Companies seeking to expand operations often face numerous challenges. One such challenge is raising the capital necessary to make such an expansion possible. When a company sees an expansion opportunity but does not have the financial resources on hand or readily available (cash, available bank debt, etc.) to make it happen, other avenues of financing must often be considered, including potentially taking on additional investors. This can be particularly challenging where a company is not in the habit of actively seeking outside investment and, as a result, lacks the institutional knowledge and contacts to identify and court external investors.
Recently, Representative Peter Welch of Vermont introduced legislation restructuring the planned phase out for the current electric vehicle $7500 federal tax credit. As has been discussed in great detail in this blog, the current electric vehicle incentives begin to phase out individually for each manufacturer when that manufacturer delivers its 200,000th electric vehicle. As a policy mechanism, the federal electric vehicle tax incentives positively influence both consumer and automotive manufacturer market behavior. When implemented correctly, consumers will shift toward purchasing eco-friendly electric vehicles and manufacturers will ramp up electric vehicle research and development, ultimately leading to higher production volumes. By combining the benefits to both consumers and manufacturers, these incentives can build a trend toward a growing and ultimately sustainable electric vehicle market devoid of any external incentives.
The Manufacturing Industry Advisor team hopes you had a safe and happy 4th of July.
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Michigan, the cradle of the American automotive industry, has made no secret of its desire to remain an industry leader in mobility as the industry continues to evolve. On May 30, 2018, Michigan announced a new $8 Million Michigan Mobility Challenge grant that would be available to fund new mobility projects across the state. The “mobility industry” is a term of art, the exact definition of which often depends on who is being asked. Generally speaking, the term is used to refer to a variety of products and services involved in the business of how people get around, including everything from traditional automotive manufacturers, to ride hailing apps, to autonomous public transportation.
Fully connected and self-driving cars are here. Improvements to alternative energy sources for vehicles continue to advance at a rapid pace. The automotive industry is potentially facing dramatic new legal and regulatory challenges. And the road ahead shows no signs of slowing down.