This is thanks to the absurd guidance by the govt. to only give tax break Model Y like vehicles if they are under $55K. (Personally,this hurts as I bought a MY in December)
There is an argument for it: the best technologies start out expensive and even kind of crappy and only reach the people who really want (or need, in B2B) it. Then the important features get shaken out, and as mfg comes down the learning curve the production cost drops and the price does too (to build share).
So if you can increase the number of people who participate in the early stage the technology will come down the learning curve faster, which is good for everyone (except the legacy producers, in the case of a replacement technology). In other words society can get a lot of leverage from the subsidy.
Of course that's the best case, and there are opportunities for regulatory capture etc.
I bought my first electric car around 2000 or 1999. No subsidies back then and the product was crappy. Tesla started selling subsidized cars that were adequate to enthusiasts, what, a decade later. The environment was different: not just the subsidies but technological infrastructure. You had to put up with the limitations of Tesla, but it was a viable product.
Now there are many more manufacturers of electric cars, mostly better than T. So T has to scramble (if they can, which I doubt, but whatever). So this case is a net positive, IMHO.
The fossil fuel industry propered due to extensive subsidies, and that was also a very good thing (among other things it cleaned up cities and saved the whales). But they should have been withdrawn long ago. That is an extreme example of regulatory capture.
The subsidy's goal is not to make the recipient's life better, but to shift consumption decisions from ICEs to EVs. The theory is that ICE/EV cost comparison is skewed by the substantial extra negative externalities of the former.
This has nothing to do with how much is in the purchaser's wallet, and shifts consumption back to ICEs on the margin.
jjeaff|3 years ago
gumby|3 years ago
So if you can increase the number of people who participate in the early stage the technology will come down the learning curve faster, which is good for everyone (except the legacy producers, in the case of a replacement technology). In other words society can get a lot of leverage from the subsidy.
Of course that's the best case, and there are opportunities for regulatory capture etc.
I bought my first electric car around 2000 or 1999. No subsidies back then and the product was crappy. Tesla started selling subsidized cars that were adequate to enthusiasts, what, a decade later. The environment was different: not just the subsidies but technological infrastructure. You had to put up with the limitations of Tesla, but it was a viable product.
Now there are many more manufacturers of electric cars, mostly better than T. So T has to scramble (if they can, which I doubt, but whatever). So this case is a net positive, IMHO.
The fossil fuel industry propered due to extensive subsidies, and that was also a very good thing (among other things it cleaned up cities and saved the whales). But they should have been withdrawn long ago. That is an extreme example of regulatory capture.
wutbrodo|3 years ago
This has nothing to do with how much is in the purchaser's wallet, and shifts consumption back to ICEs on the margin.
rasz|3 years ago
wilg|3 years ago
bdcravens|3 years ago
napolux|3 years ago
https://www.ilsole24ore.com/art/tesla-abbatte-listini-model-...