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Instant Cash Rebate, Not Tax Credit, Needed to Spur EV Adoption

By Kara Saltness

As history shows, the cost to bring disruptive technologies to market is usually steep; but as consumer adoption and demand grow, prices drop. From an ecological, economic, energy supply, and national security standpoint, we cannot wait 10 to 15 years for electric cars. We need affordable electric vehicles now.

It’s not a question of when; all electric, green cars are coming this year. It’s a question of how.

How do we, as an industry, help consumers overcome the price barrier that exists with this technology so that we can accelerate the widespread adoption of all electric cars?

CODA Automotive conducted extensive consumer insights research and analysis, which indicates that one of the highest impact ways to answer that question and move America into the electric car era is to change the $7,500 Federal tax credit program that is already in place for plug-In vehicles to an instant cash rebate program.

Similar to the 2009 Cash for Clunkers (CARS) program, which resulted in nearly 700,000 new vehicles sold during its eight-week run, a $7,500 instant cash rebate would be paid to retailers at the time of sale. This would provide immediate price relief, reducing the upfront cost to the buyer. While the concept behind the current program (making electric cars more affordable to more people) is a good one, it doesn’t work as a tax credit.

Most Americans think in short term, monthly payments. A tax credit is not something they would see immediately and doesn’t help if they’re financing the car. For instance, with the tax credit program a consumer who finances a $40,000 electric car over a 5-year term, would pay about $150 more per month and accrue nearly $1,300 more in interest payments over the course of their loan than if the program gave them an instant cash rebate. That’s $10,300 more a consumer would pay over the course of five years.

Plug-In Vehicle Finance Transaction (60 Month Term)

Without Price Subsidy

With Price Subsidy

Retail Price

$40,000

$40,000

CA Sales Tax (9.75%)*

$3,900

$3,900

Less Subsidy

$0

$7,500

Down Payment

$4,000

$4,000

Amount Financed

$39,900

$32,400

Interest Paid (6.5%)

$6,900

$5,640

Monthly Payment

$780

$634

*California will likely apply sales tax before deductions

Based on CODA Automotive’s extensive consumer research, restructuring the current Federal tax credit program to be an instant cash rebate would nearly triple demand for all electric cars in 2010-2011. This would also allow CODA Automotive to price its all electric car, with touch screen navigation, on-board telematics, Bluetooth connectivity, and satellite radio capabilities, in the low $30,000-range or below, or simply put similar to a fully loaded Toyota Prius. We believe this lower upfront price, coupled with electric cars’ lower total cost of ownership, will attract a broader range of customers and quickly spur the adoption of all-electric vehicles.

While others (including Darryl Siry and former New York Governor George Pataki) have pointed to the benefits of changing the tax credit to an upfront rebate, we believe it is the manufacturers’ responsibility to advocate for this change. That’s why CODA Automotive is actively meeting with legislators to explain the real benefits of changing the basis of the plug-in vehicle tax credit program to one that is truly beneficial to consumers and a catalyst for initial sales of all-electric vehicles.

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  1. posted by Jim stACK January 29, 2024 at 6:37 pm

    I think we need instant real oil and gas prices at the pump. If congress would stop paying subsidies and giving tax right off along with free drilling right gas would be $8-10 like in Europe. Then people would line up to buy the CODA on a time payment .

    If an instant rebate was put in place it should only be fore advanced lithium batteries and light efficient vehicles. No lead acid monster trunks etc. It could get abused like the NEV lead acids that give away since they got credits. I heard it stopped Jan 1st, Thanks goodness.

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  4. posted by Tom A. February 5, 2024 at 8:19 pm

    These are good points - a direct rebate would be smarter, though the tax code already has the credit, so I don’t see Congress doing much more in that department.

    As far as gas prices go, I agree, the direct and indirect subsidies are the fundamental problem - all these radical 100% free-market buffoons cry bloody murder if gas was allowed to go to it’s realistic “market” value, but in this case, it would have worked. We’d have EVs long already - the projects from the 1990s and early 2000s wouldn’t have been squashed.

    I’ve been a huge fan of Tesla until today, when I heard about the CODA from autobloggreen. I’m still a fan of Tesla, because overall, I think they have a fantastic product in the Model S.

    However, their interface is overkill, and the price is “getting up there” for most middle class people (what’s left of us, anyway).

    Other than range and acceleration, I love this arrangement - the interior package is excellent with all the necessary, and safe, hands-free technology, full connectivity, etc. The battery chemistry as well as temp control is pretty slick, and the car doesn’t look bad at all - it looks normal, which is nice.

    I’d love to sit in the driver seat - being significantly cheaper and available 1.5 years sooner than the Model S, I would seriously consider buying this car instead. I’d like to know if/when this product is available in the DC region for test drives, etc. I’m 6′4″, so I’m going to need to sit in it first.

    Regardless, I wish CODA good luck. If Nissan only leases the Leaf batteries, that’s not going to catch on very well, I don’t think. The Ford Focus EV is probably the greatest threat to this segment, not only for CODA, but for the 3rd generation Tesla as well.

  5. posted by MiisCamellia2010 February 9, 2024 at 1:20 am

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