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Tesla Model S Owners Are Rich - Should We Keep EV Incentives For Luxury Vehicles?

There's no doubt that Model S owners are often Tesla superfans. The vehicle they love is not cheap and their purchase is often used as an argument against government incentivization of EVs. Now we have a poll of Tesla owners that adds more fuel to the debate fires.
Tesla Model S in black

The average selling price, before incentives, for a Tesla Model S is near the $100,000 mark. One of the chief complaints against giving government-paid (meaning taxpayer-funded) incentives to buyers of a luxury car like the Model S is that those who are buying it aren't the type of people we normally think of as needing a tax break. President Obama himself has said as much, in a roundabout way, when he defined anyone making more than $250,000 as being "rich" and not in need of the kinds of tax breaks given to those who make less than that.

A new poll taken in the Tesla Motors Club website, surveying 761 Model S owners (as of this writing) shows that there may be some merit to the argument that electric vehicles in a high price range and market should not receive incentives. The poll shows that about a third of all Model S owners are within the income bracket that the president says are "rich." Nearly all Model S buyers make over $140,000 per year, in fact, with nearly half making over $200,000. Of S buyers, over 14 percent are self-described as "swimmin' in cash" with an income above half a million dollars per year.

Of the 761 owners polled, only 7 made less than $40,000 and only 28 made less than $59,999 per year.

Arguments against the poll's accuracy are easy to make, but it's difficult to say that it is wholly inaccurate. The poll is on a website that requires you to both register and be approved for membership. Further, it's very possible that the numbers, if they are skewed, are skewed in the opposite direction that Tesla fans wishing to keep incentives would wish them to be, as forum members who are not Model S owners are more likely to have lower income levels. Securing financing or the cash to purchase a car with a purchase price of $70,000+ is not for those on a housing subsidy or fixed income.

So the question is open to readers. Should the Model S and other luxury cars like it be given government incentives in the form of cash back for their purchase (ala tax refunds at local, state, or federal levels) merely because they are electrically powered? Or should incentives be tuned so that they benefit the proliferation of EVs to lower or more median income buyers instead? What's your take?

Source: TMC

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Comments

Terry (not verified)    May 2, 2015 - 9:30AM

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The point of the ev incentive is to shape behavior and choice. Any incentive whether financial or intangible (ie:hov lane use etc) helps drive forward the goal of cleaner transportation. Since the current entry level for ev vs gas is higher for evs , the incentive aids in tipping the balance. As with all leading edge technology, We need the more affluent to help bankroll the further development of the technology to gain the price reductions necessary for widespread adoption of the technology. To achieve these goals the only choices are carrot or stick. I suppose those who hate to see others benefit from incentives may feel differently if the stick was used by increasing the gasoline prices to force change.
It has been proven that ev sales in all price ranges stagnate when incentives are dropped. Encouraging everybody to jump on the ev bandwagon is a worthwhile endeavor, and tesla is the thin edge of the wedge driving the goal forward.

John Goreham    May 2, 2015 - 12:12PM

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Terry, I don't agree with your main premise that the incentives actually help make transportation cleaner, but let's set that aside. Wouldn't incentive dollars used to put Nissan Leafs, Chevy Volts, or Prius Plug-ins in driveways used daily for commuting do more to further the stated goal of "cleaner transportation" than giving a multi-millionaire "Swimmin in cash"a kickback for a Model S costing over $100K? The Model S is an awesome car, but it has nothing to do with transportation. Just a s a Rolex has nothing to do with telling time.

mike w (not verified)    May 4, 2015 - 7:37PM

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John G. Pulling tax money away from Tesla sales will hinder the efforts toward "Cleaner transportation". The Model S is the only EV that you can actually travel with and drive everyday to work. The Nissan Leaf leaves you on a 40 mile leash, ok for some to commute but not much good for anything else, The Chevy Volt gives unlimited range but only 40 miles AER and the PIP is an embarrassment for a EV and thus these cars are not as "Clean" since they all rely on gasoline at some point.
Providing tax credits helps to lower the resale values of the older models and makes them more affordable for people in the middle class. Go to the Tesla web site and search "Certified pre-owned" The price range there for a low mileage, very well equipped model S starts at $60K. $7500 instant deprecation caused by tax breaks make these prices possible.

John Goreham    May 4, 2015 - 8:42PM

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Good to hear that someone besides me links the tax credits to the low resale value of EVs. I blame it for the Volt and Leaf low resale, not sure I believe there is really a link to the Tesla yet, but I will take your word for it. Mike, let's talk seriously about cleaner transportation. How many people have a commute longer than 40 miles in one direction? Now, how many of those cannot charge up at work, even if it is only a partial charge? Now, how many of those remaining people are truly concerned with greener transportation, and a greener world in general, and concurrently can sleep at night knowing they burn the energy required to travel about 28,000+ miles per year to get to their job. Maybe zero. Let's say there is a population of 40 mile each way super-green commuters. Aren't the Prius Plug in, or some of the similar green, but unlimited in daily range cars, able to satisfy that tiny community of 28,000+ mile per year commuters?

mike w (not verified)    May 5, 2015 - 6:57AM

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I don't know or care to know where you live but here in Northern Virginia work place charging does not exist. a 40 mile commute is not the only driving that people do. People with lives come home from work and go to soccer practice and run trips to the grocery store and home depot. It all adds up in most cases to more than 40 miles for a lot of people. The Tesla is the only car that works all electric all the time. People that are wealthy still use the tax credit in their purchasing decisions along with lower fuel and maintenance costs. It all adds up. Every "Rich" person that buys a Tesla is a person not buying a "S" class or a 7 series so yes incentives for the "Rich" do drive EV sales and promote a cleaner environment.

Aaron Turpen    May 5, 2015 - 1:25PM

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The range of a LEAF is closer to 80 miles, not forty. Even in real world driving. Secondly, charging is easy to come by, even here in the wilds of Wyoming, if you're willing to hunt for it. The Nissan dealership in Cheyenne sells a LEAF a month. I interviewed them about it. You can read that here on Torque News.

The fact is, though, nearly all EV sales are in the "green happy face" comprising the coasts and Arizona/Texas. The vast majority are in California itself, especially for the Model S. It's true that I can buy a Model S and drive it coast-to-coast thanks to the Tesla charging stations, but it's also true that if I can afford a Model S, I probably don't really need the $7,500 as an incentive to buy the car either. I would think that if that's what drives buyers, maybe Tesla's marketing (such as it is) needs to emphasize fuel savings a little more. Nissan LEAFs sell like gangbusters and they do it almost entirely through word of mouth and simple sales floor mathematics offered to buyers. Looking at other high-end vehicles, the resale value of a BMW i8 is actually almost double its MSRP because they're so hard to get. Should we subsidize a $137,000 car that could be resold for over $200,000, adding further profit to the buyer via taxpayer incentives?

Finally, the argument can be made that incentives aren't really working. It's very likely that the EPA will revise its CAFE requirements in the coming months because electrified vehicle sales have not been what they had hoped.

mike w (not verified)    May 5, 2015 - 7:17PM

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Yes it is 80 miles. 40 miles each way and that is when the car/battery is new not after 4 years of ownership and definitely not in the winter time. It painfully obvious that you do not own a an older Leaf and know absolutely nothing about how the range on the Leaf changes with changing outside air temperatures. Try taking your Leaf to upstate New York in the winter time and watch your single charge range drop to 15 miles.
Charging may be easy to come by if your willing to wait 3 or 4 hours while you recharge. I will not and most people will not that is why they get a tax break which they may or may not qualify for. Please provide a link that shows used BMW i8s (can't believe there are that many out there) that shows it is selling for double the MSRP.

The credibility of your comments , as always, in the trash can for me.

Aaron Turpen    May 6, 2015 - 1:51AM

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I know a lot about the LEAF. Had you bothered to look at who I am, you'd note that I'm the one who penned the above story and the person who covers Nissan for TN. And the whole "wait three to four hours to recharge" thing is a straw man. I said it was easy to find a charge. MOST PEOPLE DRIVE LESS THAN 40 MILES PER DAY and most of that is in smaller pieces. I met someone in Colorado a few weeks ago who drives over 100 miles daily in his LEAF. He spends his lunch hour at a restaurant next to a public charging station that accommodates two cars at once. Finally, I didn't say anything about tax breaks for the LEAF. It's not a luxury car. The Model S is. Try and stay on subject. The system here doesn't allow link posting. There are no "links" to "used" i8s, but there are plenty of people who'd signed up to get one and then resold it immediately at high profit. I know at least two and if you Google it, you'll find it's a relatively common story.

John Lapine (not verified)    December 19, 2022 - 5:58AM

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It always makes me chuckle when I hear rich people whining about rich people problems. Especially when it’s whining about not getting free money from a tax break they don’t need. Stop whining about being expected to pay taxes. Even if your rolling Maga hat pollutes less than a gas car your rich person lifestyle creates so much pollution and harm to the environment that it really doesn’t make a difference. Rich people are bad for the planet. That’s a fact. If smelling your own methane in your Tesla makes you feel better go right ahead but don’t expect taxpayers to help fund your virtue signaling. Tesla is a status symbol and although I wouldn’t call the quality luxurious the price is definitely up there with actual higher end automobiles. No one who owns one actually needs that tax credit. More corporate welfare and white oriole problems

Robert Stelling (not verified)    May 2, 2015 - 7:34PM

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I wish people would stop harping about people being "rich" because they own a really superior car. Most people who own Teslas will tell you that careful planning, decisions, and effort have put them where they are now, able to afford the best. Many will also tell you that they chose not to own the extra big house, the big flat panel TV, etc. They chose to finish school, go on to college, and then chose to show up at work for years and years. They chose to have a retirement fund, and they are still choosing wisely. That's how you get rich, and that's how you can buy a Tesla. I'd bet I could point out a dozen reasons why some people have had "bad luck" all their lives and have to make do with a Toyota now.

Robert Stelling (not verified)    May 17, 2015 - 12:02PM

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Being fairly widely read, belonging to EAA, and reading hundreds of letters a week from Tesla owners all over the country, I feel I can say that I "know" a bunch of those Tesla owners in that "dreamy profile" outside Northern California. Neither here nor there. Enjoy your Leaf. Make careful decisions. Keep supporting the move away from non renewable, polluting, environment destroying, century old technology that keeps Big Oil and Big Auto rich. Give your kids a chance, at least, to be able to buy a no compromise electric. Good Luck.

Andre (not verified)    June 14, 2015 - 2:34PM

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I think the argument is reasonable as any other. However, when you look at the bigger picture of transforming to renewable energy consumption for the U.S. and the ultimate goal of creating a mass produced EV sedan for the masses that would achieve that big picture vision, then that is a great move forward. I would accept the sacrifice of letting the rich get the benefits of the tax credits. It's unfortunately a necessary evil. I hope that when the Model 3 comes out there are big tax breaks for those vehicles and the Model S no longer receives there own.

mike w (not verified)    June 14, 2015 - 7:02PM

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Andre---Yes people buying the Model S are in the "Upper Half" of the income brackets. Tax breaks are a tricky issue because it depends on many things. I remember the 1970s when electronic fuel injection first came out. Only the wealthy few who could afford to buy BMWs, Mercedes Benzs ect could get that feature. Basically the "Rich" paid for the development of that technology. Today its on literally every car. The rich paid for the development of the technology and now all income groups get the benefits of better performance and lower fuel consumption. The EV industry is the same. Tesla adds a premium onto the cost of every Model S sold today. Some of that money is used to build out the supercharger network which will benefit more than just the few buying the Model S today.