Tag Archives: tesla

Georgia Subsidizes 90 Percent of Nissan Leaf

A government’s decision to subsidize one electric vehicle model over all other vehicles is a problem. It distorts the economy picking winners and losers regardless of the environmental benefits. But when such also increases greenhouse gases it is even worse. Yet, this is the situation playing out in Georgia.

Metro Atlanta is the second largest market in the U.S. after San Francisco for electric vehicle sales. And many of these sales are due to one vehicle model: the Nissan Leaf. Atlanta has been the Leaf’s largest market over the past year, in large part because Georgia offers Leaf buyers a $5,000 tax credit. Coincidentally, Nissan played a significant role in the tax credit’s passage. Yet other electric and hybrid vehicles do not receive the same tax incentive. In cases where vehicles are sold directly by manufacturers, only the first 150 are eligible for the tax $5,000 tax credit. This provision seems designed to prohibit Tesla buyers from receiving this subsidy, since Tesla is the only major vehicle not sold through dealers. The subsidy also does not apply to gas-electric hybrids such as the Ford Fusion or Toyota Prius.

But the Nissan Leaf cannot even claim it helps the environment. Much of the fuel used to generate power in Georgia is coal. As a result, when the Nissan Leaf charges its battery with electricity, it relies primarily on coal, one of the most polluting power sources on the planet. Yet when the unsubsidized Toyota Prius charges its battery, it uses its oil-powered engine. As a result the Prius is responsible for fewer greenhouse gas emissions than the Leaf. In fact the Nissan Leaf produces almost as much greenhouse gas as a conventionally powered vehicle with good fuel efficiency such as the Honda Fit.

The retail price for the Nissan Leaf is approximately $30,000. Yet after factoring in gasoline savings and state incentives of $5,000, drivers can lease a Leaf for free. The monthly payment for a 24-month lease is $235 per month for a total of $5,640. Add in the $5,000 state tax credit and lessees come close to breaking even. In addition, gasoline savings of savings of approximately $100 a month ($2,400 total) provide lessees with nearly $2,000 in yearly profit. Georgia spent close to $2 million on tax credits for electric vehicle owners in 2013. It is time to retire a tax credit that distorts the economy and increases greenhouse gas emissions.

Vying for Tesla

In 1978 every person knew that Detroit was the motor capitol of the world, and for good reason as they employed more than 250,000 people. Automobiles began in the North and with it came Ford, General Motors, and Dodge building their world headquarters.

2014 looks vastly different as factories are now automated, most of those workers are now unemployed, and the city shrunk from 1.8 million to a mere 700,000. As the world began to globalize there became a push for financially viable alternatives and now even environmental alternatives. Machine labor replaced human labor, and forced unions out as the remaining worker salaries were far too high compared to the alternatives to the union absent South. The South began an automobile revolution taking in Toyota, Mercedes, and Volkswagen to name a few. However, a new company has risen, and northern states are nowhere on their list of possible destinations.

The first Tesla was sold in 2008 and has since made steady advances to become a household name in the United States. The company has had numerous political problems with their approach to selling vehicles without the need for a dealership license. Tesla has a unique, and somewhat illegal, sales model that sells cars directly to consumers without the need for dealerships. As can be expected, current auto manufacturers and dealers are furious and are spending millions on banning Tesla in their states. While many states such as New Jersey, Arizona, and Texas have banned it, there are four that are biting at the bit to get Tesla to build a factory in their states. With 5 billion dollars, and 6,500 jobs at stake there is a lot to be excited about.

New Mexico. The dark horse in the list of possible locations, New Mexico was originally a candidate for a factory in 2007. However, their incentive package was beaten by California’s at the last minute causing Tesla to pull out of Albuquerque. There were numerous advantages in 2007, but 7 years is a huge difference and other states have climbed to be better potential suitors.

Texas. Currently Texas has banned the sale of Tesla vehicles but it has the second most populated state in the United States. If Tesla wants to move product it must gain Texas as a place where it can sell vehicles. The building of the plant may create the leverage needed to allow the sale of vehicles. Even Governor Rick Perry is an advocate, expressing his support for the opportunity that the plant represents.

Arizona. In the same situation as Texas, Arizona has a ban on the direct sales model created by Tesla and therefore no cars can be sold in the state. Tesla attempted to overturn this policy but it was quickly struck down and no further plans to allow sales are even possible until 2015. Tesla will be looking at the long-term though, as the factory will not even be manufacturing until 2017.

Nevada. Considered the frontrunner in locations for Tesla, Reno, Nevada has immediate access to not only rail systems but a large amount of land and local tech companies ready for positions at the new facility.

A similar situation happened in Alabama when many southern states were fighting for Mercedes. In the end, Alabama offered a huge incentive package utilizing tax breaks and taxpayers dollars to attract the auto giant. Near identical events are unfolding in these states as backroom deals are occurring daily in order to win the bid. While the system is controversial, it outlines the bigger problem. None of these deals would have to happen if barriers of entry were not so tough. Alliance, Texas has seen huge success with their free trade area. Now if only the rest of Texas could get on board.