I await its arrival with bait-like breath…

Back in the late 1980s, I was fortunate enough to ride a “S curve.” I was in the computer-aided design software field, employed by a software company as an Sales Engineer. I was the technical half of a sales team. The software we sold was revolutionary and ended up redefining 3D design. When I started the job, the product was relatively unknown. However, demonstrations of its capabilities blew engineers away. Of course, many were jaded, by years of “smoke-and-mirrors” in software demonstrations. Their experience caused them to fear what they weren’t seeing (i.e. possible bugs or limitations). Adoption was slow at first.

The CEO spoke to the sales teams about “S curves of innovation.” “Basically,” he said, “when a new, revolutionary product debuts, sales start off slowly. As more and more people get exposed to it, the ‘first adopters,’ buy first. These are the people that see where this new product can go, in its development, and want to jump on board as soon as they see it. Next, as those people gain experience in the new product, the tell their friends about it. Other sign up to see a demonstration. The sales curve starts to change. What was a gradual adoption of the technology, becomes a massive uptick, as the masses begin to see what the early adopters grasped from the beginning and jump on the bandwagon. As the years move forward, sales begin to slow down, either because everyone that needs the product has acquired it or a new competition (with a newer technology) enters the market and starts its own S curve.”

S curve

I said I was fortunate, because those who sell a new product, which is at the beginning of the steep increase in sales, become valuable personnel. In just three years, my income tripled! CEOs of companies attempted to recruit me, due to my in-depth understanding of this bold, new product. Life was exceedingly good.

Now I’m starting to see the evidence that I’m about to surf another wave. The evidence first appears, when you look at cumulative sales. Here’s my cumulative plug-in vehicle sales:Cumulative

I can definitely see the slope of the curve taking off. Looking at the S curve chart above, I’m thinking we may be around the 7 or 8 value, on the X (horizontal) axis of the chart. If so, that means there’s a very wild ride coming up very soon. Dealerships who failed to prepare will be left behind and, in my opinion, many will fail to survive. Back in my software days, I saw the demise of many venerated software companies. They had been leaders, in their day, but had failed to innovate. The just coasted on their past successes.

Innovation is not easy. Overcoming market inertia is not easy. But it happens every day.

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A bit of advice here: In your career, YOU are the product. Failure to continually upgrade your skills will destroy you in the modern job market. We no longer need typewriter designers, whalers, livery stables, etc. I started my career in the oilfield manufacturing arena, as a machinist. I became a CNC machine operator (a manufacturing machine controlled by a computer program) and then learned to program those machines. I taught others what I knew and I became a manger. I was fat and happy.

Then, the price of oil collapsed. Houston was devastated. I had to move 250 miles away to find work. My income plummeted.

But I learned my lesson. I had grown my skills, butHawking quote only as they pertained to my specific industry. When that industry collapsed, I was financially damaged. Take note oilfield workers, coal miners, etc: Renewable energy careers are on the upswing just as your career is on the downswing. Have you read much about it? Taken any courses to learn about it? Are you fat and happy, like I was? I highly recommend reading “Who Moved My Cheese?”

I’ve been talking about a tipping point for three years now. As I saw things, the “stickiness” of plug-in vehicles, or the strong likelihood that a plug-in vehicle owner would never go back to a solely gasoline-powered vehicle, as a building swell, of which most people were unaware.

As I mentioned in my February 2018 sales figures, in my 4-1/2 years as an “Evangelist,” I usually saw zero plug-in vehicle sales in January and February. Last year was the first exception. I sold one in each of those two months that year.

This year, I sold 3 in January and 4 in February.

And it gets better from there.

So far this month, I have sold 3 plug-ins and have commitments on another SIX for a total of NINE and it’s not even the midpoint of the month yet!!! These are solid deals. We are just waiting for the vehicles to arrive. The most I’ve ever sold in March was five Volts in 2016, when the 2nd generation Volts started arriving in Texas (the 2016 models were not available in Texas). Other than that one standout month, my best March was one plug-in.

What’s going on here?!?!?

Plug-in salesThe plug-in Chevys are not advertised in Texas (where I am located). Texans are proud of their oil heritage and by-and-large think of EVs as a fad (they’re wrong). Chevy dealers have goals established by General Motors for sales of various vehicle types. Classic Chevrolet has consistently hit around 400% of the goals. In my estimation, most Chevy dealers in Texas won’t hit the target we have, but things are heating up. Here’s some interesting info:

  • I trade vehicles with other Chevy dealers, up to 250 miles away, to get the exact configuration my customer desires (or as close as possible). In the past, the other dealer always wanted a Silverado, Camaro, Tahoe or Corvette in trade for their Bolt EV or Volt. More and more often, they will ask for a plug-in vehicle to replace the plug-in vehicle I’m getting from them.
  • Fewer and fewer dealers have any available for trade and some have been reluctant to let go of their plug-in vehicles.
  • Dealers are now contacting us to trade for one of our plug-ins! This used to never happen!

It may be the optimist in me, but the boost in what would be a lackluster time for plug-in sales, has *almost* convinced me that the wave has truly started, in an indisputable way. Is 2018 the year we’ll look back on, as the year that plug-in vehicles began to roar?

I’ve been preparing for this for five years now. I’m ready.

Taxing rumor mill…

CongressSeveral sites are quoting an unnamed Republican and announcing that the Federal Income Tax Credit for plug-in vehicles will be retained in the “reconciliation” bill.

For those unfamiliar with how our legislative process works, here’s a quick intro:

  • Lobbyist proposes a change to current law or a new law
  • Trench-coat-garbed smoking men meet in darkened public parking garage to exchange money and verbatim text of proposed law.
  • Congressperson enters new law as a bill.

(just kidding…I hope…)

  • The Senate and House both propose bills, in this case a tax reform bill.
  • Both the House and Senate committees debate and pass (or fail to pass) the bill from committee.
  • The bill is heard by the respective chamber and the entire chamber votes on the bill.
  • If the bills pass both the House and the Senate, someone has to iron out any differences, so that a singular, unified bill goes to the President’s desk for signature. This is done by a “reconciliation committee,” that makes compromises needed to assure passage through both chambers.
  • Both chambers vote on the reconciled bill.
  • If the reconciled bill passes both chambers, the bill is sent to the President for signature, making the bill the law of the land, or veto.

The big news for the last several weeks, in the EV world, is the House of Representatives had a clause, in their version of the tax reform bill, that eliminated the income tax credit, effective this December 31st. The Senate version kept the tax credit in place.

The first rumor I saw was that the reconciled bill contained the House’s wording, eliminating the tax credit.

Now, the latest rumor is exactly the opposite. Many sites are proclaiming the tax credit is saved.

My advice is unchanged: If you were considering the purchase or lease of a plug-in vehicle and the income tax credit was a major factor in the decision, do the following:

  • Do NOT trust. Verify. If there is no public announcement before January 1st, consider pulling the trigger on your acquisition instead of taking the risk of not getting the tax credit.
  • KEEP up the calls, emails, letters, tweets, Facebook posts, petitions, etc to your elected official up. Do NOT release the pressure, until we know the tax credit has been preserved!
  • Of course, if it is announced the tax credit is ending, I recommend taking advantage of it before year’s end. I wish I could do the same, but my current Volt lease doesn’t end until March 2019.
  • Of course, if both houses prematurely end the tax credit, vote against every single incumbent, regardless of party, in the next couple elections. Only then, will they remember who their bosses are and that they are in a subservient role.

Dark clouds on the horizon.

IRS logoAccording to an article posted by Green Car Reports today, the Federal Income Tax Credit for plug-in vehicles may be in danger of being eliminated prematurely. Based on the picks that have been made to head up departments like the EPA, Department of Energy, etc, this could be a very real threat.

There are two courses of action:

  • If you’ve been considering a plug-in vehicle, you may want to purchase or lease one before the end 2017.
  • If you’re opposed to this action, contact your elected representative and make your voice heard!

Tax planning

IRS logoAs we’re about to enter the final quarter of the year, thoughts turn to the holidays and then…tax season. This year and next planning is especially important. The three top producers of plug-in vehicles, that qualify for the full $7,500 Federal Income Tax Credit for all-electric and plug-in hybrid vehicles will probably hit their 200,000th unit sale in 2018. Depending on the modeling you employ, this could start happening as early as mid-year or closer to the end of 2018.

For the uninitiated, there is an income tax credit for those who buy (not lease) all-electric and plug-in hybrid vehicles. But not all vehicles get the same tax credit. The amount of the tax credit is determined by the size of the battery pack. Also, it is important to understand the difference between a tax deduction (like the deduction for having a child, property taxes paid or mortgage interest paid) and a tax credit.

A tax deduction is a deduction off your income, so if you have a deduction, with a value of $2,000, it reduces your taxes by the deduction multiplied by your tax rate. It’s a little more complicated than that, due to how tax brackets affect the calculations, but this example is close enough for horseshoes or hand grenades. If your tax bracket is 25%, the tax deduction of $2,000 only reduces the taxes you owe by $500 ($2,000 X 25%).

A tax credit actually reduces your income tax by the stated amount of the credit. So, in the example above we used a value of $2,000. A tax credit would of that amount would reduce your taxes by $2,000. Easy, peasy. There are some other considerations, so consult your tax preparer.

The plug-in vehicle income tax credit phases out, for a manufacturer’s vehicles, Once they have their 200,000th sale. Once the 200,000 mark is hit, the countdown begins. For the quarter, in which the 200,000th vehicle is sold, and the following quarter, that manufacturer’s vehicles still qualify for the entire $7,500. Qualifying vehicles from that manufacturer are eligible for 50 percent of the credit ($3,750) if purchased in the first two quarters after the end of the $7,500 tax credit mentioned above. The tax credit then drops to 25 percent ($1,875) of the original amount, if purchased in the third or fourth quarter of the phase-out period.  After that point, the credit goes away completely.FITC RulesWho are the three manufacturers that will be affected first? They are Nissan (maker of the Leaf), Tesla Motors (maker of the Roadster, Model S, Model X and Model 3) and General Motors, (maker of the Cadillac ELR & CT6, Chevy Volt, Bolt EV and Spark EV).

So, in planning your taxes, if you want to make a purchase in 2017 and collect the tax credit when you file in 2018, you need to be working on that purchase now. If you want to order exactly what you want, it’s too late for a Tesla, since their waiting list is so long. For the current GM models, you should place your order no later than October 15th, as it usually takes eight weeks from order to delivery (depending on dealer allocation). Unfortunately, I do not know what the order cycle is for the newly redesigned Nissan Leaf.

If you want to make a purchase in 2018 and collect the tax credit when you file in 2019, you need to keep an eye on how the manufacturers are each progressing toward the 200,000 vehicle limit. As of last month, it shaped up like this:

  • Tesla Motors – 138,469
  • Nissan – 113,263
  • General Motors (Cadillac and Chevrolet) – 149,649

The Tesla numbers were based on estimates. I will endeavor, over the next year, to keep an eye on this and post my findings here.

Will the EV income tax credit punish the pioneers?

We’re approaching the 7th anniversary of mass-produced plug-in vehicles. Although the $7,500 income tax credit was expected to get 1,000,000 plug-in vehicles on the road quickly, we’re only about 2/3 of the way there, in the U.S. market. As of the end of last month, there were 686,192 plug-in vehicles that had been sold, in the U.S. Every single year, sales have increased. We are on track this year to possibly hit the 200,000 unit mark for the first time in a single year (depending on how December goes). December, due to year end sales promotions and the nearness to tax time, is always a very high production month.

This got me thinking about the pioneers and the stragglers.

The tax credit begins to go away, once a manufacturer sells their 200,000th plug-in vehicle. Three manufacturers are already well over 100,000 units sold: Tesla Motors, General Motors and Nissan. These are the manufacturers that paved the way for all the newcomers we’ve been reading about, with great expectation. However, they may be punished for their risk taking. When these three manufacturers hit the magic 200K units, the newcomers will have a distinct price advantage, as their customers will still be able to get the full tax credit, while the customers of the more established PHEV manufacturers will suddenly lose half the tax credit, a few months later 3/4 of it and shortly after that, all of it.

My question: Was this the strategy of the stragglers?

In the darker places of my mind, I can see a boardroom, where the executives are saying, “Let them take the risk! We can sit back and see how things develop. If PHEVs take off, we’ll be late to the game, but we won’t have paid the price of educating the consumers about them. Better yet, when the other guys lose the tax credit, we’ll have an amazing price advantage over them, giving us a huge leg up, into the market!”

I have complained about the implementation of the tax credit before. There were so many ways it could have been a much better tool to stimulate sales. It probably would have been a better stimulus, if the tax credit had been available until the total sales of all PHEVs in the U.S. reached a benchmark. For instance, if the goal of one million PHEVs had also been used as the end of the tax credit, the incentive would be to ramp up production much more quickly. To the bold would go the spoils! Stragglers would have the same tax credit available, but by dragging their feet, fewer of their vehicles would have qualified for it, because the pioneers would have gobbled much of it up. There would have been a race to produce quickly. Instead, we seem to have incentivized caution and failure to innovate.

I’m proud of the risks taken by the Big Three of PHEVs, but I am concerned about how they’ll fare, once they lose the tax credit and have to compete with competitors who have prices thousands of dollars lower than what they can successfully provide.

Disclaimer: I have had five Chevy Volts in my household. I love the Volt & Bolt EV (and Spark EV, Cadillac ELR, Tesla Model S, etc) so much, I changed careers to promote them. Part of my concern is definitely self-serving: How will I be able to sell, once the playing field is so badly tilted against me?

National Drive Electric Week 2017 #NDEW2017

It’s that time of year again: It’s National Drive Electric Week! Well…actually, it starts on September 9th and goes through the 17th. As bookends to the week, I will be at the NDEW2017 gathering at Grapevine Mills Mall on Saturday, September 9th. Form 10:00AM until noon, there will be a gathering of plug-in vehicle owners, supporters and the EV-curious. It’s a;ways a good time and I’ll have the Chevy Bolt EV and Volt with me.

On the last day of NDEW2017, Sunday the 17th, I will have Bolt EVs at “Run with the Sun,” in Irving, Texas. At that event, I plan to take people on test drives. There’s nothing like “butts in seats” to prove how great EVs are!Run with the SunI hope to see you at these great events!

Chevrolet’s eAssist Silverados arrive in Texas

eAssist at Electric AveThe 2017 eAssist Silverados have begun arriving. They are all Crew Cab LT Silverados with V8 engines and a battery pack about 1/10 the size of the Volt’s Battery pack. eAssist is a “mild hybrid,” meaning it does not get plugged in, but rather works like a traditional hybrid, like the Hybrid Malibu. eAssist Silverados all come with a tonneau/bed cover and are available in both two wheel drive- and four wheel drive configurations. The transmission is a ten-speed automatic. The EPA mileage estimate is 18 MPG in the city and 24 MPG on the highway, which represents about a 13% increase in efficiency, when compared to V8 Silverados without eAssist.eAssist at Electric Ave