Despite the stereotype, there are times when car salespeople are straight talkers. And Craig Gutelius is pretty forthright in his opinion that eliminating the federal tax credit on plug-in cars is a bad idea.
Gutelius, the Infiniti general sales manager at Nissan-Infiniti of San Francisco, has been selling cars since 1993. If the $7,500 federal tax credit on electric vehicles goes away — as the House GOP tax bill proposes — it would definitely impact sales, Gutelius says.
"People want to pay less and less for the car, and it just makes everybody suffer," he said. "When you do put something good out there like the rebate that the government offers for driving this car, if you pull it away, [people are] going to expect the dealer to compensate for that. It's terrible."
Gutelius said his dealership sells around five to seven Nissan Leaf EVs a month, and every shopper comes in knowing about the federal incentive.
And that's where the other stereotype of car dealers — eternal optimists — comes in.
If the tax credit goes away, says Gutelius, there is likely to be a rush of people buying new EVs before it expires.
"It'll get people moving, especially if they give a timeline," he said. "You might see a bunch of people come buy it before rather than after.
"We're always hopeful," he said. "It's the car biz. We'll have to wait and see."
That optimism is shared by others in auto sales, not just because of the prospect of near-term rush sales, but also because of some confidence that EVs can retain their allure with certain consumers, even without the subsidy, or that Congress won't get around to stripping the credit.The tax proposal has passed the full House, and the Senate version, which keeps the credit, awaits consideration by that chamber. But many hurdles remain.
"People know that we have the federal tax incentive, but I think a smaller portion of the people are coming in to buy now before the end of the year because they're worried," said Doug Watanabe, Internet director at Burien Nissan in Burien, Wash. "It's there, but I don't think a ton of people are worried about it."
At Nissan of Cool Springs in Franklin, Tenn., about 25 miles from the Leaf factory in Smyrna, a saleswoman who asked not to be identified said that "knowing how our political climate is, until [the tax credit is officially killed], I have no concerns."
A saleswoman at Kool Chevrolet in Grand Rapids, Mich., who also asked not to be identified, said only "unique shoppers" are looking for vehicles such as the Chevy Volt plug-in hybrid and Chevy Bolt EV.
"I don't think the loss of the tax credit will affect them very much," she said, adding that shoppers don't typically ask about the incentives much anymore.
This may be prove to be wishful thinking, if the experience of Georgia is any indication of what happens when an incentive goes away.
Georgia's $2,500 low-emission vehicle tax credit went into effect in 2000, with a zero-emission vehicle credit worth $5,000 starting in 2001. The credits weren't used much until late 2010, when the Nissan Leaf and Chevy Volt went on sale in the U.S.
Both credits disappeared in the middle of 2015, and EV registrations in Georgia took a big dive, said Anne Blair, president of EV Club of the South and clean fuels director at the Southern Alliance for Clean Energy.
EV registrations peaked in 2014 at 10,540 units, Blair said, citing data from IHS Markit. They dropped to 6,846 in 2015 and just 2,549 in 2016.
"We saw the significant decline in sales due to the loss of the state credit," Blair said, "and the federal tax credit could have even more consequences for EV sales in our area" if it's eliminated.
There's an added factor that could affect the nationwide fallout. The three manufacturers that have sold the most plug-in vehicles all are approaching the 200,000-vehicle limit for the full $7,500 federal tax incentive anyway. Once an automaker hits this number, its qualifying vehicles are subject to a reduced tax credit: $3,750 for half a year on a full EV, then $1,875 for the next six months. Then it expires completely.
"Most people have baked into their assumption that the full $7,500 credit was going away for 2018 for the most popular EVs anyway," said Jeff Cohen, who works for charging network operator ChargePoint and is the founder of the Atlanta Electric Vehicle Development Coalition.
Cohen said automakers might try to find ways to squeeze more cost out of their EVs to remain competitive.
"All the automakers have done their pricing thinking that the $7,500 stays in," he said. "So, now, the economists at BMW and Ford and GM and even Tesla will go back and redo their models and figure out what the new pricing is going to be. The OEMs will adjust to the lack of the incentive."
While a BMW or Tesla buyer might be more willing to swallow a higher price, "it's going to be hard for the entry-priced cars to fight," Cohen said, "and these folks at GM and Ford and Nissan are going to have to really think about what this means and how committed they are to the EV market in the absence of the subsidy."
GM and Nissan have signaled no pullback from their EV plans and said they'll push members of Congress to continue the incentive program to help accelerate the adoption of EVs.
Paul Scott was an early advocate of plug-in vehicles. From August 2010 until May 2014, he sold around 500 vehicles as a Leaf specialist at Nissan of Downtown L.A., making him one of the world's top Leaf salespeople for a time.
Looking back at the impact of the tax credit on his customers, he called it "extremely helpful" and said it continues to be helpful today.
"It definitely drove people into the showroom," he said. "Otherwise, they would look at the price online and say, well, I'm just not willing to spend that much for that kind of car.
"A lot of them came in, and they wanted the car for environmental reasons," he said. "Some of them did it because they thought they would save money over gasoline, which is true, and other people came in because they hated the oil companies or the military costs of oil."
The money, though, was often an important part of the deal, he said.
With talk of the tax credit going away, Scott said he has heard from his connections in the EV community that many customers who put down deposits on a Tesla Model 3 now are considering a Chevy Bolt instead. Bolt EVs are available at dealerships now and eligible for the full $7,500 credit, while shoppers face a long wait for the Model 3 that could stretch beyond the availability of the credit.
Scott said people have bought and continue to buy EVs in part because of the tax incentive that helps offset the added cost of such a vehicle, but "as we get closer to parity with a gas car, they will become unnecessary."
"Had there been no tax credits, the industry would be in its infancy still," he said. "Right now, we're a toddler."
