More on the Tesla electric car

[eridanus]

Quote:

Originally Posted by Texas Proud What is this susidy of large SUVs you speak of And how much But I agree that if there is one, I would want to get rid of it also.

It's the Section 179 subsidy for large SUVs (>3 tons) for business purposes.

Here's how you can benefit:
Passport BMW | New BMW dealership in Marlow Heights, MD 20746

It used to be an immediate $100,000 tax write-off, aka the Hummer loophole, but it's now just $25,000 + the bonus.

[Lazarus]

Sure:

There will never be mass market adoption for a 57K car.

Buying A New Car

The average price of a new car sold in the United States is $28,400

Of course some people will spend 50 to 100K but not most people.
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Too limited in range.

Model S Features | Tesla Motors

Max range with the large battery is 300 miles.

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I doubt the battery will last the life of the car either. The Tesla warranty is 8 years so it should last that long anyway. At some point you get to buy a new battery pack no matter what.

Model S | Frequently Asked Questions | Tesla Motors

How many years will the battery last?
Based on testing, Tesla expects the battery to retain approximately 70% of its initial capacity after seven years or 100,000 miles.

If 8 years is the lifespan of the car I guess you are ok. But your range will be down to about 200 miles according to Tesla.

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I object to the Federal Tax credit that the electric cars are getting also. I don't think the government needs to subsidize buyers of 57K cars at taxpayer expense.

Just to be clear I object to the other subsidies mentioned also. But we are talking about electric cars here not listing all the possible things that are subsidized.
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I am not for or against electric cars. I just don't think they are a good value.

[Chuckanut]

Quote:

Originally Posted by Zathras <snip> For Tesla specific work (battery/drivetrain etc) one of the Tesla Rangers would come up from Chicago and do what work they needed to in my garage or driveway.<snip>

Oh! This is just wonderful! Does the Tesla Ranger who helps you out wear a mask by any chance? Does he drive a white roadster named Silver? This is wonderful marketing!!!

Tonto (after all the other Tesla Texas Rangers had been murdered): You are alone now. Last man. You are lone ranger.

[Texas Proud]

Quote:

Originally Posted by eridanus It's the Section 179 subsidy for large SUVs (>3 tons) for business purposes. Here's how you can benefit: Passport BMW | New BMW dealership in Marlow Heights, MD 20746 It used to be an immediate $100,000 tax write-off, aka the Hummer loophole, but it's now just $25,000 + the bonus.

Not even close to the same thing is it

First, you have to use it for business... second, all it does is accelerate depreciation... depreciation that would have been taken anyhow....

I can see how one could see this as subsidizing SUVs, but I do not...


I do agree that the corn subsidy is a lot worse than this car subsidy.... if I were able to get rid of one and not the other, it would be that... (heck, probably all farm subsidies, but that should be in another thread which would be closed quickly)....

[eridanus]

Quote:

Originally Posted by Texas Proud Not even close to the same thing is it First, you have to use it for business... second, all it does is accelerate depreciation... depreciation that would have been taken anyhow.... I can see how one could see this as subsidizing SUVs, but I do not... I do agree that the corn subsidy is a lot worse than this car subsidy.... if I were able to get rid of one and not the other, it would be that... (heck, probably all farm subsidies, but that should be in another thread which would be closed quickly)....

Of course it's the same. If it wasn't a subsidy that benefits wealthy small business owners (e.g., doctors), why would it be advertised on a BMW website? Why would it be a Forbes article?

How To Take A 100% Tax Write-Off For A New Porsche, BMW or Cadillac - Forbes

It's a benefit for large SUVs because it's for vehicles (tractors and work vans, originally) that have a gross weight over 6000 pounds. A CRV won't work; an X9 will. A Cayenne will work; a RAV4 won't. In fact, a regular car can only take ~$11,000 of depreciation the first year.

As for the accelerated depreciation, this is obvious. Taking $46,000 from income in one year is a LOT better than taking $46,000 over several years. Not only is there the opportunity cost of the money saved now but there's also the potential marginal tax rate decrease. I always prefer the immediate Section 179 deduction vs. taking a little off each year -- and, apparently, so do most other small business owners.


As for subsidies, the big whale is the mortgage deduction. A phase-out of that subsidy would go a long way to balancing the budget.

[ERD50]

Quote:

Originally Posted by eridanus Of course it's the same.

Lots of difference.

As I understand it - any vehicle used 100% for business can be 100% written off. Yes, you have to depreciate it, and this law allows for immediate deduction, and that is clearly a benefit.

But getting to accelerate a benefit you were going to get anyway is very different from getting a benefit that you were not going to get.

-ERD50

[eridanus]

Quote:

Originally Posted by ERD50 But getting to accelerate a benefit you were going to get anyway is very different from getting a benefit that you were not going to get.

Then...let's get rid of it. No more super-special immediate deprecation for >6000 pound SUVs because, obviously, that's an oft-ignored and never used part of the Section 179 regulations that benefits no one. Right?

I think this is a case of my subsidy is a sacred cow and yours can go on the chopping block.

[Texas Proud]

Quote:

Originally Posted by eridanus Then...let's get rid of it. No more super-special immediate deprecation for >6000 pound SUVs because, obviously, that's an oft-ignored and never used part of the Section 179 regulations that benefits no one. Right? I think this is this a case of my subsidy is a sacred cow and yours can go on the chopping block.

I would never buy that big SUV unless I needed it... deductions are not anywhere near as good as a direct check or a credit... I do not think any of the other posters take it either....


But, IMO if anybody takes that 179 deduction they are not thinking properly.... I assume that most that use it will be making over $250K... and it is very likely that their tax rate will go up next year.... I would rather have a deduction NEXT year than this year if I were in that tax bracket....

[ERD50]

Quote:

Originally Posted by eridanus Then...let's get rid of it. No more super-special immediate deprecation for >6000 pound SUVs because, obviously, that's an oft-ignored and never used part of the Section 179 regulations that benefits no one. Right? I think this is this a case of my subsidy is a sacred cow and yours can go on the chopping block.

?

Where did I defend any subsidy? I simply explained the difference between acceleration of a deduction you would get anyway, and a straight tax deduction unrelated to existing deductions. Take 'em all away as far as I'm concerned - even the 'mortgage subsidy'* - though in return I ask for real overall tax reform/simplification.

Further, I think the EV subsidy is counter-productive. If you favor EVs, you should be against it too.

* Actually, I'm not so sure the mortgage deduction really is a 'subsidy'. If I rent, the owner deducts interest as a business expense, and in a competitive market, the owner's costs affect what they need to charge for rent. So lower costs translate to lower rents - the renters get this advantage. So maybe the deduction for home-owners just levels the field? But go ahead - phase it out, fine with me.

-ERD50

[eridanus]

Quote:

Originally Posted by Texas Proud I would never buy that big SUV unless I needed it... deductions are not anywhere near as good as a direct check or a credit... I do not think any of the other posters take it either.... But, IMO if anybody takes that 179 deduction they are not thinking properly.... I assume that most that use it will be making over $250K... and it is very likely that their tax rate will go up next year.... I would rather have a deduction NEXT year than this year if I were in that tax bracket....

Shrug. Then let's get rid of it. *Poof* Subsidy gone.

[Chuckanut]

I have no idea if the Tesla company will be a success or suffer the fate of many pioneers. But, I do admire them for attempting something that is difficult.

Note this quote from Teddy Roosevelt: http://www.goodreads.com/author/quot...dore_Roosevelt

[Nords]

Quote:

Originally Posted by Lazarus Sure:

Thanks.

[samclem]

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Originally Posted by ERD50 Actually, I'm not so sure the mortgage deduction really is a 'subsidy'. If I rent, the owner deducts interest as a business expense, and in a competitive market, the owner's costs affect what they need to charge for rent. So lower costs translate to lower rents - the renters get this advantage. So maybe the deduction for home-owners just levels the field? But go ahead - phase it out, fine with me.

I think the mortgage deduction subsidizes/supports residential real estate spending in general, and prices of same. It's hard to make the case that the government should be increasing the price of housing and encouraging people to spend more on this particular thing in preference to, say, food, clothing, education and health care for one's children, etc.

[kumquat]

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Originally Posted by Chuckanut The next great need: a competitive low-pollution source of electricity to power these vehicles.

You don't have to be smart enough to split the atom to think of at least one.

[Midpack]

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Originally Posted by Chuckanut The next great need: a competitive low-pollution source of electricity to power these vehicles. Quote: Originally Posted by kumquat You don't have to be smart enough to split the atom to think of at least one.

Go on, give us one or two?

[ERD50]

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Originally Posted by Chuckanut I have no idea if the Tesla company will be a success or suffer the fate of many pioneers. But, I do admire them for attempting something that is difficult. Note this quote from Teddy Roosevelt: Theodore Roosevelt Quotes (Author of The Rough Riders)

I have to agree with that. While other companies were trying to figure out how to make an 'affordable' EV, Tesla connected the dots...


Dot 1) People would really like their EV to have a 200+ mile range.

Dot 2) (make some calculations....) Whoah! That takes a $$$$-load of batteries!!!

Dot 3) Hmmmm, enough batteries for a 200+ mile range, combined with the torque curve of an electric motor, will provide enough energy for a short while to make that EV accelerate like a bat-outa-hell!!!

Dot 4) Some people will happily pay a $$$$-load of money for a car that will accelerate like a bat-outa-hell! Enough to pay for all those $$$$ batteries!

Dot 5) A world-class performance EV is unique, and will get lots of press, and it will attract 'greenies'.

And then they pulled it off, no easy task. I gotta hand it to them.

Whether any of that translates to anything approaching mass market in the US is very questionable IMO. As I've said before, I'd expect to see them in Europe first, with their high petrol prices and denser population. If they don't make it there, I can't see anything but niche applications here.

-ERD50

[Midpack]

Quote:

Originally Posted by ERD50 While other companies were trying to figure out how to make an 'affordable' EV, Tesla connected the dots... And then they pulled it off, no easy task. I gotta hand it to them.

You may be a little ahead of yourself. Have they turned a profit yet, or even had a breakeven quarter. Don't get me wrong, they seem to be headed in the right direction and I'm a fan of Elon Musk, so I wouldn't bet against him. I really hope SpaceX is successful, and it's good that there are folks developing EV's even though the pure economics aren't all that helpful just yet. But it may be premature to declare victory...

Tesla: Profit Point - Seeking Alpha among tons of analysis/articles out there.

[rodi]

We've decided our next car will be an EV. Probably the more affordable Leaf, rather than the Tesla, but it will be an EV. But Hubby's gas-hog '95 Dodge PU keeps running strong and we can't justify buying a new car when that one is still reliable and solid.

My car is a hybrid highlander. I got it June '05 and it's still drives like new. All the talk about the batteries dying seems to be the hype of haters. Since it's a hybrid, we'll still be able to take it on longer trips, when we get the EV, which will be range limited.

When we get the EV, we'll put on solar panels. We live in sunny San Diego, so there's no lack of sunshine. We're low electrical users, (no AC) so solar hasn't penciled out. When we get an EV - our usage will increase, making the solar make financial sense.

The interesting thing about driving in Southern Cal. The road is split 50/50 between BMW's and Prius's. OK - that's an exaggeration... but not by much. They are definitely the majority of cars on the freeways.

[ERD50]

Quote:

Originally Posted by Midpack You may be a little ahead of yourself. Have they turned a profit yet, or even had a breakeven quarter. Don't get me wrong, they seem to be headed in the right direction and I'm a fan of Elon Musk, so I wouldn't bet against him. I really hope SpaceX is successful, and it's good that there are folks developing EV's even though the pure economics aren't all that helpful just yet. But it may be premature to declare victory... Tesla: Profit Point - Seeking Alpha among tons of analysis/articles out there.

Right, too soon to tell for profitability, etc. I just meant in terms of actually delivering some significant number of product to customers. It's out of the proto stage, and an actual shipping product. Or to quote Steve Jobs " Real artists ship!"

And considering all the hoops you need to go through to get a new car to market, with a new technology no less, I am impressed - both engineering-wise and business-wise.

Long term? It will be interesting. There is certainly a bigger market for the BMW/Mercedes range than for the super-high performance sports car area. Can they compete? We will see.

I have a harder time picturing EVs in the median price range though. I suspect that by the time batteries get to a sweet spot, the other tech will have progressed enough to make it very tough. But as batteries improve, hybrids will be more common. I keep envisioning something like the Chevy Volt with an engine far more efficient than the current ICE - maybe a small constant-speed diesel, or a turbine, with a Sterling engine or something to recover the waste heat?

-ERD50

[Chuckanut]

Quote:

Originally Posted by ERD50 Dot 4) Some people will happily pay a $$$$-load of money for a car that will accelerate like a bat-outa-hell! Enough to pay for all those $$$$ batteries!

IIRC, the head of Tesla has implemented his plan based upon this conclusion. The first Tesla was a very limited production, extremely expensive roadster. The next car is the Model S, just a 'normally' priced expensive car made in much higher quantities. Next up, is a more affordable (note: I did not say inexpensive) electric car that can be mass produced in much larger quantities. This will be the toughest challenge.