"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.
> It's really bizarre to me how much certain groups are just itching for Tesla to fail.
Patrick Michaels is a climate change denialist. He himself has estimated that about 40% of his funding comes from the oil companies. He has been criticised for manipulating the data of other scientists - not trivial mistakes or oversights, but deliberate serious manipulations. (Here's just one example where a colleague almost accuses him of fraud (http://www.columbia.edu/~jeh1/2005/Crichton_20050927.pdf)
> One of the skeptics, Pat Michaels, has taken the graph from our 1988 paper with simulated global temperatures for scenarios A, B and C, erased the results for scenarios B and C, and shown only the curve for scenario A in public presentations, pretending that it was my prediction for climate change. Is this treading close to scientific fraud?
He's part of the Cato Institute, who have publically said they disagree with the scientific consensus on climate change.
Disappointing to see this worthless tripe on HN, and to see it getting any votes.
Tesla doesn't WANT to increase demand right now. That means scaling up manufacturing, which is extremely expensive and still kind of politically shaky. MUCH better for them to put a ceiling on demand with high prices, and simultaneously increase their profit margin. More money in the bank for later expansion, less debt, and less commitment to potentially flawed early designs.
The Tesla Roadster was ridiculous, but the cash it generated and the lessons it taught them gave them the opportunity to scale with the S sedan. Now the S sedan will give them that same cash/lessons combination to expand with whatever comes next.
This is no different than scaling a software startup, if you think about it.
It's really not that bizarre at all when you consider how much money is in the traditional auto industry. People see "their" industry and lifestyle being threatened and just freak out and suspend all logic.
This 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.
Do 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.
The long-term costs of carbon emissions will be a public cost. It follows a pattern that has become quite common recently in America, where the profits are kept by the company and shareholders, while the costs are borne by the public.
So don't be surprised that the Cato institute discounts that fact, since their funding comes from industries that can only survive by perpetuating this system.
This is an article of faith for the green crowd. I and many others are skeptical of such a claim, especially when temperatures have dropped despite higher emissions the past 10 years.
It'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.
What 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.
Why? 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.
This isn't particularly odd. Creating a tax break for some people is the same as lowering the "default tax rate" and creating an extra tax for all the other people. For instance, a tax break for being married is the same as an extra tax on singleness.
As 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.
Your 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.
The 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.
The 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.
The 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.
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.
Elon 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.
There 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.
Putting 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.
". 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.
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.
> 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?
The 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.
It 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.
[+] [-] LandoCalrissian|13 years ago|reply
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.
[+] [-] DanBC|13 years ago|reply
Patrick Michaels is a climate change denialist. He himself has estimated that about 40% of his funding comes from the oil companies. He has been criticised for manipulating the data of other scientists - not trivial mistakes or oversights, but deliberate serious manipulations. (Here's just one example where a colleague almost accuses him of fraud (http://www.columbia.edu/~jeh1/2005/Crichton_20050927.pdf)
> One of the skeptics, Pat Michaels, has taken the graph from our 1988 paper with simulated global temperatures for scenarios A, B and C, erased the results for scenarios B and C, and shown only the curve for scenario A in public presentations, pretending that it was my prediction for climate change. Is this treading close to scientific fraud?
He's part of the Cato Institute, who have publically said they disagree with the scientific consensus on climate change.
Disappointing to see this worthless tripe on HN, and to see it getting any votes.
[+] [-] beatpanda|13 years ago|reply
[+] [-] beat|13 years ago|reply
The Tesla Roadster was ridiculous, but the cash it generated and the lessons it taught them gave them the opportunity to scale with the S sedan. Now the S sedan will give them that same cash/lessons combination to expand with whatever comes next.
This is no different than scaling a software startup, if you think about it.
[+] [-] ryguytilidie|13 years ago|reply
[+] [-] justina1|13 years ago|reply
[+] [-] revscat|13 years ago|reply
It is an "ounce of prevention" thing.
[+] [-] sp332|13 years ago|reply
[+] [-] sc68cal|13 years ago|reply
So don't be surprised that the Cato institute discounts that fact, since their funding comes from industries that can only survive by perpetuating this system.
[+] [-] altoz|13 years ago|reply
This is an article of faith for the green crowd. I and many others are skeptical of such a claim, especially when temperatures have dropped despite higher emissions the past 10 years.
[+] [-] jshen|13 years ago|reply
[+] [-] Kequc|13 years ago|reply
I can't believe this is on the front page of hacker news.
http://www.cato.org/blog/climate-impact-keystone-xl-pipeline
[+] [-] jerf|13 years ago|reply
[+] [-] anonymoushn|13 years ago|reply
[+] [-] mncolinlee|13 years ago|reply
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 [2] http://www.cato.org/publications/policy-analysis/big-oil-pub...
[+] [-] enoch_r|13 years ago|reply
This sort of thing is why I'm tired of political news on HN.
[1] http://www.cato.org/publications/commentary/eliminating-oil-...
[2] http://www.cato.org/publications/commentary/oil-subsidies-do...
[+] [-] uvdiv|13 years ago|reply
[2] clearly does not endorse subsidizing oil.
[+] [-] icebraining|13 years ago|reply
[+] [-] aaronbrethorst|13 years ago|reply
[1] http://energycenter.org/index.php/incentive-programs/clean-v...
[+] [-] danielweber|13 years ago|reply
[+] [-] nawitus|13 years ago|reply
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-own...
[+] [-] drawkbox|13 years ago|reply
[+] [-] jcampbell1|13 years ago|reply
http://www.cato.org/publications/commentary/eliminating-oil-...
I tend to disagree with Cato's brand of libertarianism, but they are consistent.
[+] [-] stephengillie|13 years ago|reply
I wonder how he felt about Lee Iacoca getting Congress to bail out Chrysler in the 80s.
[+] [-] glenra|13 years ago|reply
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.
[+] [-] jjtheblunt|13 years ago|reply
[+] [-] RestlessMind|13 years ago|reply
Tax subsidies are decided by legislators who are elected by us. So the claim - "completely against most of our wills" - is utterly false.
[+] [-] andrewtbham|13 years ago|reply
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|13 years ago|reply
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.
[+] [-] salimmadjd|13 years ago|reply
[+] [-] jasonkolb|13 years ago|reply
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.
[+] [-] quotha|13 years ago|reply
[+] [-] beat|13 years ago|reply
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.
[+] [-] vec|13 years ago|reply
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?
[+] [-] ptlu|13 years ago|reply
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.
[+] [-] kiba|13 years ago|reply
[+] [-] mchanson|13 years ago|reply
[+] [-] steveklabnik|13 years ago|reply
[+] [-] crazcarl|13 years ago|reply
Except in this case, Honda is paying for Tesla's R&D instead of their own.
[+] [-] icebraining|13 years ago|reply