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Comment by dhc02 | Hacker News Reader

I may be the only one, but I was under the impression this whole time that all EV tax credits were for consumers who buy EVs, not companies who sell them.

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They are, but typically what automakers will do is assume the tax credit on your behalf and just give you $7,500 off the price of your car up front. They will then collect $7,500 come tax day.

That's a win-win all around, the consumer saves $7,500 off the list price up front, they have to finance less etc, and Tesla gets a tax credit.

There were vehicle sourcing credits in the Inflation Reduction Act, which are granted per kWh of battery with sufficient domestic mineral content. Was $4,000/vehicle if I recall.

lol! No no, this America! Automakers are actually buying and selling EV credits to eachother. Tesla often would have been in a loss position and possibly bankrupt if the big 3 auto makers weren’t buying credits from Tesla so they could get their fleet averages down and keep making trucks and SUVs.

It amounts to the same thing, no?

Definitely not, no. Credits on profits incentivize short term profit taking, while credits in products incentivize number of units shipped. The second is much better for society. Think about it from the perspective of a company deciding between selling low margin cheap EVs in the short term before process efficiencies kick in, or selling expensive EVs now.

The idea is to stimulate both supply and demand. Credits for consumer only stimulate demand which may not be enough to compel literally hundreds of billions of dollars worth of CapEx, not to mention opportunity cost.

Consumer credits stimulate demand by increasing the cost consumers are willing to pay for a vehicle, shifting the demand curve, and greatly increasing the profitability in selling cars, provided it is done at scale. It can most definitely compell hundreds of billions of dollars of CapEx, and in many ways it's more effective than a tax break, because it will reduce losses if the venture never ends up being profitable (unlike a tax break which will only be worth it if the venture is eventually profitable, so there is less risk), and if it provides future market share through investments in the low end, especially in international competition, it can end up spurning more CapEx as it makes the more capital-intensive strategy more viable.

It isn't a tax credit for making profits. It's a tax credit for making EVs. The reason there are credits for both consumers and manufacturers is that the manufacturer credits provide an incentive to build EV factories in the US, even if some of the cars are for export.

But we don't care about more profits, we care about more EVs. If you want to create an incentive to make EVs that are exported then you can make one, for example by subsidizing production equipment or by providing a per-unit sold refundable tax credit.

> But we don't care about more profits, we care about more EVs.

Which is why the tax credit is for making EVs.

you're just circling back to the GP's last comment, without refuting that comment.

>Credits on profits incentivize short term profit taking, while credits in products incentivize number of units shipped. The second is much better for society.

There aren't credits on profits. There are credits for making EVs (which the manufacturers get) and for buying EVs (which the customers get).

They are, by definition, credits on profits made from selling EVs, and not from selling EVs. If Tesla made EVs without making a profit they wouldn't have received a penny.

They're credits against taxes. Since corporate income taxes are on profits, that implies that there would have to be some profits in order for there to be taxes to take the credit against, but that doesn't make them credits on profits. If they had made more profits without making more EVs, they wouldn't have gotten more credits. If they had made more profits but offset the taxes with some other credits then they might not have been able to use these, not because they didn't make enough profits but because they didn't pay enough taxes.

And this works the same for the consumer EV credits; you can't get them unless you were paying that much in taxes.

If your point is that non-refundable credits are stupid, yes. All credits should be refundable. But that doesn't have anything to do with whether they're credits for the manufacturer or the consumer.

Making the consumer credits non-refundable is actually worse, especially for the credits on used EVs. Because then you can't get the credit if you're unemployed or a student or otherwise don't make enough money to be paying the value of the EV credit in taxes, so it becomes a tax credit for the affluent that the poor aren't eligible for.

Those are different credits. There are (if they didn't expire yet, don't remember) federal tax credits for buyers, but separate system is for manufacturers where if you make cars, you need to make some of them EV, or buy credits from somebody who does (e.g. Tesla).

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