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The Federal Electric Vehicle Tax Credit Is a Bipartisan Success Story, Which House Republicans Want to Undo
By Ben Jervey
As the House and Senate develop their respective versions of a tax reform bill, the $7,500 federal electric vehicle (EV) tax credit is positioned to be a potential bargaining chip. The House's version of the bill, the "Tax Cuts and Jobs Act," includes a repeal of the EV tax credit. The Senate's newly introduced version, at the moment, doesn't kill the credit.
Current policy calls for an already-scheduled phase out of the credit over the two calendar quarters after each automaker surpasses 200,000 total plug-in vehicle sales. The new House proposal would eliminate the tax credit entirely at the end of this year—only EVs registered on or before Dec. 31 would qualify.
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Even though Elon Musk once said that Donald Trump "doesn't seem to have the sort of character that reflects well on the United States," the Tesla/SpaceX CEO is joining the president-elect's Strategic and Policy Forum, an advisory board for the president on business issues.
Uber CEO Travis Kalanick and PepsiCo CEO Indra Nooyi were also named as strategic advisors on Wednesday.
"My Administration is going to work together with the private sector to improve the business climate and make it attractive for firms to create new jobs across the United States from Silicon Valley to the heartland," Trump said in a statement announcing the latest appointees.
Other high-profile CEOs on the 19-member Strategic and Policy Forum include Mary Barra of General Motors, Jamie Dimon of JPMorgan Chase & Co, Bob Iger of The Walt Disney Company, among others. The forum will be chaired by Stephen A. Schwarzman, who heads the investment firm Blackstone.
Members of the group will "be called upon to meet with the president frequently to share their specific experience and knowledge as the president implements his economic agenda," a media release explained.
Musk's willingness to take part in Trump's forthcoming administration—one that's filled with climate change deniers and fossil fuel barons, at that—is admittedly a head-scratcher. Similar questions were raised when Leonardo DiCaprio and Al Gore met with Trump and his daughter Ivanka. The Tesla boss is very outspoken on climate change issues and has built a renewable energy enterprise.
Musk is also a big proponent of a carbon tax to drive investments in clean tech. We have to "remove the effective subsidy of not pricing the damage done by carbon pollution," he said last year. Also, in an appearance in DiCaprio's climate change documentary Before The Flood, Musk said, "If governments can set the rules in favor of sustainable energy, then we can get there really quickly ... Only way to do that is through a carbon tax."
Trump, in contrast, famously believes that global warming is a hoax created by and for the Chinese. The hotelier has waged wars on windmills, calling them bird killers and a blight on the view of his luxury golf courses. As for solar, Trump said the booming sector is "so expensive" and "not working so good."
The president-elect also campaigned on slashing taxes across the board, axing President Obama's emissions regulations and exiting the historic 2015 Paris climate agreement.
However, a report from Recode suggests that Musk might use his clout to push for green initiatives. As Recode reporter April Glaser writes:
"Still, it's probably in Musk's favor to work with the incoming administration, especially as it starts to shape new policies that are dear to Musk's heart, like regulations to bring self-driving cars to U.S. roadways and whether to abide by the 2015 Paris climate agreement or pull out, a threat Trump made on the campaign trail.
"That doesn't sit well with Musk, who will likely urge the Trump administration to remain a signatory on the international climate accord. Reps for Musk did not immediately respond to request for comment."
Additionally, as Glaser notes, "Musk might be able to persuade the president-elect not to renege on the Paris agreement, which already lacks strong mechanisms for enforcement."
Glaser points out that secretary of state nominee/Exxon CEO Rex Tillerson—whose company announced its support of the Paris climate agreement and acknowledges the risks of climate change—also endorsed the idea of a national carbon tax.
But as the New York Times argues, Tillerson might only support the Paris agreement and a carbon tax if it does not harm his company's bottom line.
"Will Mr. Tillerson try to persuade Mr. Trump to support the international climate accord reached in Paris? He might, but he would probably stress the importance of natural gas and methods to bury carbon emissions—policies that would not hurt fossil fuel industries," the newspaper of record writes.
After all, Exxon sells a product that fuels climate change and the company has spent years and millions of dollars funding climate change denial.
Yesterday, a number of Silicon Valley executives gathered at Trump's "tech summit" at Trump Tower in New York. The group included Musk, Jeff Bezos of Amazon, Timothy D. Cook of Apple, Sheryl Sandberg of Facebook, Larry Page and Eric Schmidt of Alphabet, Google's parent company, Satya Nadella of Microsoft and more.
"I'm here to help you folks do well, and you're doing well right now and I'm very honored by 'the bounce'—they're all talking about 'the bounce' and I know everybody in this room has to like me a little bit, but we're going to try and have that bounce continue," Trump said at the summit. "Perhaps even more importantly we want you to keep going with the incredible innovation. There's nobody like you in the world. There's nobody like the people in this room."
On Jan. 29, 1886, Carl Benz—who had invented the first stationary gasoline engine seven years earlier—patented a "vehicle powered by a gas engine," which he had built in Mannheim, Germany. By 2030, the country may ban his invention.
The world's first automobile, invented in 1886.Mercedes-Benz
Germany's Bundesrat, its upper house of parliament, passed a bipartisan resolution calling for a ban on sales of new vehicles powered by internal combustion engines, which includes both gasoline and diesel.
"If the Paris agreement to curb climate-warming emissions is to be taken seriously, no new combustion engine cars should be allowed on roads after 2030," weekly news magazine Der Spiegel quoted Green Party lawmaker Oliver Krischer as saying.
The shockwaves from this action, reported over the weekend, haven't quite hit the global auto industry or German manufacturers just yet. Germany has one of the largest automotive industries in the world, and it is the biggest industrial sector in Germany. Automobile manufacturing and related businesses employ 774,900 German workers and account for one-fifth of German industry revenue.
The country is also Europe's top automobile market, and U.S.-based manufacturers do big business there as well. General Motors sold 244,000 vehicles in Germany in 2015, while Ford is on track to sell 280,000 vehicles this year. The Ford Mustang is the most popular sports car in Germany. Fiat Chrysler Automobiles sold 90,000 vehicles there last year, with its U.S.-built Jeep brand growing strongly.
The company that Carl Benz started, today's Mercedes-Benz, is investing $1.1 billion in battery production and plans to launch 10 new electric vehicles (EVs) by 2025. The company says that every model series will be electrified. BMW is expanding its EV lineup, while Volkswagen—reeling from its diesel emissions scandal—announced that it plans to sell three million electric cars by 2025. At the current 2016 Paris Auto Show, virtually every major auto manufacturer is showcasing new electric or hybrid vehicles.
The Bundesrat resolution would require only electric or hydrogen fuel cell vehicles by 2030, and Germany's action is likely to precipitate wider European Union policy.
"We're ready for the launch of an electric product offensive that will cover all vehicle segments, from the compact to the luxury class," said Daimler AG Chief Executive Officer Dieter Zetsche at the opening of the Paris Auto Show in September. Daimler is the parent company of Mercedes-Benz. The company that invented the automobile now needs to reinvent itself.
The Detroit-based carmaker, whose total electricity demand for operations was nine terawatt hours last year, said it saves $5 million annually from renewable energy use. Earlier this week, GM revealed that its 2017 Chevy Bolt EV has a range of 238 miles per charge, outpacing Tesla's Model 3 by 10 percent.
For a deeper dive:
Commentary: Nexus Media, Jeremy Deaton column
Could Uber and Lyft make the dream of futurists for personal rapid transit come true?
Since the 1950s, thinkers such as city transportation planner Donn Fichter began to envision an automated public transit system for low-density areas where rail and even buses were not practical. Even in denser urban environments, it has always been a challenge to get people to leave their cars at home when mass transit cannot offer point-to-point and schedule on demand service.
The 1960s through 1990s saw research studies and a handful of demonstration projects in the U.S., Europe and Japan. In 1999, I visited the Honda R&D facility in Tochigi, Japan, where I could summon a self-driven minicar to take me to specific spots around the campus. The vehicle would then return to its home base on its own. Other proposed systems used guideways, separating the vehicle from existing road or rail systems but offering less flexibility.
The automotive industry is investing heavily in autonomous vehicle technology, some aspects of which are already available in mass-market vehicles from major manufacturers. Two major industry suppliers, Delphi Automotive and Mobileye, are teaming up to produce off-the-shelf autonomous vehicle technology that will be shown at the International CES in Las Vegas in January. This will enable automakers to more quickly introduce self-driving cars and spend less on their own research and development.
Uber has just started a pilot program in Pittsburgh involving up to 100 self-driving vehicles in partnership with Volvo. The company has also acquired Otto, a start-up company headed by autonomous vehicle engineer Anthony Levandowski.
Uber's modified Volvo XC90 for its Pittsburgh self-driving fleet.Uber
Earlier this year, General Motors announced a $500 million in investment in rival Lyft. This month, Ford said it would have a fully autonomous vehicle on the road for ride sharing by 2021. Google's 25-mph prototype vehicle is also testing on public roads.
Uber and Lyft are looking beyond competition with traditional taxi services. They may be creating the first practical, affordable personal rapid transit (PRT) systems that will compete with buses. In 2014, Uber launched UberPool, enabling multiple parties to share a ride along similar routes. The following year, the company announced uberCOMMUTE in China, which they described as " carpooling at the press of a button." In the U.S., it's being tested in Chicago. Then, in December, Uber launched uberHOP in Seattle, which operates along pre-selected commuters routes.
Virtually all mass transit systems are publicly subsidized. Farebox revenues rarely cover more than 50 percent of expenses, which are labor and capital-intensive. In Pinellas Park, Florida—a Tampa suburb—has just replaced two bus lines with Uber service, subsidized to the tune of $3 per ride. It's cheaper than running the buses. The Pinellas Suncoast Transit Authority budgeted $40,000 a year. Running the two bus lines cost four times as much.
In the Denver suburb of Centennial, Lyft launched a program this month providing free rides to the Dry Creek light rail station. In this case, the program is designed to encourage mass transit use by enabling commuters to get to the station without having to park a car there all day. A self-driving bus is already being tested in Washington, DC.
A key benefit of a self-driving vehicles is greater fuel efficiency. The computer can drive better than you can. It will drive at a steady speed, will avoid jackrabbit starts and won't exceed the speed limit. Ultimately, a preponderance of autonomous vehicles could reduce traffic congestion by communicating with each other and traveling together in a controlled caravan. Car-sharing and carpooling make for more efficient use of roadways, vehicles and infrastructure devoted to parking.
There are concerns, however, that self-driving cars will encourage more driving. That remains to be seen, but if the technology is accompanied by more car-sharing and greater use of electric vehicles, that may act as an offset.
A KPMG/Center for Automotive Research study stated, "The new technology could provide solutions to some of our most intractable social problems—the high cost of traffic crashes and transportation infrastructure, the millions of hours wasted in traffic jams and the wasted urban space given over to parking lots, just to name a few. But if self-driving vehicles become a reality, the implications would also be profoundly disruptive for almost every stakeholder in the automotive ecosystem."
Personal rapid transit is no longer a pipe dream; it's a business.