TPT May 2018

G LOBA L MARKE T P L AC E

Coming soon: the withdrawal of a significant US inducement for electric car buyers – and a test case for the sellers Before much longer, shoppers for electric vehicles in the US market will begin paying closer attention to the federal tax credit for the purchase of an EV. The full benefit attaches to the first 200,000 vehicles sold by any individual carmaker, but the incentive dwindles for subsequent buyers. Sebastian Blanco of Green Car Reports (22 February) laid out what happens when an automaker sells its 200,000 th qualifying plug-in vehicle in the US and the credit starts to go away: For the rest of that calendar quarter and the one following, buyers of that make of car are able to get a tax credit of up to $7,500. For the next two quarters, this drops 50 per cent, to $3,750. In the following two quarters, the tax credit drops again, to 25 per cent ($1,875). After that, buyers of cars from this manufacturer get no assistance from Washington. Mr Blanco noted that the automakers have been aware of this graduated stepdown since before selling their first EVs in the American market. It is also no secret, he wrote, that the three makers that sold the most qualifying EVs are drawing close to the 200,000-car limit. What will they do when it goes into effect? Green Car Reports requested comment from three carmakers – Tesla, General Motors and Nissan – nearing the limit. Nissan alone responded, asserting that, with around 12 months to go, the company was not in any way worried about the looming shrinkage in the tax credit; that there were “other things” Nissan can do to make its vehicles attractive in the marketplace. › Brian Maragno, Nissan’s director of EV marketing and sales strategy, declined to discuss Nissan’s plans except in broad terms, choosing instead to emphasise the company’s exceptional prudence. “The bottom line is we have the flexibility and we have the foresight on how to manage after the tax credit,” he said, “because we’ve been planning for it all along.” In the end, Mr Maragno said, the price of a plug-in EV is going to be less important than what the buyer gets for the money. › Maybe so. Within a year or so, when the first post-incentive sales results start trickling in – Nissan’s chief EV marketing and sales strategist will be able to test his hypothesis in real time. A research analyst casts an educated eye over the preparations of three carmakers headed into ‘a tax-abatement apocalypse’ The title of the Green Car Reports article cited in the previous item is “What Happens to Electric-Car Sales When Tax Credits Sunset? Each Maker Differs” (22 February). The author, Sebastian Blanco, had not much success in getting answers to his questions from three EV makers certain to be affected by the impending disappearance of a $7,500 tax credit for buyers in the US.

Instead, Ms Hendricks urged carmakers to help avoid such restrictions by paying for hardware upgrades to diesel cars that would clean up their emissions. The German industry has so far rejected that option, but some pertinent new statistics may make it more biddable. FT.com reported that diesel cars accounted for 45 per cent of new German registrations in January 2017. That share, it said, has since fallen to 33 per cent. Carmakers and parts suppliers, customarily aligned, take up opposite positions on US auto emissions rules “In the debate over how quickly to make American cars pollute less, the nation’s auto-parts makers are now in open disagreement with the automakers that buy the countless transmissions, turbochargers and other components that make up modern automobiles.” Car manufacturers would like a rollback of Obama-era standards that mandate deep cuts in auto emissions. As noted by Hiroko Tabuchi of the New York Times , those rules, which require automakers to nearly double the average fuel economy of new cars and light trucks by 2025, are the single biggest step the US has taken to combat climate change. Automakers claim that the rules put in place by the Obama administration fail to take into account the rising demand for larger vehicles, which pollute more heavily and make emissions control more challenging. The Trump administration is reviewing the rules for possible revision. But, on 1 March, five groups representing the country’s major auto suppliers forced the issue, urging that the US stay the course. In an unusual joint statement, the suppliers declared that it is “in the nation’s best interest” that it continue to develop and manufacture “the cleanest and most efficient vehicles in the world.” (“Parts Suppliers Call for Cleaner Cars, Splitting With Their Main Customers: Automakers,” 1 March) Coming down clearly on the side of stringent emissions rules were the Motor & Equipment Manufacturers Assn (MEMA), which represents more than 1,000 auto suppliers; together with the Advanced Engine Systems Institute, the Emission Control Technology Assn, the Manufacturers of Emission Controls Assn, and the Aluminum Assn – all four of which represent auto suppliers. At stake is a measure that the Obama administration estimated would eliminate as much as six billion metric tons of greenhouse gas emissions and save consumers more than $1tn at the pump over the lifetime of their cars. Vehicles driven on American roads now emit more earth-warming gases than the nation’s power plants. › According to experts consulted by the Times , parts suppliers have a “particular incentive” to favour rigorous standards. The Natural Resources Defense Council (NRDC) estimated in a report published last year that clean vehicle technology directly supports nearly 300,000 American jobs. “These suppliers are investing in technology for the next generation,” Luke Tonachel, director of the clean vehicles programme at the NRDC, told Ms Tabuchi. “And those standards are really important for providing the certainty the companies need to keep on making those investments.”

54

www.read-tpt.com

MAY 2018