government gives you money they took from someone else.", as opposed to a "tax break", which is "the government doesn't take as much money from you as they think they could."

By my definition, I don't think fossil fuel gets any subsidies at all, while solar and wind and others get rather a lot.

Dramsey

By your definition if you pay $9400 in sales tax and the state of California gives you a $2500 rebate that is not a subsidy. Oh and the government paid for the space program that plus the defense budget funded development of transistors. I guess you didn't want to comment on any of the roads you drive on. There has also been government funding in the form of grants to colleges to build both Internet 1 and 2.

Silly debate. If it is the 1% that are getting the rebates, well, guess who pays the lion's share of taxes to fund those rebates. Yeah, the same 1%.

So, don't give me angst over a tax break that the rich get since the rich get soaked by taxes to begin with. Well, except for Warren Buffet. Of all rich people, he is a genius at evading taxes. Congrats Warren, but your folksy image kinda grates...

John: Since the first satellite wasn't put into orbit until 1957 (Sputnik 1) and Shockley invented the transistor while at Bell Labs in 1947, I feel pretty sure that the "space program" didn't have anything to do with funding the development of transistors. As far as I know, there was no government funding of this research at all. Do you have any citations to show otherwise?

And I'm not sure what "the roads I drive on" have to do with anything. Surely you see the difference between funding a public works project (roads, bridges, etc.) and funding a private for-profit company...don't you?


Silly debate. If it is the 1% that are getting the rebates, well, guess who pays the lion's share of taxes to fund those rebates. Yeah, the same 1%.

This is actually the best answer one can make. It has the advantage of being factual.

That said, would not getting the CA rebate have changed anyone's mind on buying a Tesla?

Nah. Now maybe the Federal+ State being negated would make a difference....10K to me....

@ dramsey,

I wonder if some of this includes two multi-trillion dollar wars to keep the oil flows coming? I agree, the numbers might be a bit wonky, but the principle is that we don't really what the true subsidy is on any of these because the marketplace has been distorted by non-market forces.

In the end, tax incentives, rebates, etc are fundamentally similar processes. They make the playing field less than level, tilting it in favor of one industry/company/constituency or another.

Seems like we all get the basic notion that if we had to pay actual non-subsidized fossil fuel costs (like much of the rest of the world), the decision to go electric/solar/alternate might have been done differently.

I wonder what would have happened if in the early 1900's the government subsidized the horse and buggy manufacturers. Would the development and implementation of automobile been different or delayed?

shop,
Warren Buffett has 99% of his net worth in Berkshire Hathaway common stock. His stock doesn't pay a dividend.

Therefore, he has no personal income tax on 99% of his wealth. It just compounds away at the corporate tax rate.

Obama is proposing (2014 budget) to cut the corporate rate to 28%. Berkshire Hathaway is one of those companies that actually does pay the 35% rate. So Obama's budget only means that Warren Buffett will get rich at an even faster compounding rate. How's that for the "Buffett Tax"?

You could raise the income and dividend tax rate to 100% and it would hardly matter to Warren's rate of wealth building -- it would have no affect whatsoever on this 99% of his money that is compounding away tax deferred. It only affects the 1% of his wealth that he holds outside of Berkshire.

It's kind of funny really. The media is completely oblivious.

I looked at the rebates/credits as covering the ever so iritating tax and license.

Right, rfriess. It's a wash.

When this program was created, I suspect the idea that an electric car could be inherently desirable was hard to imagine. At this point, I don't think the $2500 is influencing many consumers to purchase electric cars, and in particular, I doubt it convinces anyone sitting on the fence to order a Tesla.

I too was happy to cash my check, but there are probably better ways to spend money. We could probably repair a few crumbling schools for example.

A more cost-effective system might be to enter all electric car buyers in a lottery, where the state pays for the cars of the winners. The total payout could be much smaller but the program would generate far more interest and excitement than the $2500 rebate.

I submitted my application for the CA rebate and got a confirmation right away. Apparently they've re-funded it. What is not funded anymore is the rebate for residential solar electric.


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