

If Tesla Would Stop Selling Cars, We’d All Save Some Money - ericcumbee
http://www.cato.org/publications/commentary/tesla-would-stop-selling-cars-wed-all-save-some-money

======
LandoCalrissian
"Tesla can’t increase demand by dropping the price very much. "

That's a pretty big leap on the Authors part, one that isn't really justified
from facts or information. We know basically nothing about Tesla's plans for
their cheaper models or what they have/will do to reduce the cost.

It's really bizarre to me how much certain groups are just itching for Tesla
to fail.

~~~
DanBC
> It's really bizarre to me how much certain groups are just itching for Tesla
> to fail.

Patrick Michaels is a climate change denialist. He himself has estimated that
about 40% of his funding comes from the oil companies. He has been criticised
for manipulating the data of other scientists - not trivial mistakes or
oversights, but deliberate serious manipulations. (Here's just one example
where a colleague almost accuses him of fraud
(<http://www.columbia.edu/~jeh1/2005/Crichton_20050927.pdf>)

> One of the skeptics, Pat Michaels, has taken the graph from our 1988 paper
> with simulated global temperatures for scenarios A, B and C, erased the
> results for scenarios B and C, and shown only the curve for scenario A in
> public presentations, pretending that it was my prediction for climate
> change. Is this treading close to scientific fraud?

He's part of the Cato Institute, who have publically said they disagree with
the scientific consensus on climate change.

Disappointing to see this worthless tripe on HN, and to see it getting any
votes.

~~~
duncan_bayne
<http://www.nizkor.org/features/fallacies/ad-hominem.html>

It's disappointing to see someone avoid addressing every single one of the
issues raised in the original article, and instead focusing on attacking the
author.

Would you care to address any of the points he made in the original article?

~~~
skrebbel
Why is it disappointing? There's plenty of people here who address the
original point. Knowing more about the author and his motives is useful
information.

~~~
duncan_bayne
It wouldn't have been disappointing had DanBC posted it as an FYI - in the
sense of "be careful to check this guy's claims; he has falsified data in the
past."

But what he wrote was: "Disappointing to see this worthless tripe on HN, and
to see it getting any votes."

That is an ad-hominem attack, and disappointing to see on HN.

~~~
DanBC
I don't want people to be careful when checking that guy's claims.

I want people to not waste their time bothering to check that guy's claims.

Scientists gather data and form an opinion.

This guy has an opinion before he sees any data; he's paid at least 40% of his
funding for having that opinion; and then manipulates data to fit that
opinion. He misrepresents other people's work and other people's opinions.

If he had lied once or twice then perhaps there's some useful information to
be had by carefully checking what he's saying. But the pattern is so strong
that people can safely ignore him. Just as we ignore the time-cube guy, or
people who use phrases like quantum touch healing.

~~~
duncan_bayne
"I want people to not waste their time bothering to check that guy's claims."

That is pretty much the definition of an ad-hominem attack.

Your criticisms of his approach are valid, but also apply to a good number of
climatologists whose income is more dependent upon pro-AGW funding this his is
dependent upon oil company funding. Glass houses, stones, etc.

FWIW, my position is that correlation between human activity and climate
change has (finally) been solidly established, but:

\- our models lack any real predictive ability w.r.t. future climate, except
to say "interesting stuff will happen."

\- catastrophic climate change happens regardless of human input

Given the above two points I'm unconvinced that there's any AGW-based argument
for legislation. Argument based on atmospheric pollution harming human life?
Sure.

Instead, we should be focusing on growing our technological and academic
capacity towards climate engineering. Regardless of what AGW brings, at some
point in our history, we will need to tweak the climate to survive.

------
revscat
This is only true if you do not factor in the longer-term costs of carbon
emissions. Those emissions will eventually need to be dealt with, and the
costs will be substantial. If those costs are addressed today via tax
subsidies for zero-emissions vehicles then the future costs will be lower.

It is an "ounce of prevention" thing.

~~~
altoz
"...the costs will be substantial..."

This is an article of faith for the green crowd. I and many others are
skeptical of such a claim, especially when temperatures have dropped despite
higher emissions the past 10 years.

~~~
Afforess
>This is an article of faith for the green crowd. I and many others are
skeptical of such a claim, especially when temperatures have dropped despite
higher emissions the past 10 years.

Am I reading the graph wrong?

<http://data.giss.nasa.gov/gistemp/graphs_v3/Fig.A.gif>

Looks like a rise to me.

Source: <http://data.giss.nasa.gov/gistemp/graphs_v3/>

~~~
glenra
The quote you're responding to said "past 10 years". Strictly speaking, that's
accurate. You can play with the chart here - this is a chart of an average of
several global temperature series over exactly the last 120 months, with
trendline:

[http://www.woodfortrees.org/plot/wti/last:120/plot/wti/last:...](http://www.woodfortrees.org/plot/wti/last:120/plot/wti/last:120/trend/plot/wti/last:120)

------
jshen
It's rather odd to hear Cato complaining about tax breaks. It's even odder to
hear them talk about one persons tax break as another persons tax burden. They
seem to be very selective with where they apply this logic.

~~~
Kequc
What a rag. Here they are talking about the Keystone Pipeline, a proposed way
of pumping oil in north america to the shore where it can be exported at a
profit. They cite job creation as a benefit of public funding for the
pipeline, as well as the environment.

I can't believe this is on the front page of hacker news.

<http://www.cato.org/blog/climate-impact-keystone-xl-pipeline>

~~~
jcampbell1
> They cite job creation as a benefit of public funding for the pipeline

That is not stated or implied anywhere in the linked article. The Keystone
Pipeline is a private project.

~~~
Kequc
you're right, apologies for that

------
mncolinlee
As I pointed out in the other thread[1], this argument is pretty silly as the
Cato Institute and most electric car critics have openly advocated subsidies
for the industries they support. These "subsidies" are paid for by companies
who CHOSE to pay them to continue participation in the California market
without producing zero emissions vehicles. In the minds of these critics, the
fact that Tesla is a niche startup today in a small, renewable transportation
sector changes the entire dynamic about the deal.

One needs look no further than Cato's full-throated endorsement of oil
subsidies[2]. Despite admitting externalities exist, they put their stamp of
endorsement on oil industry subsidies while opposing far smaller industry-paid
subsidies for Tesla, a company whose product harms profits of oil companies.

[1] <https://news.ycombinator.com/item?id=5753993> [2]
[http://www.cato.org/publications/policy-analysis/big-oil-
pub...](http://www.cato.org/publications/policy-analysis/big-oil-public-
trough-examination-petroleum-subsidies)

~~~
enoch_r
Your Cato link is _not_ a "full-throated endorsement of oil subsidies," it is
a discussion of whether government interventions in energy markets benefit oil
companies on net, and if you'd done a cursory google search for "Cato oil
subsidies" you would have found that Cato has repeatedly argued _against_
them[1][2].

This sort of thing is why I'm tired of political news on HN.

[1] [http://www.cato.org/publications/commentary/eliminating-
oil-...](http://www.cato.org/publications/commentary/eliminating-oil-
subsidies-two-cheers-president-obama)

[2] [http://www.cato.org/publications/commentary/oil-subsidies-
do...](http://www.cato.org/publications/commentary/oil-subsidies-dock)

~~~
mncolinlee
Cato: "The evidence indicates that, on balance, the oil industry is not a net
beneficiary of government subsidies... The contention that oil consumers do
not pay their fair share of the environmental and national defense costs they
impose on society is dubious. There is little evidence to suggest that the
environmental externalities imposed by oil consumption exceed the taxes and
regulatory costs paid by consumers."

That's about as close as anyone has ever come to fully-backing oil subsidies.
They're not terribly popular in normal political discourse. The piece unveils
a dubious argument that evades the fact that taxes on oil are used to finance
the cost of roads and highways. They do not serve to mitigate national defense
costs, environmental damages, or health costs caused by burning fossil fuels,
extracting them, or refining them. These costs are borne mostly as hidden
externalities paid by government and consumers.

~~~
pod4369
How in the world is that a "full-throated endorsement of oil subsidies"?

Also, claiming that "That's about as close as anyone has ever come to fully-
backing oil subsidies" is quite laughable.

~~~
mncolinlee
If you have been in politics as long as I have, you would know that an
argument which is designed entirely to downplay the risks and costs of a
policy is an endorsement of the same policy.

------
aaronbrethorst
The total cost of the referenced program in California is $55.7m spread over
four years, or just under $14m per year[1]. In a budget that measures into the
_billions_ of dollars per year, that's nothing.

[1] [http://energycenter.org/index.php/incentive-
programs/clean-v...](http://energycenter.org/index.php/incentive-
programs/clean-vehicle-rebate-project)

~~~
danielweber
I'm not saying the program should end, but your argument is how we get death
by 1000 paper cuts.

~~~
aaronbrethorst
I'm guessing we probably disagree on the sequester too, then, huh?

------
nawitus
The article should take sales tax into consideration, ranging from 3 to 8
percent, while the average is 5.75%[1]. That's pretty close to the $7.5k
federal taxback bonus.

Another critique of the article is that Leaf's sales numbers are not good
evidence for future sales. Electric cars will make a lot more sense when fast
charge stations become more commonplace. It's like saying (in 2004 or
something) that nobody ever wants to buy a smartphone because there's only a
few apps available.

1\. [http://auto.howstuffworks.com/under-the-hood/cost-of-car-
own...](http://auto.howstuffworks.com/under-the-hood/cost-of-car-
ownership/cost-of-taxes-on-your-car1.htm)

------
drawkbox
The subsidies and tax breaks are minuscule to the subsidies of oil companies
which cato backs. I wish we could just tax all companies equally and much much
lower. But we should always give breaks to encourage competition.

~~~
jcampbell1
What? Here is Cato praising Obama for proposing the end of oil subsidies:

[http://www.cato.org/publications/commentary/eliminating-
oil-...](http://www.cato.org/publications/commentary/eliminating-oil-
subsidies-two-cheers-president-obama)

I tend to disagree with Cato's brand of libertarianism, but they are
consistent.

~~~
drawkbox
Well I stand corrected, had not seen that. Glad they posted that. However
still the breaks for electric/green tech is still not a comparison at all and
oil/gas/manufacturing are well established. I'd be for kicking taxes down to
the subsidy levels so there aren't any major costs to remove it, just a tax
break for other industrie. It would be great for revenues for companies for a
while and they might pay their taxes actually. In a perfect world taxes would
be 10% maybe and companies could bring their money back to the US.

------
stephengillie
This article was written with an edge. I would not be surprised if the author
is among the people who consider taxation to be theft.

I wonder how he felt about Lee Iacoca getting Congress to bail out Chrysler in
the 80s.

~~~
jjtheblunt
Was the author even born then?

~~~
tlrobinson
I'd guess "yes": <http://www.cato.org/people/patrick-michaels>

------
RestlessMind
> but it would be more comfort if we weren’t all compelled—completely against
> most of our wills—to shell out around somewhere around $10K

Tax subsidies are decided by legislators who are elected by us. So the claim -
"completely against most of our wills" - is utterly false.

~~~
jessriedel
Doesn't have to be. Legislators elected with small majorities can easily vote
for legislation that is supported by less than 50% of the constituency.

~~~
RestlessMind
Its possible in one of the following cases: 1\. The issue is insignificant
enough (or else, opponent would hammer the electorate with ads highlighting
this issue) so voters don't care about it. 2\. The issue comes up after the
election and stance of candidates regarding that is not known before one
votes. #2 is not applicable since green energy / electric cars are pretty old
issues and voters (should) know what their candidates think about those. #1
might be more applicable, in which case the original point in article
("against most of our wills") is still moot - voters simply don't care about
this as much as they care about some other stuff.

~~~
icebraining
The fact that there are more important issues doesn't mean voters don't care,
it just means the system is unfit to take them into account.

~~~
RestlessMind
If majority of voters care about some not-insignificant issue, current system
will ensure that its taken into account. And thats my main point - this issue
is simply not significant for a majority of the population.

~~~
icebraining
_If majority of voters care about some not-insignificant issue, current system
will ensure that its taken into account._

Well, that's your claim, but not everyone agrees.

------
andrewtbham
Elon Musk says the ZEV credits are likely to go to 0 by Q4. The car is also
projected to 25% gross margins in Q4. Battery energy density and cost improve
about 7-8% each year and there will be a $30k car in 2016 or 2017.

I suspect the oil and car industries and their PR departments will push hard
to repeal the tax credit as they are in this article. Also expect Tesla will
push hard to tax carbon emitting vehicles. Should make for plenty link bait
like this.

~~~
dm2
There will be a tipping point thought. Hopefully sooner rather than later, the
major auto companies are going to have to jump on board with the electric
vehicle industry and fully support EVs.

What year do you think the last ICE vehicle will be sold in the US? At some
point, gas stations will stop selling gasoline. I honestly don't know if it'll
be in 10 years or 50 years.

~~~
andrewtbham
I think within 10 years we will see an explosion in the popularity of EVs.
However, it's possible as EVs increase in popularity, Lithium prices could go
up and gasoline prices could fall.

------
salimmadjd
Putting Cato's credibility and biased views aside, this article it's first of
its kind that doesn't just republish Tesla's PR as news! You can view Tesla as
tax on the middle class. You can argue most middle class families will not buy
a Tesla but they are paying the rich to buy one. I think the tax credit should
be tied to income.

------
jasonkolb
". Then there are generous state subsidies ($2500 in California, $4000 in
Illinois—the bluer the state, the more the taxpayers get gouged)"

I live here, and I am no fan of Illinois, but the sales tax rate is 6.25 on
autos right now, which mean the state makes back 98% of that subsidy every
time a Tesla is sold.

------
quotha
They should get those tax credits for driving the car - not just buying it -
cause then they help lower the cost of gas for us all!

~~~
sp332
They already get an effective tax break by not paying gas taxes.

~~~
eatmyshorts
So, if I get you correctly, you're saying they get a tax break by not paying
taxes on something they don't use? Why stop with them not paying gas taxes?
Since they are American-built, they also don't pay import taxes. They aren't
luxury yachts, so they don't need to pay a luxury yacht tax, either. Why,
there's all sorts of taxes they don't pay.

Claiming they get an effective tax break by not paying gas taxes is absurd.

~~~
jaynos
Gas taxes are used to build and maintain the roads that electric cars drive
on. Electric car owners reap those benefits without paying the gas tax.

That said, the CATO article was beyond biased for all the reasons already
mentioned.

------
beat
First draw your curve, then plot your data.

Cato isn't so much a "conservative think tank" as a mouthpiece for certain
established financial interests, such as the oil industry. So Cato's job is
not to produce facts and logic, but rather to produce propaganda that bears a
surface resemblance to facts and logic, in order to put a thumb on the
political scales.

Tesla is what we in our little corner here call "disruptive innovation" - in
this case, disrupting the automotive sector's dependence on the oil industry.
This is a technically difficult and very expensive proposition, in the face of
some extremely powerful vested interests at both the national level (Cato
Institute for oil) and the local level (mandatory dealer laws in Texas, etc).
Tesla is tackling this in part by relying on tax subsidies to consumers, based
on the public good.

Now, if tax subsidies benefit Cato's backers, then Cato is all for tax
subsidies. But if tax subsidies threaten their backers, then Cato is suddenly
all righteous about "free markets". Cato doesn't give a crap about free
markets. And their backers are scared... Detroit and other non-US auto
manufacturers are sorta-neutral third parties here. They're not in the oil
business, they're in the car manufacturing business. If Tesla's disruption is
successful, they'd much rather adopt Tesla's model and cut Big Oil loose, than
go out of business manufacturing dinosaur-fart burners.

So this post is mostly interesting in that grumbling about consumer tax
subsidies on high-end luxury goods is the BEST they have.

~~~
icebraining
Well, the fact that they may be hypocrites doesn't make them wrong, but a look
at their arguments for tax breaks on the oil industry could help better
understand where they're coming from. Do you have some links to those? Thanks.

------
vec
> As the company sold 5,000 cars in the quarter, though, $13,600 per car was
> paid by other manufacturers, who are going to pass at least some of that
> cost on to buyers of their products.

The article compares pollution credits to bribery and a shakedown, but I don't
quite get the case. Tesla doesn't get them for free, it actually has to
produce low emission vehicles. And no one is forcing Honda to buy them from
Tesla specifically (or technically at all). Honda isn't prepared to produce
low emission cars, so the carbon credits market means they don't have to, so
long as they're willing to bear the external costs in some other way.

Pollution credits are a relatively lassiez faire mechanism for converting a
specific type of external costs to internal ones, and they seem to function
pretty well. Not a leading question, but I'm honestly curious. What is the
conservative or libertarian argument against them, and what approach would
conservatives or libertarians prefer we took to the problem of large
externalities?

~~~
icebraining
Well, there are multiple capitalist libertarian schools of thought, not to
mention left-libertarian, but from what I've understood the Rothbardian
position (which, I believe, is pretty hardcore in general) to be, it boils
down to:

1\. It's impossible to calculate the true costs of an externality like "air
pollution", therefore any number that the government chooses is arbitrary and
unjust.

2\. When an externality can be defined concretely as in "Action by person A
harms person B or her/his property", then B can sue A to stop it and get
compensated (e.g., a factory dumping chemicals to someone's land).

3\. On the other hand, it's unreasonable for people to individually identify
and sue car owners, therefore the best solution is to privatize roads, and
then the road owner would be liable for the pollution, so he would have an
incentive to raise prices or ban high polluting cars.

That said, this is not necessarily the position of the CATO Institute; I'm not
sure where they stand.

------
ptlu
The author blames a company which is able to take advantage of laws rather
than blaming the lawmakers for creating such laws.

1\. Tesla is able to sell carbon credits it earns from selling its cars. Due
to California law, other car companies must buy these credits to offset the
sale of their fossil fuel burning cars. 2\. Its customers get a lower price on
their vehicles due to tax-credits for electric vehicles.

These are the laws in place which help a company like Tesla grow.

I would imagine these laws are designed to do exactly what they are doing,
which is helping an electric car manufacture grow and compete in a world
dominated by vehicles using fossil fuels.

The hidden argument he is making is that fossil fuels and climate change
surely cost us nothing and should not be included at all in the cost of items
which generate a third of CO2 emissions.

------
kiba
The tax credit and carbon dioxide emission credits compensate for the negative
externality of petrochemical products.

------
mchanson
Cause you know the big three never got any government money...

~~~
uvdiv
Who do you think the Cato Institute is?

<https://www.google.com/search?q=auto+bailout+site:cato.org>

------
steveklabnik
The Cato institute is not exactly without bias. Doesn't mean they're wrong,
just something to think about as you read this piece.

------
crazcarl
It doesn't seem all that strange or bad that the non-tesla car producers are
passing along the costs to the consumer. If a company is putting their own
profits into R&D for a new product they are developing, is that not same thing
as passing on the costs to the consumer?

Except in this case, Honda is paying for Tesla's R&D instead of their own.

~~~
icebraining
I'm pretty sure their disagreement is with the exceptional nature that you
pointed out.

------
uh_oh
They mentioned Honda, of all companies!

[http://www.sourcewatch.org/index.php?title=Cato_Institute#Co...](http://www.sourcewatch.org/index.php?title=Cato_Institute#Corporate_sponsors)

American Petroleum Institute, ExxonMobil, General Motors, Honda North America,
Toyota Motor Corporation, Volkswagen of America

------
trotskylives
Comparing apples to apples, I would figure out what % of the US military
budget is spent defending oil supplies for gas powered cars which is another
unseen subsidy.

------
Shorel
Save some money on a very short term.

I'll put my hopes in Tesla. Long term thinking is where the future becomes
reality.

------
jcampbell1
The argument is deeply flawed, but not because libertarianism is inconsistent.

Reducing dependency on petroleum is a trillion dollar issue. Tesla has made
some major innovations in this area, including the multi-cell floorpan
battery, and all the money they have spent buying batteries is used by
suppliers to innovate on making them cheaper. Innovation only has to be done
once, and right now every car company on the planet has Model S's on racks and
are doing engineering tear downs. Tesla's engineering will probably pay
dividends to the world in the amount of billions over the next 30 years. A few
hundred million in state subsidies seems a small price to pay.

From the article: > About the only way they can do this (barring
some—currently remote—major battery technology improvements) is by cutting the
vehicle’s range.

It is completely lost on the author that one reason batteries get better (both
directly and indirectly) is because Tesla builds cars.

