Last month, Tesla announced its 500th delivery. The lucky customer was Martin Tuchman, who uses his Roadster as his primary commuter car. He’ll enjoy far lower lifetime ownership costs thanks to the lower cost of electricity vs. gasoline. The Roadster is exempt from sales, use and luxury taxes in New Jersey, Connecticut, Washington and Arizona. Numerous states, including California, are considering similar tax waivers. Quebec and Ontario just became the latest regions to offer rebates – up to $10,000 per car. Colorado, Oregon, Georgia and other states have generous rebates, too. All US owners get a $7,500 federal tax credit.
The Obama administration plans to end the popular $3 billion Cash for Clunkers program on Monday, giving car shoppers a few more days to take advantage of big government incentives.
The Transportation Department said Thursday the government will wind down the program on Monday at 8 p.m. EDT. Car buyers can receive rebates of $3,500 or $4,500 for trading in older vehicles for new, more fuel-efficient models…
…Through Thursday, auto dealers have made deals worth $1.9 billion and are on pace to exhaust the program’s $3 billion in early September. The incentives have generated more than 457,000 vehicle sales. Administration officials said they have reviewed nearly 40 percent of the transactions and have already paid out $145 million to dealers.
Administration officials said applications for rebates will not be accepted after 8 p.m. EDT Monday and dealers should not make additional sales without receiving all the necessary paperwork from their customers. Dealers will be able to resubmit rejected applications after the deadline.
Not soon enough, IMHO…
Jag on Fire:
V10 Super Duty:
If you’ve read this blog at all over the last month you know I do not support the CARS program because of it’s excessive wastefulness and questionable effect – perfectly good vehicles and used car parts being destroyed before their normal usable life-span in a dangerous and dirty government mandated procedure.
Now we’re learning that dealerships who participated and “fronted” the $3500 to $4500 government rebate to the customers are now having trouble getting the actual rebate from the government, causing immediate cash flow problems. They basically sold cars at a loss, intending to “make” their profit from somewhere in the rebate check.
If you remember the program works because the government offers consumers a roughly $4500 dollar rebate.
So every clunker a dealership takes in puts them in the red until the government reimburses them. “What you have is hundreds of thousands of dollars sitting out there waiting for the government to pay,” Speers said.
Sheppard Auto has yet to see any cash, “I’m not concerned,” Speers continued, “I think we will get paid, it’s just going to take longer than we anticipated.”
That is fine for big dealerships like Sheppard Motors and Kendall Auto. Kendall’s CEO said they have been paid for 84 of their clunkers, but they have sold about 600.
For smaller dealerships, keeping up with this could be trouble. “A small dealership would have a tough time continuing with this,” Jeff Shutt the GM of Nissan Lithia in Eugene said.
They are doing alright, despite not getting reimbursed for all their clunkers, but there are rumors in the industry that some small dealerships may have to discontinue the program, if they don’t see some cash fast.
Now dealers are waiting on the mailman, hoping that the check arrives soon enough to pay the bills. Wonderful. Payments are so slow that many dealers are opting-out of the IOU’s for Clunkers program.
What are your thoughts? Did you take advantage of C4C? If so, how did it work out for you?
UPDATE: Even more good news over at the LA Examiner…
- If Our Gas Taxes Go Up, Will Gas Prices Become Unfair? Faced with dwindling cash reserves, several states are considering raising their Gas Tax. Those with efficient vehicles will come out ahead. Low income families, the trucking industry and the alternative fuel industry will finish last.
- Taxing Motorists Based on Miles Traveled, Not Gasoline Consumed? Oregon… Kulongoski wants motorists in the Beaver State to pay 1.2 cents for every mile they drive regardless of whether their rides chug gasoline and spew rivers of greenhouse gas, or run on electricity supplied by happy hamsters spinning wheel-generators.
- Waxman promises quick action on climate - ”Our environment and our economy depend on congressional action to confront the threat of climate change and secure our energy independence,” said Waxman. “U.S. industries want to invest in a clean energy future, but uncertainties about whether, when and how greenhouse gas emissions will be reduced is deterring these vital investments.”
This week Charles Krauthammer wrote in The Weekly Standard about a novel new kind of gas tax – a “net-zero” tax. In an effort to keep raw oil prices low, encourage improved fuel conservation, and shore-up alternative energy investment and development, Mr. Krauthammer suggests we take the current low oil prices as an opportunity to impose a new gas tax.
High gas prices, whether achieved by market forces or by government imposition, encourage fuel economy. In the short term, they simply reduce the amount of driving. In the longer term, they lead to the increased (voluntary) shift to more fuel-efficient cars. They render redundant and unnecessary the absurd CAFE standards–the ever-changing Corporate Average Fuel Economy regulations that mandate the fuel efficiency of various car and truck fleets–which introduce terrible distortions into the market. As the consumer market adjusts itself to more fuel-efficient autos, the green car culture of the future that environmentalists are attempting to impose by decree begins to shape itself unmandated. This shift has the collateral environmental effect of reducing pollution and CO2 emissions, an important benefit for those who believe in man-made global warming and a painless bonus for agnostics (like me) who nonetheless believe that the endless pumping of CO2 into the atmosphere cannot be a good thing.
But how exactly do you convince American’s to accept this new tax – especially now as so many still struggle with job losses, mortgage payments, and a skidding stock market? How about establishing a tax-refund proportional to the amount of tax paid at the gas pump.
The rub, of course, is that this price drop is happening at a time of severe recession. Not only would the cash-strapped consumer rebel against a gas tax. The economic pitfalls would be enormous. At a time when overall consumer demand is shrinking, any tax would further drain the economy of disposable income, decreasing purchasing power just when consumer spending needs to be supported.
What to do? Something radically new. A net-zero gas tax. Not a freestanding gas tax but a swap that couples the tax with an equal payroll tax reduction. A two-part solution that yields the government no net increase in revenue and, more importantly–that is why this proposal is different from others–immediately renders the average gasoline consumer financially whole.
Here is how it works. The simultaneous enactment of two measures: A $1 increase in the federal gasoline tax–together with an immediate $14 a week reduction of the FICA tax. Indeed, that reduction in payroll tax should go into effect the preceding week, so that the upside of the swap (the cash from the payroll tax rebate) is in hand even before the downside (the tax) kicks in.
The math is simple. The average American buys roughly 14 gallons of gasoline a week. The $1 gas tax takes $14 out of his pocket. The reduction in payroll tax puts it right back. The average driver comes out even, and the government makes nothing on the transaction. (There are, of course, more drivers than workers–203 million vs. 163 million. The 10 million unemployed would receive the extra $14 in their unemployment insurance checks. And the elderly who drive–there are 30 million licensed drivers over 65–would receive it with their Social Security payments.)
Essentially it’s a redistribution of tax, from paychecks to gas pumps, giving a real incentive to conserve fuel while keeping the price of crude oil in check – since a hike in crude prices would cause too much pain at the pump, and cut demand like we’ve seen over the past few months.
I am concerned with the mechanics of administering such a tax for those in the “exceptional” areas – I disagree that an average of 14 gallons week is even close to fair, judging from a cusory look thru some of the aggregate data here at FuelClinic. Perhaps we’d build a system like FuelClinic – which tracks actual fuel usage – but in a more verifiable way (this site is basically using the honor system, you can add to it whatever you want, but you’re only hurting your own statistics, not stealing any money from the government.)
So… would you support a gas-tax if it was coupled to a tax credit or some sort?
Another great find tonight, and I can’t believe this one snuck past me. Thanks to the guys at PowrTalkÂ I think I just found my next car. And it’s already monogramed for me!
Ready to hit the American market in 2010, Miles Electric Vehicles 4-Door SedanÂ is the first practical, affordable, 4-door, high-way-speed rated, all-electric vehicleÂ you can buy (if you can still get a car loan…)Â for around $35K USD.
According to the Miles EV website:
“In early 2004, concerned by growing environmental problems linked to micro-carbon emissions, Miles Rubin set out to make a difference â€“ by developing a line of safe, affordable, all electric vehicles that produce zero emissions. He centered the company’s activities in Tianjin, China, where the battery industry had expert manufacturing experience. Since then, Miles Electric Vehicles has begun importing low speed vehicles and is working to develop a highway speed, all-electric, midsize sedan.”
“The MILES XS500 prototype sedan currently under development will top 80mph and travel over 120 miles on a single charge Â – for about the cost of a gallon of gas.”
“Miles Electric Vehicles is owned by Miles Automotive Group, Ltd, and headquartered at the historic Santa Monica Airport in Santa Monica, CA.”
Hopefully I can get in touch with my local rep for some additional information and to arrange a demonstration. I’ll keep you posted.
Senator Obama ran a brilliant campaignÂ and yesterday a majority of Americans voted him in to the Office of the President of the United States. While there is certainly reason to celebrate today, in a few short months he will inherit a failed energy policy, one in desperate need of change â€“ but exactly what kind of change?
The Obama-Biden comprehensive New Energy for America plan will:
+ Provide short-term relief to American families facing pain at the pump
+ Help create five million new jobs by strategically investing $150 billion over the next ten years to catalyze private efforts to build a clean energy future.
+ Within 10 years save more oil than we currently import from the Middle East and Venezuela combined.
+ Put 1 million Plug-In Hybrid cars — cars that can get up to 150 miles per gallon — on the road by 2015, cars that we will work to make sure are built here in America.
+ Ensure 10 percent of our electricity comes from renewable sources by 2012, and 25 percent by 2025.
+ Implement an economy-wide cap-and-trade program to reduce greenhouse gas emissions 80 percent by 2050.
In the past Obama has been a friend of the ethanol industry, supporting the subsidies that enabled the young industry to flourish in his home state (and surrounding states) early by encouraging private investment and innovation. He recently said corn ethanol is not â€œoptimalâ€ when compared with sugar cane ethanol, a comparison that is not entirely fair, since corn ethanol production produces feed for livestock as a byproduct.
Will he continue to support the ethanol subsidies, and work to raise the “blend wall” on E10Â from 10% to a higher figure? (Ethanol production is about to “cap” out due to the lack of market for it’s excess product.) There is no mention of the Flex-Fuel Vehicle in the bullet pointsÂ above, although it would be the cheapest fastest method forÂ reducingÂ (in a meaningful way) America’s transportation reliance onÂ oil. Â
So, besides encouraging fuel conservation and mandating FFV’s w/ the Open Fuels Standard Act,Â what else should President Obama’s energy policy include and exclude?
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From Associated Press
…For the most part, the tax benefits are ones that lawmakers talked of repealing this year when Congress struggled to respond to the public outcry over soaring summer fuel prices and oil companies’ huge profits.
Topping the list for repeal are:
-Tax breaks for refinery expansion and for geological studies to help oil exploration.
-A measure passed two years ago primarily to promote domestic manufacturing. It allows oil companies to take a tax credit if they chose to drill in this country instead of going abroad.
Democrats say neither tax benefit should be needed for an industry reaping large profits at today’s high crude oil prices.
Over 10 years, the production tax credit saves oil companies $5 billion and the refinery measure and exploration credit a total of about $1.4 billion, according to Congressional Budget Office estimates.
Other oil tax breaks probably will go unchallenged. That includes some passed by Congress only a year ago and others already targeted for repeal this year.
For example, House Democrats have no plans to change a provision that allows oil companies to avoid billions of dollars in taxes by the way they calculate inventories. The Senate this year agreed to a repeal; the effort was abandoned amid House GOP opposition and an uproar from other industries that also benefit from the tax language.
House Democrats also are shying away from tampering with more than $1 billion worth of oil- and gas-related tax breaks, enacted last year. These breaks largely benefit small companies or gas utilities rather than the major oil companies now awash in cash.
Nevertheless, the House and Senate are expected to push legislation early to force oil companies to renegotiate flawed offshore drilling leases that have allowed the companies to avoid paying federal royalties. The loss eventually could cost the government $10 billion, according to some congressional estimates.
Other prime targets of House and Senate Democrats include:
-Alleged price gouging. Proposals to create a federal price gouging law for gasoline and other fuels probably will move quickly.
-More incentives and mandates to expand the use of ethanol and biodiesel as a substitute for gasoline. Requiring oil companies to phase in retail pumps that deliver fuel that is 85 percent ethanol.
-Requiring power companies to produce a percentage of their electricity from renewable energy sources such as wind and solar power. Such a measure is a priority of Sen. Jeff Bingaman, D-N.M., incoming chairman of the Senate Energy and Natural Resources Committee.
-Extending energy efficiency tax credits approved by Congress last year. Most are scheduled to expire at the end of next year.
-Expanding a tax break for buyers of gas-electric hybrid cars and offering more incentives for automakers to build greater numbers of the vehicles.
Rep. John Dingell, D-Mich., who will take over as chairman of the House Energy and Commerce Committee, said he plans hearings on legislation to spur further production and distribution of ethanol and biodiesel, and promote conservation.
But he suggested it will take time to produce legislation. “The process is a long one. It takes hearings, it takes fact finding,” said Dingell in a telephone interview.
Depending on your politics, you may be happy, disappointed, or indifferentÂ about the outcomeÂ of the Tuesday electionsÂ whichÂ resulted inÂ the United States of AmericaÂ listing slightly to the left.Â
As with any great body at rest, the USÂ Congress hasÂ tended to remain at rest over the last two or three years, especially in regard to encouraging the search for, and adoption of, alternative energy sources.Â
In the marching orders for theÂ new leadership of the US Congress is a mandate from America to ween ourselves from foreign oil and prepaare ourselves for a future without an abundance of cheap oil.
Here’s a few related initiatives:
- Using the existing standards, immediately set aÂ higher mileage requirement for allÂ automobiles sold in the United States. A mandatory 7% increase in mileageÂ within 2 model years, and a 15% increase in 5 years.Â
- Increase incentives for biodiesel, ethanol and other alternative fuels as well as wind, solar, geothermal and other sources of alternative energy.
- Renegotiate oil and gas leases that waived royalty payments to the government. Oil companies are getting filthy rich at the expense of the US Taxpayer. I feel that mutli-billion dollar profitÂ each quarter for the last few years speaks for itself. It’s simply outragious, and America is being fleeced.
- We shouldÂ explore for oil on public lands, I think we have to do this quickly and purposefully. We currently depend on volitile Middle East oil for 20% of our current needs. If we can hold-the-lineÂ on our usage by adopting more efficient practices, then we can greatly reduce our dependence on foreign oil by developing our own existing reserves.Â
Okay – that last one might not be a traditional Democrat position, but I think it is the correct path ahead.
Last year, the only tax incentive South Carolina offered to consumers for using alternative fuels was a $1,000 tax credit for installing a solar water heater. The state provided only enough funding for 20 people to receive the tax credit, and no one applied.
“In the past year and a half, we’ve seen tremendous awareness of energy issues and global warming issues,” said John Clark, director of the South Carolina Energy Office. “It seems to be snowballing, nationally and locally.”
The federal government approved tax credits for purchasing hybrid vehicles, solar heating systems, energy-efficient windows and other fuel-saving measures in 2005.
Unlike the federal incentives, South Carolina’s income tax credit for hybrid vehicle purchases is not slated to expire. The state credit is worth 20 percent of the current federal credit, which varies by vehicle make, model and year.
The state sales tax rebate for flex-fuel vehicles, which can use either gasoline or the ethanol-gas blend known as E85, is good only through June 30, 2007, but applies to new and used vehicles.
Hybrid vehicles typically cost more than non-hybrids, and there are waiting lists to buy some models, but vehicles that can run on E85 are common and usually carry the same price as similar models that only run on gasoline.
“There are a good number of E85 vehicles on the market,” said Pat Watson, executive vice president of the South Carolina Automobile Dealers Association. “You didn’t hear much about them before, when gas prices were low.”
One of the ways the US Government has helped motivate consumers to buy more fuel efficient vehicles is through generous tax incentives on the Hybrids. These include various models from Ford, General Motors, Honda and Toyota.
But as the manufacturer sells more of any particular model, those incentives begin to “phase out” in two steps, each one reducing the tax credit for that particular model by half.
Toyota appears to be the first manufacturer reaching those sales numbers, and on October 1st, 2006 the tax credits for the 5 Toyota-made models will be cut in half. If you want a Toyota Hybrid, you have until the end of September to get the full tax credit for your purchase! ($3150 on the Prius)
Qualifying hybrids purchased or placed into service after December 31, 2005 may be eligible for a federal income tax credit of up to $3,400.
Credit amounts will begin to phase out for a given manufacturer once it has sold over 60,000 eligible vehicles.
When does this incentive end?
The credit will begin to phase out for vehicles offered by a given manufacturer after it sells a total of 60,000 eligible hybrid and lean-burn vehicles starting from January 1, 2006. RS will announce when a manufacturer has exceeded this sales figure.
Beginning with the second calendar quarter after the calendar quarter in which the manufacturer sells 60,000 vehicles, the credit will be 50% of the full credit amount. This part of the phase-out will last for two calendar quarters (6 months).
For the next two calendar quarters, the credit will be 25% of the full credit amount. The incentives for vehicles by that manufacturer will end thereafter.
In addition to the phase out rules, any vehicle purchased after December 31, 2010 will not be eligible for the credit.