Of course other EVs will also cost more, so “competitive disadvantage” is relative, although the article notes that the Hyundai Ionic5 and the VW Buzz are manufactured here in the US, so they will be (mostly) unaffected. Generally speaking, though, “higher price” means fewer sales, as marginal customers are squeezed out of the purchase group.
The article notes that if Tesla chose to eat all those extra costs, it would cost them about $3B, roughly 1/3 of their profit last year.
Tesla has released a stripped down version of the new Juniper Model Y, but It’s still $43,130 after deducting the $7,500 tax credit.
intercst
Which tax credit may not last. The EV tax credit (and other green subsidies) are a prime target for Republican budget-drafters looking for pay-fors to get their budget proposal to pass reconciliation muster. The green provisions in the IRA are a big pot of future spending that can be slashed to offset tax cut proposals.
Yep. That’s why I got mine while the gettin’ was still good. {{ LOL }}
intercst
What makes you think that an exception wouldn’t be made for Tesla?
Pete
Because Tesla is still the lion’s share of qualifying EV’s in the U.S. If you give them an exception, you lose much of the offset money you want for other priorities (like tax cuts). Push comes to shove, once the GOP has to actually start making choices about finding spending cuts, Tesla’s share of the EV subsidy is going to be pretty down the priority list of spending that they want to preserve - regardless of Musk’s influence.
When is the last time the GOP actually wanted to make tax cuts for real? Meaning, not rebalancing by cuts to wealthy and higher taxes/rates for poor? Actions speak louder than everyone’s assumptions.
Similar question, what spending cuts do they really want that would be a net negative on spending? Cuts to medicaid yes, but then spend more with incentives to Oil, Energy, Lobbiests, etc. There is no net reduction and there never has been in my life time. The only time we have had budget surpluses was under…whom?
They definitely don’t like subsidies for green stuff. Their base doesn’t like it, it’s a red-meat conservative issue, and they would love to be able to claim a spending scalp.
I agree that a lot of the GOP would rather pretend to cut spending than actually cut spending, but their majority is so small that the small number of true budget hawks are significantly empowered. It’s just hard to see EV credits surviving a GOP budget process where leadership has to give those guys something, and slashing spending on electric cars is an obvious choice.
I’m not sure I follow this logic. The Tesla’s sold in the US are “made” in the US. With about 60-70% parts (value?) coming from outside US/Can. And the cost estimate is up by about $4000.
The Ionic 5 is also made in the US (at least the ones sold in the US) and they will somehow be mostly unaffected? The only way this is true (compared to Tesla) is if they have much more than 60-70% US parts and assembly value. Maybe they have no Canadian parts?
I thought the VW ID.buzz was made in Germany. (I don’t think there are enough hippies from the 60s still around to buy enough of these to make them in the US)
Mike
Perhaps it is not the percentage of parts, but the value of those parts - since the tariff is charged on the cost of the imported product.
Edit: I just looked this up:
Perhaps the batteries are a lot more expensive than the parts imported for the Ionic 5. From what I am reading, the Ionic batteries will be made here.
True. But they also have the so-called first gigafactory near Reno that makes batteries with partner Panasonic.
Mike
I have no idea about the dollar values but I know that Elon Musk has said that Tesla will buy all the batteries suppliers are willing to sell. On the other hand, the 4680 dry process is finally working and Elon claims it has become the lowest cost battery. Tesla has had CATL install an LFP manufacturing line which reduces the need to import batteries.
Tesla to Open LFP Battery Plant in US with CATL Equipment: Report
Bloomberg News reports the domestic production of Megapack batteries will rely on idle CATL equipment.
Michael C. Anderson Editor-in-Chief, Battery Technology
February 1, 2024
And wholly Tesla made 4680 batteries made in various Giga Factories as well as a lithium refining facility in Texas.
Costs are a moving target.
The Captain
It appears to be based on an assessment of how much of the parts that are made in the U.S. are produced using raw materials and/or components that are imported from outside the U.S.
For example, Tesla builds their own batteries, for the most part. But even though those batteries are constructed in the U.S., and thus are included in the 60-70% parts coming from within the U.S., many of the raw components (like, say, lithium) that go into those batteries are imported. So when we impose tariffs on China, the lithium that Tesla sources from China gets more expensive, and the price of the battery components rises - even though the batteries themselves are not subject to tariff.
If tariffs are intended to bring manufacturing jobs back to the US, then not putting them on raw materials would make more sense.
(Not that sense factors into it.)
These tariffs aren’t structured that way. These tariffs are intended to reduce bilateral deficits in the trade of goods (not services) on an individual nation-by-nation basis. A tariff regime intended to promote domestic manufacturing would look very different than this one…
Of course I don’t disagree, but an awful lot of talking heads, in video and print, keep going on and on about bringing manufacturing back.
