Republican Tax Bill: PHEV/BEVs MSRPs Either Fall or The Market Evaporates

Discussion in 'In the News' started by xcel, Dec 6, 2017.

  1. xcel

    xcel PZEV, there's nothing like it :) Staff Member

    [​IMG] Just when OEMs headlong push into the fuel saving technology is picking up steam, the loss of the Federal Tax credit will probably decimate PHEV/BEV sales. Unless…

    Wayne Gerdes – CleanMPG – Dec. 6, 2017

    [​IMG]

    As I am prepping to attend a regional event covering the Ioniq PHEV this morning, a few thoughts.

    The recent Republican tax bill voted in by the House is moving through Congress which if kept in the House-Senate Conference bill and adopted would repeal the Federal Tax Credit of up to $7,500 for the 2017 tax year. If this occurs, either OEMs electrified drivetrain offerings will have to see a much lower MSRP or the plug-in market will evaporate. Given the very steep upfront upcharges, this segment is barely on life support.

    [​IMG]

    The Ioniq PHEV uses the same drivetrain - the GDI I4 and electric motor is the same as the std. HEV - and the platform is the same. Packaging adds little as the spare wheel well is being filled with the larger - 8.9 kWh pack vs. 1.56 kWh pack - but there is a more robust higher current inverter and the onboard Level2 charger hardware. This last one is the real expense

    Here is a back of the envelope cost analysis. With OEM traction battery costs falling to < $100/kWh, the Ioniq PHEV's additional 7.34 kWh battery should add < $700 to the cost of the PHEV. The onboard charger probably cost less than $500 from an OEM perspective, and the Inverter changes are going to add < $50. In other words, the PHEV should only cost as a guess, $1,250 more than the std. HEV. Unfortunately, the rest of the industry is pushing their BEVs and PHEVs with upcharges between $2,500 and $15k with the higher end targets being hidden under even more profitable higher end trims and using the Federal Tax credit to add profitability. I am considering the Volt vs. Cruze hatch or LEAF vs Versa. The latest sedan PHEVs from Honda - Accord vs. Clarity, Kia Optima HEV vs PHEV, Hyundai Sonata HEV vs PHEV, Volvo XC90 vs XC90 PHEV, plus BMWs and Mercedes Benz' electrified offerings are in no better shape with thousands to tens of thousands added on to both "cover" the additional hardware and create a profitable model line.

    With no federal tax credit, either the MSRPs come down to meet the new total cost of ownership reality or the electrified PHEV/BEV lineups will wither to oblivion.

    Considering Hyundai built their PHEVs around the HEVs from the beginning with economy of scale cost basis and minimal PHEV price increases, I believe the Ioniq PHEV has the best chance of surviving the Fed TC loss as they “could” price the Ioniq PHEV with a $1.0k to $1.5k upcharge. The Sonata/Optima PHEV pricing will have to be reduced significantly however. GM’s Volt and Bolt are probably DOA at their current price points?

    Can GM absorb a $10k reduction of MSRP and make an internal case for profitability from either? Same with Nissan’s new 150-mile range LEAF. The 40-kWh traction battery is an OEM $4k markup and the Level2 charging HW uses the same cost estimates as the Ioniq PHEV above. The standalone 147 hp electric motor should not cost more than $2 to $3k vs. $1.5 to $2k for a std. I4 and CVT. The 2018 Versa Note S retails for just under $16,500 USD incl. D&H. The LEAF S retails for $30,885 incl. D&H albeit it does include a few more std. features.

    Do the math and the electrified highway uphill grade just increased by a few more degrees.
     
  2. WriConsult

    WriConsult Super Moderator

    Disappointing. Hopefully the industry has developed to the point that reduced production costs will allow at least PHEVs to continue production.

    Ironic that I took possession of my used BEV on the day this BEV-killing bill passed. Also probably lucky for me, as I would expect prices of used BEVs (already bottomed out) to rise as the supply dries up over the next 3 years.
     
    xcel likes this.
  3. xcel

    xcel PZEV, there's nothing like it :) Staff Member

    Hi All:

    The lousy bill that the Republican Congress has compromised on in Conference appears to have now left the EV Tax credit intact! That was close and thank god!!!

    Wayne
     
  4. EdwinTheMagnificent

    EdwinTheMagnificent Legend In His Mind

    Wayne , what about the tax credit for PHEV's ? Does that stay the same ?

    Thanks ,

    Edwin
     
    thunderstruck likes this.
  5. thunderstruck

    thunderstruck Super Moderator

    I second his question. I'm going to look at a Prime today, in spite of having nowhere to plug it in until I move. More concerned about loss of tax credit, but if it stays intact I can afford to wait.
     
  6. Chris12

    Chris12 Well-Known Member

    It's the same tax credit, covering both EVs and PHEVs. EVs get a $7,500 federal tax credit, while the Prius Prime, for example, gets a $4,502 federal tax credit:

    https://www.fueleconomy.gov/feg/taxevb.shtml

    Don't forget many states also have their own EV/PHEV tax credits. In NY State, the Prime gets a $1,100 state tax credit.
     
  7. thunderstruck

    thunderstruck Super Moderator

    I meant about whether it was going to stay or not. It appears it will remain, based on reports on Prius Chat, so I'll go look at a Prius 4 today. I need some of the options that my 3 doesn't have, like BSM. Traffic is crazy here. They now offer a big screen in the 2018 Prius, although I'd prefer knobs and buttons over an iPad on the dash.
     
  8. Trollbait

    Trollbait Well-Known Member

    Look at this way. It would have been easier for Congress to cut the credits completely than to alter the current law to exclude PHEVs.

    In a way, I am disappointed the credits were saved. GM, Nissan, and Tesla took on the risk of selling a plug in nation wide while the battery costs were high. The tax credits helped support them in that effort, but the structure of so many plug ins sold by manufacturer, followed by a phase out, awards the fence sitters for waiting until those battery costs have dropped. Instead of their use of the credits helping to jump start the automotive traction battery industry, they get to use more of their credit allotment to increase profits.
     
    xcel, Jay and BillLin like this.

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