With Teslas and other electric automobiles becoming more and more common on American streets, it can seem as though the future of cars will be electric. And with government fuel economy standards growing ever more strict in an attempt to force the artificial death of internal combustion engines, that march toward electrification may feel all but inevitable. But do consumers really want electric cars or are they just spurred to purchase them by government tax incentives? Now we may know the answer.
Many of Tesla’s critics have claimed that the company never would have been able to survive this long had it not been for government tax credits for electric vehicle purchases. The federal government offered the purchasers of electric vehicles up to $7,500 in tax credits for purchasing an electric vehicle, a subsidy that spurred purchases of Teslas and other electric cars. Those tax credits are phasing out now that Tesla has delivered 200,000 vehicles, so we’ll get to see whether demand for Tesla automobiles remains steady. All indications are that it may not.
Canadian provincial governments offered similar tax incentives to their citizens to purchase electric cars and, now that those tax rebates have been eliminated in Ontario, sales of electric cars have plummeted. In comparison, sales of electric cars in Quebec and British Columbia, where the rebates remain in place, have stayed strong.
That doesn’t bode well for the future of Tesla. Between the expiration of tax credits, increasing amounts of mismanagement within the company, and the prospect of an economic slowdown dampening demand for high-end automobiles, the company is facing a one-two-three confluence of factors that could spell some major difficulties for the company. And with Tesla being the poster child for electric automobiles, its failure could set back the adoption of electric cars and finally get most people to realize that electric cars currently are toys for the urban rich and not something to be foisted on consumers who don’t really want them.
