[sudosysgen]

Definitely not, no. Credits on profits incentivize short term profit taking, while credits in products incentivize number of units shipped. The second is much better for society. Think about it from the perspective of a company deciding between selling low margin cheap EVs in the short term before process efficiencies kick in, or selling expensive EVs now.

[AnthonyMouse]

It isn't a tax credit for making profits. It's a tax credit for making EVs. The reason there are credits for both consumers and manufacturers is that the manufacturer credits provide an incentive to build EV factories in the US, even if some of the cars are for export.

[sudosysgen]

But we don't care about more profits, we care about more EVs. If you want to create an incentive to make EVs that are exported then you can make one, for example by subsidizing production equipment or by providing a per-unit sold refundable tax credit.

[AnthonyMouse]

> But we don't care about more profits, we care about more EVs.

Which is why the tax credit is for making EVs.

[johnnyanmac]

you're just circling back to the GP's last comment, without refuting that comment.

>Credits on profits incentivize short term profit taking, while credits in products incentivize number of units shipped. The second is much better for society.

[AnthonyMouse]

There aren't credits on profits. There are credits for making EVs (which the manufacturers get) and for buying EVs (which the customers get).

[sudosysgen]

They are, by definition, credits on profits made from selling EVs, and not from selling EVs. If Tesla made EVs without making a profit they wouldn't have received a penny.

[missedthecue]

The idea is to stimulate both supply and demand. Credits for consumer only stimulate demand which may not be enough to compel literally hundreds of billions of dollars worth of CapEx, not to mention opportunity cost.

[sudosysgen]

Consumer credits stimulate demand by increasing the cost consumers are willing to pay for a vehicle, shifting the demand curve, and greatly increasing the profitability in selling cars, provided it is done at scale. It can most definitely compell hundreds of billions of dollars of CapEx, and in many ways it's more effective than a tax break, because it will reduce losses if the venture never ends up being profitable (unlike a tax break which will only be worth it if the venture is eventually profitable, so there is less risk), and if it provides future market share through investments in the low end, especially in international competition, it can end up spurning more CapEx as it makes the more capital-intensive strategy more viable.