Electric vehicle manufacturers are reckoning with the changing tax credit format, buses are getting a small boost nationwide, and apparently we all stopped driving right when gas prices were becoming normal again. All that and more in The Morning Shift for Tuesday, August 16, 2022.
1st Gear: Going, Going, Gone
When President Biden signs the Inflation Reduction Act into law today, those who were expecting to save a chunk of change on their forthcoming electric vehicles may find themselves suddenly on the hook for about $7,500 more than they were planning, depending on the make and model. Rivian and Lucid are among the brands scrambling to ensure their reservation holders “lock in” those credits before it’s too late. From Automotive News:
Before the new regulations take effect, Rivian said, the existing credit can be locked in. The automaker referred to the credit by its IRS tax code, IRC 30D. The current EV credits have no price limit for vehicles and no income cap for buyers.
“Buyers who have a ‘written binding contract’ to purchase a qualified EV before the Inflation Reduction Act becomes law will be able to apply under the current IRC 30D tax requirements,” Rivian said. The EV startup provided a link for customers interested in signing a contract.
Lucid also said last week that it is “exploring opportunities to invite reservation holders to confirm their orders now in order to keep eligibility for current incentives.” Some reservation holders have posted online their email invitations from Lucid to sign a binding contract and lock in the tax credit.
As you’d imagine, Rivian is already sitting on a ton of preorders, and Lucid’s got quite a few as well. Provided many of those customers with reservations sign binding contracts, the startup truck maker will be working through vehicles with legacy credits applied for the next several years:
Rivian said this month it has a preorder backlog of about 98,000, with this year’s production estimated at 25,000 vehicles. Lucid said it has about 37,000 reservations and will build between 6,000 and 7,000 vehicles this year.
None of this applies to Tesla, of course, because Tesla has long since sold past its initial 200,000 vehicles under the current, soon-to-be-obsolete credits scheme. Tesla is one of the few automakers that should benefit from the new plan. Good for Tesla, it could really use a break.
Complicating all of this is that nobody knows exactly when buyers won’t be able to qualify for the old credits anymore:
Among auto industry analysts, there remains some confusion over when the current credits expire.
Some believe they will be available until the end of the year for vehicles made in North America based on language in the new law. Others suggest they will end with Biden’s signature.
The new law includes a “transition rule.” It states that “before the date of enactment of this Act,” a taxpayer who “purchased, or entered into a written binding contract to purchase, a new qualified plug-in electric drive motor vehicle” would qualify for the current credit.
It should only be about several hours before we know for sure!
2nd Gear: A Billion-Plus for Buses
The Federal Transit Administration announced Tuesday that it will award a total of $1.66 billion to cities in 48 states to fund new buses, most of which will produce zero emissions. From Reuters:
The U.S. Transportation Department said on Tuesday it is awarding $1.66 billion in grants to cities and states to buy 1,800 buses in a shift to cleaner, lower-emission travel.
The grants will fund 1,100 zero-emission buses, which will nearly double the existing 1,300 zero-emission transit buses, the White House said.
The funding for 150 bus fleets from the $1 trillion 2021 infrastructure law will help cities and states retire older polluting buses.
The funding will also buy 700 buses, which include hybrid-electric, natural gas and diesel models. “These grants are going to be used in every corner of this country,” White House infrastructure coordinator Mitch Landrieu told reporters.
That may seem like a lot, and it’s a worthwhile step in the right direction — but context is important. From the Washington Post:
New York’s Metropolitan Transportation Authority, the nation’s largest transit agency, received $116 million to help pay for up to 230 electric buses, which is 4 percent of its fleet. L.A. Metro was awarded $104 million to replace 160 natural-gas-powered buses with electric models.
Four percent! For other, smaller services around the country, the grant will pick up the tab for one bus:
Smaller agencies also will benefit. Fernandez said a $115,000 award will go to the Pyramid Lake Paiute Tribe in Nevada. The money will cover a single bus, but Fernandez said tribal leaders told federal officials the money will mean more reliable service.
“Buying that bus will mean fewer times they have to cancel routes on the 742 square miles of the reservation, which means that more people will be able to ride more often to places and get to opportunities,” she said.
In total, the FTA received more than 500 applications for funding, totaling almost $8 billion. Out of that, only 150 were approved.
3rd Gear: BMW: Fatal Crash in Germany Didn’t Involve AV
On Monday, a BMW iX in Germany drove into oncoming traffic, causing a four-car crash that killed a woman and injured nine others. Police initially reported that the crash involved an “autonomous test vehicle,” though BMW has stated that was not the case. From Reuters:
BMW confirmed that the crash had involved one of its models but said the car in question had no self-driving capabilities.
The vehicle is equipped with Level 2 driver assistance systems, in which case “the driver always remains responsible”, a spokesperson said in an emailed statement.
Such systems can brake automatically, accelerate and, unlike Level 1 systems, take over steering, according to BMW’s website.
The carmaker said it was in close contact with the authorities to establish the exact circumstances of the crash.
This was a vehicle capable of only Level 2 autonomy, like every single “self-driving” car available to consumers in the U.S. Of course, that’s not to say the individual behind the wheel wasn’t expecting the iX to do more than it was able to, and at this time it’s still unclear what driver assistance features were active at the time of the collision.
4th Gear: Fashion Exec Joins GM Board of Directors
Joanne Crevoiserat, who heads luxury fashion names including Kate Spade and Coach, is General Motors’ newest board member. From Automotive News:
Crevoiserat, 58, is a member of the Business Roundtable, a group of chief executives that weigh in on policy issues affecting the economy, along with GM CEO Mary Barra.
Crevoiserat oversees strategy for Tapestry Inc., including its acceleration program designed to drive sales and profit growth by making the company more consumer-centric, digital, data-driven, leaner and responsible, according to her Business Roundtable bio.
“Joanne’s approach to driving growth, which focuses on integrating data-driven insights to elevate the consumer experience, will be invaluable to GM as we launch our all-electric portfolio, introduce additional software-based services, and scale businesses in new markets,” Barra said in a statement Tuesday. “As we accelerate our transformation, we have an incredible opportunity to drive loyalty for our iconic brands and attract new customers, which is exactly what Joanne has done at Tapestry.”
Corporate transformation has reportedly been Crevoiserat’s specialty in recent years, having guided Abercrombie & Fitch, Kohl’s and Walmart — so it’s little wonder why GM is seeking her input.
5th Gear: Gas Prices Falling, Less People Driving
The cost of fuel might be slowly coming back down to Earth, but that hasn’t resulted in people driving more this past summer. Not yet, anyway. Financial Times quoted travel data over the past two months, as prices at the pump have slid:
The US Energy Information Administration, a government statistics agency, has estimated petrol demand averaged 8.9mn barrels a day over the four weeks to August 5, marginally less than one month earlier and 6 per cent below the same period last year, when prices were $3 a gallon. Last week the EIA trimmed its full-year forecast for petrol consumption.
Apparently, we all started driving less in June, which is right around the time gas cost the most:
Travel data from the US Federal Highway Administration showed that traffic volumes hit a wall in June after consistently outstripping 2021 levels in the first five months of the year. Traffic in June, the latest month for which data were available, was 1.7 per cent — or 4.8bn vehicle miles — lower than in June 2021. In California, where petrol prices had reached above $6 a gallon, the decline was 3.5 per cent.
AAA, the motorist group, said a survey found that about two-thirds of drivers had changed their habits since March due to high prices — largely by cutting back the amount they drive and combining errands. At $3.96 a gallon on Monday, petrol prices were down by more than a fifth from their mid-June peak and below $4 for the first time in nearly six months, according to AAA.
As much as gas being as expensive as it has been in 2022 sucks, it’s sort of nice to finally get a real-world reminder that there are consequences to the untenable prices of things. Sometimes, anyway.
Reverse: You Know This One
And if you don’t, give this a read!
Neutral: Have You Seen a Reatta Lately?
I saw not one but two Buick Reattae on two consecutive days over the weekend. They weren’t even the same Reatta — these were in different parts of Pennsylvania! Incredible. The self-ascribed opulence of GM’s fancy brands in the ’80s always makes me smile, and so too does the Reatta. To be fair, it was very attractive in profile.