Automotive Engineering - October 2021 - 4

EDITORIAL
EDITORIAL
Bill Visnic
Editorial Director
Bill.Visnic@sae.org
Time to end the madness of EV sales subsidies
" Gotta-have " products and features sell
themselves in this industry. More than 100
years ago, it didn't take much coaxing for
people to want a vehicle equipped with
one of the new electric starters. If your
daily driving began with the gritty handcrank
ritual, an e-starter was the high tech
to have. Electric starters quickly became a
gut-punch to the era's nascent electricvehicle
(EV) industry, which lost a competitive
advantage - particularly with
female customers who had been a strong
fan base. Once gasoline stations began
springing up near and far, bringing even
more convenience to the IC
engine, EVs were doomed.
Decades later as competition
intensified, " gottahave "
features were no
longer enough to move the
metal. The famous " buy a
car, get a check " marketing
schtick that 1980s Chrysler
boss Lee Iacocca used
(with wild success) to
hawk K-cars unfortunately
created a new consumer mindset: Pay
me to buy your product. Putting " money
on the hood " still rules retail sales. The
OEMs that have largely escaped the
cash-back game make iconic, unique
and compelling products that sell themselves.
Have you ever seen the local
Apple store use cash-back deals to sell
iPhones and iPads? Me neither.
So, some questions. Why can't EVs sell
themselves yet? To a growing customer
base they are indeed a " gotta-have " purchase,
with well-publicized attributes such
as low operating costs, zinging acceleration,
zero tailpipe emissions, etc. Why,
then, do they require another decade of
purchase subsidies, at up to $12,500 per
vehicle (as is being proposed within the
$3.5 trillion U.S. federal budget bill) to sell
them? The bill in the House Ways and
Means Committee (as of mid-September)
also would remove the 200,000-vehicle
production cap that Tesla and GM have
reached, ending their access to the tax
credits. Does anyone believe that Tesla
4 October 2021
Do EVs really
require another
decade of
purchase
subsidies at up
to $12,500 per
vehicle?
Lindsay Brooke
Editor-in-Chief
Lindsay.Brooke@sae.org
needs pay-me-to-buy-your-car support
anymore? Does GM? And how are ongoing
subsidized sales going to help drive the
aggressive cost-reduction actions that EVs
desperately need at the design, engineering
and sourcing levels?
A supplier friend reckons that the
mostly Democrat legislators who are
pushing to subsidize EVs through extended
tax credits are, in effect, mandating
the public to " do its part " in creating
manufacturing scale for EV components
and subsystems. The greater scale, although
artificial, could help drive lower
costs for batteries and electric
drivelines. Or so the
thinking goes.
The pay-me-to-buy-anEV
subsidies don't end with
new vehicles. The House bill
also proposes a $1,250 to
$2,500 tax credit, linked to
battery capacity, for used
EVs. The value of used EVs
is highly inconsistent, based
on vehicle age and battery
condition/capacity. A smarter and more
effective use of tax breaks would be another
" cash for clunkers " program aimed
at turning over the average age of the
U.S. car parc - 12 years old, according to
IHS Markit - faster and getting people
into newer, safer and more-efficient vehicles,
no matter what's under the hood.
But politics isn't market-based, of
course. There's an additional $4,500 tax
break for EVs manufactured in unionized
plants which, as I've opined here previously,
is supremely unfair to every OEM
other than the former Detroit Three. And
the bill doesn't neglect a subsidy for
electric-assist bicycles, even though
nearly all are made in Taiwan. It includes
a new tax credit worth $750 for single
buyers, $1,500 for couples who file jointly,
for e-bike purchases.
Where does this madness end? If EVs
and e-bikes are truly " gotta-have " products,
let their design, engineering and
cost competitiveness win the market.
Lindsay Brooke, Editor-in-Chief
Paul Seredynski
Senior Editor
Paul.Seredynski@sae.org
Ryan Gehm
Associate Editor
Ryan.Gehm@sae.org
Lisa Arrigo
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Products Editor
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AUTOMOTIVE ENGINEERING
Automotive Engineering - October 2021

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