Free Money (OT)

This is a followup to the OT Ford Mach-E EV post, and I beg your pardon. I really shouldn't write about this this morning. But I can't help myself...I need to vent.

Here's the short version. As you've probably heard, the government, at both the State and Federal level, wants to sweeten the deal for people buying EVs. So they offer consumer incentives in the form of rebates and tax credits. (As of this year, the Federal tax credit can be applied to the price of an EV immediately at the point of sale, by the dealer, so it's easy now.) In my State the incentives max out at $7,500 Federal and $2,000 State. There are a few conditions, mainly to benefit American car companies and lessen our dependency on China.

So the government wants to give me $9,500 to help me buy a Ford EV. Nice of them, huh? And guess how much the Mach-E qualifies for?

...In most cases, $500. I didn't skip a zero there—five hundred dollars. The other nine grand? Ford doesn't mind if you and I miss out on that.

G O O D   L O R D. Talk about shooting themselves in the foot! Ford pours resources and engineering into building an all-new, from-the-ground-up EV, and then they don't even ensure that their customers can avail themselves of the free money the government is giving away. What?!? Really? That has got to be one of the most self-defeating business blunders ever. If you were designing a car from scratch, and the government had designed a program specifically to help you succeed, wouldn't it be "Job One" to absolutely ensure that your car qualifies for the monetary incentives your customers will be eligible for?

Of course, it's a little more complicated than that. The government did change the rules midstream in January '23—the Mach-E qualified for half the Federal incentive before that—and the lowest model configuration of the car does qualify for the whole two grand from the State. It's all the higher models that only qualify for $500. Furthermore, a used EV that costs less than $25k qualifies for $4,000 in Federal tax credits, regardless of where it was made and what kind of batteries it has. (But there are no State rebates for used EVs.) A few of the early cars have already dipped into that range, and more will follow as time passes. And, Ford was planning to build its own LFP battery plant in Michigan, which would have solved the problem—but apparently it has put those plans on the shelf because of short-term consumer hesitancy.

Ah, what a clusterf--k.

Anyway, in 2022, when the Mach-E qualified for half the Federal sweetener and was still newish, it outsold the gasoline Mustang—in fact, in April '22, Ford suspended orders, citing excessive demand. In 2023, U.S. sales (now with zero Federal rebate) only rose slightly, from roughly 39,000 to around 41,000. But how are you going to apportion the blame for that? Some of it has to be due to the denial of the subsidies. Why would you buy Car B if it meant leaving $9,500 on the table, vs. Car A which allows you to have that money? There was also a very costly recall of early cars that might have dampened Ford management's enthusiasm for the whole project. That's partly what you get for starting at the top end, rather than the low. Maybe Ford should have built a cheap EV at the same time. (Reminds me of Kyocera's star-crossed attempt to build a deluxe 6-MP Contax DSLR, the full-frame N Digital,  before the timing was right. It wasn't "the" camera that killed Contax—there were several factors—but it was the biggest.) Still, the Mach-E is currently either No. 3 or No. 4 on the list of the best-selling EVs. The first two places are held by Teslas, which qualify for all of the available government incentives.

No such thing as range anxiety
Meanwhile, two little morsels I stumbled across in my research (you know me—it's been all EVs all the time for the past several days). They give opposite perspectives on the the issue of range anxiety. The first from a guy who's making a road trip from L.A. to Phoenix and the second from a guy who charges a daily driver, a Tesla, at home.

1: A wonderful rant by Matt Farah of The Smoking Tire about "infrastructure anxiety." Start watching at about 12:00 and go to about 14:30. This is worth hearing. (Note that the sound is not properly sync'd.)

2: From a comment by a Tesla owner who goes by the name @MH-Tesla:

"Oh, and it's full every day I wake up, like having a gas pump at your home. So the one and only thing a gas car is superior at is long road trips.

"I thought the charging was going to be the thing I disliked the most. Turns out it's the best part of an electric car. Unless you do that road trip, you don't even think about range. It doesn't enter your thinking. You just use your car without a thought to 'do I have enough gas / range.' You always have enough every day so you quickly get used to not thinking about it. It's awesome."

"Like having a gas pump at home." We don't hear enough about that. In my area, you can get free electricity in the middle of the night if you are using it to charge an EV, and you can sign up to get all your electricity from local solar fields whether you have an EV or not.

Anyway, the Mach-E gets shunted to the long list of expensive cars I like but can't afford, and to say I am disappointed is an understatement. (I've really caught the jones for that car.) Well, those grapes were probably sour anyway. But supposedly the Chevy Bolt is being redesigned and re-engineered for a 2025 or 2026 return, and will reportedly be at the cheaper end of the price range for EVs. We'll have to wait and see if that will be true—and whether the GM managers have enough sense and direction to give their customers a crack at that free money.

Mike

Original contents copyright 2024 by Michael C. Johnston and/or the bylined author. All Rights Reserved. Links in this post may be to our affiliates; sales through affiliate links may benefit this site. As an Amazon Associate I earn from qualifying purchases. (To see all the comments, click on the "Comments" link below or on the title of this post.)

Featured Comments from:

Stephen S.: "I used to live in a condo near downtown Toronto, Canada, and they announced a plan for electric car charging in the underground parking: residents would have to pay up to $30,000 to get a charger at their parking spot, and the building could only support half of the parking spots having chargers, so everyone was encouraged to secure their spot for the future, or risk losing out forever. It sure made it look like the future was that EV ownership only for those who owned a house, and that half of the condo residents would have to give up driving entirely if internal-combustion vehicles were ever outlawed. This was not at all encouraging."

Tom Stermitz: "Yes, pay attention to the rebates, whether Federal, State, dealer or manufacturer. The Hyundai/Kia group doesn't qualify for the Federal rebate because the batteries are not U.S.-made, but the manufacturer matches the $7,500. Thanks to the supply-demand-inventory distortion of the moment, I got $17,500 off my Kia EV6.

"Secondly, pay attention to lease vs. purchase cost over the life of the deal. Leased EVs get the Federal rebate regardless of battery origin—assuming the dealer passes that on to you. This is such a good deal, that over half of the EVs sold right now are leased.

"Thirdly, pay attention to your local off-peak electric costs. My 7.5 cents means that I pay $2 per 100 miles. My electric bill went up $20/month, but my fuel cost went down $200/month.... I commute about 1,200–1,500 miles per month....

"Fourth, don't forget the little things like purchase sales tax, yearly registration and monthly insurance. These cars are tech-heavy, and a broken rear-view mirror or bumper probably includes broken cameras or sensors."

John Camp: "One of the odder and yet more intriguing speculations about why 'we're alone' in the Universe—that is, we've never found a sign of life outside the solar system—is that advanced civilizations hit a 'great filter' that destroys them, and maybe their worlds. That always seemed unlikely to me, as surely some advanced civilizations would avoid the filter. But perhaps there are several filters to avoid, and we're approaching one. One of the more ignored thoughts about global warming is that there is an enormous (truly enormous) store of methane in the northern tundra of Canada and Russia. When that begins to melt, the amount of warming gases entering the atmosphere will increase exponentially. We can probably handle 130 degrees in Scottsdale and Austin with air conditioning. Can we handle 200 degrees in Minneapolis?

"Also, to the people who argue that energy generation is energy generation, and that going to EV cars is simply moving pollution from one place to another...no it isn't. The difference is, power plants are single-point sources. There is available (if expensive) tech that will sequester CO2. But how do you do that from millions of tiny point-sources, like cars. And the answer is, you can't. If we really want to control CO2 emissions, we need EV cars and nuclear, wind and solar."

Mike replies: Wind is already 10% of utility-scale electricity generation in the U.S., and the total of renewable sources is 21%, which exceeds the percentage for nuclear (source). Worldwide, the situation is better, with more than a quarter of power generation being from renewables according to the United Nations (source). One nice thing about renewables is that you can scale those down to point-sources (as you call them)—I have a number of friends who run their homes on solar, and one who runs his house on solar and has enough power left over to fuel his Nissan Leaf.

Cars are also an excellent solution to the problem of how to store solar energy! Millions of little mobile batteries can do what large-scale storage ideas can't.

Comments

[Kirk]

Here are some of the reasons for the change. This is a great explainer article:

https://www.npr.org/2023/12/28/1219158071/ev-electric-vehicles-tax-credit-car-shopping-tesla-ford-vw-gm

[Kirk]

An additional note from the same article: There are different and less stringent requirements if you are buying one of the cars for business use. "a business expense." You can get up to the same $7500 on cars but without having to deal with the parts sourcing requirements. And, as I'm sure you are aware, you can write off the interest of any loan used to purchase the car for business and additionally, can (usually) depreciate the value as well. With this in mind perhaps the Mach-e can slip back onto your "good" list.

[John]

For those of us living in apartments, charging is a whole other matter though.

[Dan B.]

For something even stranger, I think that LEASING any EV vs buying gets around the restrictions so that the full credit is available, makes no sense to me why that would be the case but worth looking into…

[Dan Khong]

When you don't have a gas pump like the one at home, and during a long road trip, does that not add to anxieties and uncertainties (like where and when to get the next opportunity to "fuel up")?

[Speed]

1. The ideal use case for an EV that is not a Tesla is ... charge at home, home every night.

I once had a job that came with a daily commute of about 90 miles. Perfect for an EV. But that was before EVs were a thing so I drove a small Honda that had great gas mileage. 30,000 miles per year. 30+ mpg.

2. Why should "we the taxpayer" pay people (rebates) to buy electric vehicles?

[Because pollution from ICE cars is changing Earth's weather. It's a very good reason. --Mike]

[Moose]

My comment to the first post about this seems to have fallen by the wayside?

I actually saw a Toyota Mirai in the wild, in this case a CVS parking lot.

[My apologies, Moose. I checked, and it was not posted. Fixed now, but I realize it's too late for very many people to see it. Again, I apologize. --Mike]

[Kye Wood]

Musk controls the satellites that US military relies on. They have no option but to pander to his companies.

Brazil has just banned X, formerly Twitter. And France has charged the head of Telegraph. The tide may be turning but the US will protect Musk's interests in the interest of self interest and necessity.

[Richard Briscoe]

Ford is reported to be losing $40,000 per EV. They are piling up because dealers can’t sell them and so they aren’t ordering more. The EV division of Ford is reported to have lost almost $5 BILLION dollars last fiscal year and is on pace to lose more this year. I haven’t seen the figures for GM, but I doubt they’re any better. You have to wonder how long those two companies, once giants of the automotive world, can stay in business.

[Jeff]

EV tax credits are all about building, and supplying components for, batteries in the US. Tesla has a huge plant in Nevada. Ford was planning a $3.5 billion plant in Michigan, but it has apparently been delayed by its ties to Chinese technology.

https://www.forbes.com/sites/christinemcdaniel/2023/09/29/fords-battery-saga-a-glimpse-into-the-turbulent-ev-transition/#

There also seems to be a loophole in US tax law, for now, regarding leased commercial vehicles, providing full tax credit. This is another reason (depreciation being the primary one) that the majority of owners for many EV vehicles currently lease rather than buy.

[Kye Wood]

It took Musk a decade to make a profit on EVs. Ford et al. won't be dissuaded by short to mid term losses. They're in learning mode. The US shuns EVs? No problem. Export the excess to the rest of the world.

Once Murdoch's dead, the right wing media landscape will be dragged back to the centre by his children. Then listening to science won't be considered woke. It'll be considered smart.

Then maybe people will realise that the US, Russia and Australia are the reason why this planet is cooking. Not China and India.

[Not THAT Ross Cameron]

Minor point of pedantry (is there any other?) - I saw the word ‘insure’ used, and thought it a typo. Then I saw it a second time, so I’m assuming it’s intentional. Do you mean ensure?

[Sean]

“I completely agree with you about the negative effects of ICE cars, Mike. I’ve often had to explain that ‘weather is local, climate is global,’ especially to those who think stable weather means there’s no issue.

I’ve never owned a car, because I never learned to drive. There are additional negative effects of motorized vehicles, such as injuries and fatalities from collisions, as well as the environmental cost of manufacturing any vehicle. So why isn’t there more of a push for fewer cars on the road? How do we convince people to loosen their Chuck Heston-like grip on the steering wheel?

[That last question shows you're not up to date with cars...the latest thing is hands-free driving. On the Mach-E it's called BlueCruise. It's the dumbest damned thing in automotive history, because you still have to pay attention. You just don't have to steer. Why you would want to keep your hands in your lap at 70 MPH is a mystery to me, but it's a thing now. --Mike]

[Robert Roaldi]

[I'll allow this—Robert is an A+ commenter—but I'm not going to allow this post to degenerate into arguments over geopolitics. —stern Mike the somewhat hypocritical (see below) Ed.]

The idea that a move to EVs from ICE is a climate panacea is a pipe dream. Replacing millions of ICE vehicles with millions of EVs is much less desirable that having a really convenient passenger rail system that people would choose in place of driving themselves. I'd like to be able to do that and I used to be a motorsport geek. Instead, I read an automotive magazine article the other day that one of the reasons that the Chevy Bolt was taken off the market was because it was too small. If I needed any more proof that we are all batshit insane, that would be it. I happened to be parked next to a last generation Bolt at the grocery store an hour ago, and that size of car is my idea of perfect.
The Canadian guvmint has recently announced large tariffs on Chinese-made EVs, as has the US guvmint, so we'd better get used to expensive EVs, because, you know, competition and the free market ain't always so great, we're now told A generation ago, globalization was in vogue. It was profitable (for somebody) to move manufacture of low-cost items to China and it was in everyone's best interest, we were told then. But now, lower-priced cars from China are bad, it seems, with accompanying war-like talk of China being the enemy. Newspeak thrives. People wave the flag and cheer. What utter nonsense.
There may be perfectly good reasons to migrate to electrification in many of our transportation systems in the long run. But if we use this as an excuse to increase the footprint and cost of our personal vehicles, then it's all just hoo-hah.

[Violating my own rule that I just scolded Robert about, I'll just mention that the US is too big for rail travel. It suits Europe much better because countries and cities are closer together, and population density is higher. Consider that Germany is only twice as big as Wisconsin but has 14 times as many people, not to mention a far larger economy. Also, Republicans are bitterly opposed to public rail. In Wisconsin, I followed a fight over building a commuter light rail link between Milwaukee, the biggest city, and Madison, the capital, 80 miles away, which would have been very convenient for many people and the construction of which would have inconvenienced almost no one. The old graded rights of way were already there, having been turned into bike paths. The State's "conservatives" fought tooth and nail against it, and ultimately defeated the project. Not only did the Republican governor refuse Federal funding that was already in place, Wisconsin got sued by the company that was to have built the rail line, because they had already spent money building a headquarters in Wisconsin in anticipation of the project. So the State lost $10 million for nothing and lost out on tens of millions more in Federal money. The "why" was never clear that I could detect. They just hate rail for some reason. --Mike]

[Daniel Speyer]

Some clarification/a reminder about CO2 production of electric vehicles versus internal combustion engines.

Since in the United States roughly half of the energy production is from fossil fuel, the electric vehicles produce roughly half the CO2 as the internal combustion engine vehicles. This assumes the engine power and efficiency of a well designed appropriately sized vehicle engine and the utility electric power plant are roughly the same—which I would expect.

Only in countries that produce most electricity from non-fossil fuel sources (nuclear, geothermal, solar, wind, and hydro), like Iceland, is the electric vehicle overwhelmingly better than the fossil fueled ones.

BTW hydrogen as a fuel is similar, as power is required to create hydrogen (H2).

[Daniel Speyer]

Of course I meant the respective vehicle engine powers are appropriate, and the fossil fuel engine and electric power plant are roughly the same efficiency which I would expect (as an electric motor is essentially 100% efficient).

[Dave]

From the link provided by Jeff, "Ford found a way to domestically manufacture EVs by licensing battery cell technology from China’s CATL, a world leader in lithium iron phosphate battery technology."

The government wants EV technology sooner than it would normally happen (given the current high prices of electric vehicles).

But not if it comes from China. Ford proposed leasing technology from a world leading technology source, but apparently all the other Chinese goods we buy aren't doing anything to fund the Chinese economy, so now we can't license some of their technology.

(Hasn't our government been "pro-world economy" for a while? Why the change?)

Typical government. They can't understand that we would be using their technology -- not the other way around! Not to mention that the Chinese technology would be used to make better products and thus (hopefully) more sales of electric vehicles.

[Dave]

And another thing . . . there are plenty of places to have recharging stations and "fill out" the infrastructure.

These places are called "gas stations". Every station probably has room for a couple of charging stations at the very least.

[robert e]

You need to test drive a few more cars. Date around a little before settling down. You don't know what you might be missing ;) and you might save a lot of money.

If you're sure this is "the one", Ford has a 'certified used' program, and I believe that the used EV tax credit can be transferred to to the dealer to apply to the sale price.

[Robert Roaldi]

Sorry, I got carried away.

My main beef is that I cannot buy the kind of small EV to run daily errands that I need at a non-crazy price. If my car doesn't have the range for longer trips, I can always rent something else. Or take a train/plane and rent a car at the destination.

As for rail, I get it that it doesn't often make sense to take a train from NY to LA. But how many people think it makes sense to drive that distance. There are plenty of connections that would be much more pleasant to travel by rail to than to drive to. Wait till we boomers get a little older and don't feel like driving long distances so much.

[Tullio]

Hi Mike,
Enjoyed reading your post on EV. You are better than me searching the internet. Apparently the EV division of Ford reported a 1.3 billion loss in the first quarter of 2024. That is $ 134,000 loss per vehicle sold!!
And that is with the government subsidies.

Perhaps we should look at what Elon Musk has accomplished with EVs in a more positive light. He is also bringing back two American astronauts stuck on the Space Station.

Just saying…

Keep up the good work

[Sean]

Mike, It’s true, I don’t get the DeLorean’s appeal.

AI might remove human error, but then we’re into murky philosophical dilemmas like the trolley problem. Maybe it’s better to let Jesus take the libertarian wheel

[robert e]

A correction to Daniel Speyer's clarification about grid vs car emissions:

Power plants are significantly more efficient than cars, in part because they don't need to compromise efficiency in order to be small and light. They also don't need to propel all the mitigation systems that ICEs require for noise, pollution, etc. (which themselves are compromised for mobility in cars).

But CO2 isn't the only thing ICEs emit. There's also an assortment of toxins and pollutants, including carcinogens and unhealthy irritants. The pernicious thing about ICE vehicles, as Americans use them, is that they concentrate those emissions where we live, work and go to school. Power plants are generally sited some distance from population centers.

But even focusing solely on CO2, the difference may look less than spectacular to you on paper between two new cars purchased today, but think about what happens over the lifetime of the cars: the ICE engine becomes less efficient with use, while our grid is rapidly becoming more green, and even the fossil plants more efficient. Now multiply that difference by thousands and thousands of cars.

Granted, "overwhelmingly better" efficiency would be... overwhelmingly better, but better efficiency is better, and at this point we need all the better we can get.

And to bring this back to TOP, New York state belongs to one of the greenest grids in the US, so Mike switching to EV will have far more impact than someone in, say, West Virginia switching.

[Jeff]

Dave suggested that EV charging stations could easily be paced at existing gas stations. Not so easy for convenience stores/gas stations, at least from a profit standpoint, even though the logic would suggest otherwise.

https://amp.cnn.com/cnn/2022/10/18/business/ev-chargers-convenience-store

[Richard Gonet]

I think the assessments of the EV market expressed in this column and comments are too optimistic, based on recent industry trends. Ford last week said "it is changing its electric vehicle strategy" as it faces "slower U.S. EV adoption than predicted," said Adrienne Roberts in the Detroit Free Press. Ford is canceling plans for an electric three-row SUV entirely, and delaying a full-size EV pickup. It will also cut capital spending on electric vehicles. The news follows General Motors' announcement that it will retreat from plans to give Cadillac an "exclusively all-electric portfolio of vehicles." Ford has bet big on EVs but a combination of "pricing pressure" and the "politicization of EVs" are making it reverse course.

[Arg]

I agree that climate change is a very good reason to subsidise whatever is the best partial solution of the day, but only getting into the issues once you have a groin-stimulating driving experience, is......what's the right word for it, Mike? I'm stuck!

[You're looking for a word that is sufficiently insulting without being too direct about it. However, I've been thinking about these issues for years. As I said in the first article, I've long known my next car would be an EV for reasons of social responsibility. I would have had one long before now if I were only wealthier. The big change is that now I finally believe I'll enjoy it too. --Mike]

[R. Edelman]

The federal government's criteria for the federal tax rebate on EVs was decided upon with relatively short notice. Tesla was able to quickly pivot and ensure that its vehicles had the necessary US made content to qualify. Other companies like Ford could not move as quickly.

[Jeff Hohner]

Why is there so little rail/light-rail in America? In the 1930s Firestone, GM and Standard Oil bought and destroyed many light-rail systems in the U.S. so they could sell buses. Buses needed tires and gas, trolleys didn't. One of my favourite climate vloggers, Rollie Williams of Climate Town lays it out in one of his videos, https://www.youtube.com/watch?v=oOttvpjJvAo starting at 8:47.

When we got our EV, we quickly lost our range anxiety on long trips by using a number of apps that locate charging stations and help you plan a route. Heck our Kona even does this itself right on the dash.

[So that's where Rollie went! Did you know he used to vlog about pool? --Mike]

[Michael..Prius (owner)]

I must chime in again on the EV topic.
My post following your first article did not mention another financial fact that has hit drivers in our Volunteer Sate of Tennessee.
If you drive a Prius as we do, or other Hybrid, starting this year, your (we) will be paying an additional $100 for you license plate.
AND, wait for it...if you are the proud owner of an EV, your license plate adder will be !!$200 !!
Why you may ask? The answer is that WE do not buy enough gasoline to provide the necessary road tax.
Not sure where that logic fits into the world of Hybrid/EV economics.
Go figure...

[Dave]

Jeff,

Thanks for that link to the CNN article.

I had no idea such high surcharges were levied against high rates of electrical use at businesses.

If the demand charges can be up to 90% of a business's electric fees, how is any business able to support chargers?

Something will certainly have to change.

[Richard Tugwell]

Reminds me of the UKIP (stupid right wing party) candidate in the UK who, during a debate about fossil fuels, countered with "But what happens when the renewables run out?"