Edge and Odds

The enemy of knowledge is not ignorance, it’s the illusion of knowledge (Stephen Hawking)

It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so (Mark Twain)

Edge and Odds

Invest with smart knowledge and objective odds

NEW$ & VIEW$ (6 JUNE 2014)

THE U.S. ECONOMY KEEPS ON TRUCKING

North American freight shipments and expenditures continued to buck the historic trend and increased again in May. The first five months of 2014 were the
strongest since the end of the great recession. While this seems counter to the dismal GDP reading for the first quarter, which shows a one percent drop or a
contraction in the economy, much of the decrease in GDP can be attributed to declining inventories, slowing exports and weather‐related issues. Many other
economic signs, especially growth in the manufacturing sector, point to an uptick in the five‐year recovery and a continued increase in freight movements.image

May shipment volumes rose 1.0 percent to the highest level since October 2011. This was the fourth month in a row that the number of shipments increased. May shipments were 3.6 percent higher than a year ago and 26.4 percent higher than shipment levels at the end of the 2009 recession.

Capacity problems are being experienced in both the trucking and the rail industries as volumes grow. The impact of productivity‐reducing truck regulations has exacerbated the driver shortage, further limiting capacity despite the strong growth in the size of the truck fleet in 2014.

Freight expenditures climbed up 1.1 percent in May, setting another record high. Spending was 11.2 percent higher than a year ago and 77.7 percent higher than at the recession’s end in 2009. While freight rates are not showing the full effect of tightening capacity (yet), it is unlikely that this situation will continue.

New equipment and drivers have been added to the trucking fleet, and both are increasing costs substantially (the driver shortage is pushing up the cost of recruiting, training and retaining drivers). Freight expenditures are up 11.0 percent since the beginning of the year, which is lower than the 13.1 percent increase in the number of shipments. This indicates that rates are very competitive. Spot market prices have seesawed for the last couple of months ‐ a good indicator of the still somewhat sporadic nature of the capacity problems. (…)

The health of the freight market is a very good indicator of the direction in which the economy is moving. All indications point to moderate growth in freight over the next couple of months, which will bode well for the economy in general. (Cass)

Americans’ Wealth Hits Record as Rich Get Richer

The net worth of U.S. households and nonprofit organizations—the value of homes, stocks and other assets minus debts and other liabilities—rose roughly 2%, or about $1.5 trillion, between January and March to $81.8 trillion, the highest on record, according to a report by the Federal Reserve released Thursday. The figures aren’t adjusted for inflation or population growth.

German Central Bank Lifts GDP Forecast The Bundesbank raised its 2014 growth forecast for Europe’s largest economy, citing stronger domestic demand, but lowered its forecast for inflation amid ultralow rates in the euro zone.

In its semiannual economic projections, the Bundesbank boosted its growth forecast for the German economy in 2014 to 1.9% from a previous estimate of 1.7% in December. The economy will likely expand a further 2.0% in 2015, or 1.8% in calendar-adjusted terms, and then 1.8%, or 1.7% in calendar-adjusted terms, in 2016, the central bank said.

Consumer price inflation in Germany, as measured by the Harmonized Index of Consumer Prices, will only reach 1.1% this year, a downward revision from an earlier forecast of 1.3% in December, the Bundesbank said. Inflation should still pick up again to 1.5% in 2015 and will be 1.9% in 2016, it added.

THE DRAGHI SHOW!
Thumbs up David Tepper: My Fears Have Been ‘Alleviated’ David Tepper, the hedge-fund manager who spooked some investors last month when he said he was “nervous” about the markets, said many of his concerns have been “alleviated” thanks to the ECB’s unorthodox moves.

David Tepper, the hedge-fund manager who spooked some investors last month when he said he was “nervous” about the markets, said many of his concerns have been “alleviated” thanks to the ECB’s unorthodox moves.

Mr. Tepper, who runs $20 billion Appaloosa Management in Short Hills, N.J., struck a cautious note at an investor conference last month. He said he was worried about slow U.S. growth and the risk of a worsening global economy unless the European Central Bank took aggressive action.

Sure enough, the ECB on Thursday reduced interest rates, pushing the deposit rate into negative territory, and announced a series of other measures designed to boost bank lending and keep ultralow inflation from gaining traction.

It all appears to be good enough for Mr. Tepper.

“Bottom line is all of those things alleviated, one by one by one to a certain extent,” Mr. Tepper told CNBC. (…)

The comments mark an about-face for Mr. Tepper, who last month stressed how nervous he was about the markets. “The market is kind of dangerous right now,” he said in May at the annual SALT conference in Las Vegas. “It’s a tough market.”

Mr. Tepper at that time offered a bearish and blunt stance on Europe, describing the ECB as being “really, really behind the curve.”

“They’re waiting, waiting, waiting,” he said. “The ECB better ease in June, I’m nervous.”

The Dow dropped 167 points on May 15, the day after Mr. Tepper made his cautious comments in Las Vegas.

Thumbs up Investors cheer ECB rate cut Stock markets across Europe continued to rise after the central bank took introduced negative rates
Punch The WSJ:Once More Unto the Breach, Dear Draghi

Will all of this work? Count us skeptical. Mr. Draghi may stimulate more bank lending, but a lack of cheap money isn’t Europe’s main economic problem. What Europe really needs is broad and liberalizing economic reform.

Thumbs down Bloomberg: Mario Draghi’s Latest Flop

(…) Granted, the move to a negative interest rate on deposits is historic, as no other big central bank has done this. The cut is so small, however, that its effects are likely to be imperceptible once the drama of the initial announcement has faded. Same goes for the cut in the main policy rate — except in that case the announcement effect was minimal to begin with. The new refinancing operation is worth a try, but it’s small.

The announcement on asset-backed securities was potentially the most valuable — but, as always with the ECB, the key word is “potentially.” The idea here isn’t to embark on Fed-style QE: The European ABS market is too small for that, even if the ECB intended to hold the securities on its balance sheet, which it doesn’t. Rather, the idea is to encourage banks to lend to the euro area’s small and medium-size companies, which are still feeling a severe credit squeeze. By supporting a larger market in asset-backed securities, the ECB can make loans to such borrowers more attractive for banks, thus expanding credit.

To be sure, it’s a good idea — but it isn’t new, and a promise to “intensify preparatory work” doesn’t exactly convey a sense of urgency. At any rate, the preparations aren’t that easy: They require input from other regulators, to ensure that the securities in question would be simple and transparent, rather than becoming a cloak for reckless lending. Draghi said today that the ECB would work with “other relevant institutions” to this effect. Translation: This will take awhile.

Meanwhile, as the euro area flirts with deflation, the ECB continues to revise its inflation forecasts downward. Prices rose just 0.5 percent in the year to May — less than expected. The central bank’s new forecast shows inflation of 0.7 percent this year, 1.1 percent in 2015 and 1.4 percent in 2016. Two years from now, according to these projections, inflation will still be far below the central bank’s benchmark of 2 percent.

This isn’t good enough. The ECB’s new measures, cleverly packaged as they were, fall short of what’s required. Before these announcements were made, Europe needed stronger monetary stimulus. It still does.

Thumbs down FT’s Lex column: Banks and the ECB: everything it takes But how far can banks be pushed to lend?

(…) Lenders hold €120bn of excess liquidity on deposit at the ECB already, at zero rates of interest. Thursday’s 10 bps cut imposes a modest charge of €120m. The brunt will probably be borne by core banks, which have the most cash – the policy is designed to force them to lend it to peripheral peers for higher rates. This may have little impact. But it may deaden fixed-income trading – and thus earnings – as other assets go negative.

Investors in the periphery may applaud the strong-arming, should it lead to rehabilitation of banks’ weakened balance sheets. Another ECB policy announced on Thursday, an offer of €400bn in long-term funding, is aimed at the same target. It is punitive, too: banks must agree to lend more to access funds. But Italian banks pay about 1.9 per cent on average to attract depositors, Morgan Stanley says. A German bank pays 0.7 per cent. Reducing funding costs boosts equity.

That still leaves the stock of bad loans in the eurozone. That is why Italian banks pay up to borrow: they have €160bn in non-performing loans (10 per cent of all loans), and have taken more than their share of the €45bn capital being raised this year amid the Asset Quality Review. Hard to lend more here, even with cheap funds. What is the ECB to do? Buy the bad assets directly, giving banks’ balance sheets room to lend. To paraphrase the Fantastic Four’s Thing, it’s (QE) clobberin’ time.

Fingers crossed BofAML:

Although Draghi came up with many rabbits from his hat, the market has focused on his reluctance to threaten a QE bazooka if inflation was to remain so low. The revised ECB inflation projections suggest that they cannot afford another inflation disappointment and that QE is a real possibility this year. Indeed, Draghi did talk about preparations to buy ABS if needed. However, it seems that the markets want to hear QE from the ECB to believe it, while Draghi’s reluctance to discuss QE that will include sovereign bonds suggest that there is no consensus within the ECB on large asset purchases yet. Moreover, many of the new measures to support credit will take time to be effective and will be bullish for European assets when they do, which in turn will be positive for the Euro.

Turtle But the last word is from Il Maestro himself: Don’t worry, “we aren’t finished here“.

Meanwhile in China:

imageChina Regulator Pledges to Expand Credit as Economy Slows China’s banking regulator vowed to expand loans and cap borrowing costs, seeking to boost the supply of funds to the real economy as growth slows amid a clampdown on shadow financing.

Lending to small businesses, major infrastructure projects and first-home buyers will be a priority, the China Banking Regulatory Commission said in a statement today. To give banks more capacity to lend, the regulator may ease the ratio of loans to deposits by including some stable sources of deposits in the calculation, CBRC Vice Chairman Wang Zhaoxing said. (Chart from CEBM Research)

Investors Close Golden Parachutes Shareholders at four companies have voted recently to prevent executives from cashing in on certain stock bonuses if their companies are sold.

The nonbinding votes at oil refiner Valero Energy Corp. VLO +2.00% , media companyGannett Co. GCI +1.10% , commercial landlord Boston Properties Inc. BXP +1.36% andDean Foods Co. DF +2.85% come as shareholders have pressured companies to curb severance perks over the past few years, experts say. Regulators, too, have forced companies to disclose more about these payouts. (…)

Since 2011, shareholders have had a say in how much executives are paid, including golden-parachute payments. “Say on pay” votes are now required by the Securities and Exchange Commission. While they aren’t binding, boards are under pressure from regulators and shareholder-advisory firms to consider investor views when crafting executive-pay packages. (…)

The proposals at Valero, Gannett, Boston Properties and Dean Foods, submitted by organized-labor groups, would prevent unvested stock awards tied to future performance from automatically vesting in a merger. They each received a majority of votes cast but aren’t binding on the companies.

NEW$ & VIEW$ (5 JUNE 2014)

ECB cuts deposit rate below zero Central bank hopes historic move will help to avert deflation

The ECB cut its main refinancing rate to 0.15 per cent, from 0.25 per cent, and its deposit rate from zero to minus 0.10 per cent, becoming the first major central bank to venture into negative territory.

The ECB hopes the move will lift inflation by weakening the euro and spurring lending in the bloc’s more troubled periphery.

Fed Survey: Demand for Skilled Workers Stirs

Rising demand for skilled workers could push up salaries across more sectors of the U.S. economy, according to the Federal Reserve’s latest survey of regional economic conditions.

Hiring activity in general was “steady to stronger” across the U.S. from April through late May, according to the Fed’s “beige book,” based on anecdotal information about economic activity throughout the central bank’s 12 districts. Overall, the report pointed to an economy that was improving from its weak performance earlier this year, boosted largely by stronger consumer spending and job growth. The report comes two weeks ahead of the Fed’s June 17-18 policy meeting.

Companies in several regions reported difficulty filling jobs for highly skilled and upper-management positions. (…)

The Fed banks in Minneapolis, Kansas City and San Francisco reported pay increases were concentrated among workers in information technology, engineering, professional services and some skilled trades, according to the report. Outside of those jobs, few workers are seeing salary bumps.

In the Cleveland region, “skilled trade workers are very difficult to find and are driving up wages,” according to the report. In the Dallas region, a staffing firm said employers are paying higher relocation bonuses for talented employees, “particularly engineers.”

A New York-area employment agency said many candidates are getting multiple offers and that could put upward pressure on salaries going forward. A Maryland staffing agency echoed that sentiment.

The report highlighted steady improvement across other parts of the economy after a harsh winter. More than half the Fed districts pointed to strong auto sales, with other regions seeing “steady” sales. In the Philadelphia region, dealers reported “phenomenal” sales in April and have a bullish outlook for the rest of the year. (…)

Welcome back dropouts: data suggests Americans rejoining workforce

For the first time in six years, the share of people who either have a job or are looking for one is on the rise in a majority of U.S. states, a sign one of the deepest scars of the economic crisis could be healing.

Most states have experienced sharp declines in labor force participation since the 2007-2009 recession, but a Reuters analysis of government data found a reversal could be underway.

Anecdotal reports suggest that in many parts of the country, demand for labor appears to be growing enough to get people who had dropped out of the workforce to restart their job hunts.

“We are getting more job creation and we are seeing more people come in,” said Paul Turek, a labor economist with Washington state’s Employment Security Department. (…)

The state data, which can diverge from the national statistics because of adjustments the government makes to account for seasonal swings and other local economic factors, suggests she [Yellen] may be right to wait. (…)

Some more facts on housing

from a recent survey conducted by the MacArthur Foundation titled “How Housing Matters” (via Zerohedge):

As MarketWatch reports, “although mortgage rates are still quite low, down payments, poor credit and tighter lending standards remain three of the biggest hurdles for buying a home, especially among young people, Blomquist says. “The slow jobs recovery for young adults has made it harder for them to save and to get a mortgage.” Some 84% of young people are delaying major life decisions due to the poor economy, according to a 2013 survey by Generation Opportunity, a nonprofit think tank based in Arlington, Va.”

What’s more, at least 15% of American homeowners (or residents of 78 counties across the country) were living in housing markets where the monthly mortgage payment on a median-priced home requires more than 30% of the monthly median household income — long considered the maximum for rent/mortgage repayments. Housing costs above that threshold are “unaffordable by historic standards,” says Daren Blomquist, vice president at real estate data firm RealtyTrac. In New York county/Manhattan, mortgage payments represent 77% of the median income and in San Francisco County represents 70%.

As a result of a broken economy and lack of good job opportunities the “American dream” is now on its last legs: more than half of Americans, or 54%, believe that buying a home has become less appealing than it once was while some 43% of respondents have indicated that it is no longer the case that owning a home is “an excellent long-term investment and one of the best ways for people to build wealth and assets.” Even as seven in 10 renters (70%) aspire to owning a home, high proportions (58%) believe that “renters can be just as successful as owners at achieving the American Dream.”

But there is hope as younger people find jobs, they normalize their lives:

U.S. Household Formations Normalizing

The number of U.S. households climbed 1.38 million in March 2013 from the previous year (according to the Census Bureau’s population survey), in line with the two-decade median (1.35 million). That’s a marked improvement from the post-recession low of 0.36 million in 2010, and the third straight year above one million. Of note, the number of households headed by someone younger than 25 rose for the first time in seven years, likely due to the improved labor market. While household formations likely slowed more recently, according to the Census Bureau’s Household Vacancy Survey, the pent-up supply of potential homeowners should drive housing activity for some time. (BMO Capital)

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Stats on mortgage apps for purchase remain weak on the surface but Raymons James notes that the seasonally adjusted index is up 11% since February 21, which marked a 19-year low.

The service sector is uber important in the U.S. and is a big job creator:

Services-Sector Growth Accelerates The U.S. non-manufacturing sector expanded further last month, according to data released Wednesday by the Institute for Supply Management. Employment, however, continued to lag other activity indicators.

The Institute for Supply Management’s nonmanufacturing purchasing managers index increased to 56.3 in May from 55.2 in April. It was the highest reading since August 2013.

The report said that 14 industries reported increased business activity in May, with one reporting decreased activity.

Some ISM subindexes increased further after posting big advances in April. The new orders index rose to 60.5 in May after it advanced to 58.2 in April from 53.4 in March.

The ISM business activity/production index increased to 62.1—the highest level since February 2011—after jumping to 60.9 from 53.4 in March. The ISM employment index increased to 52.4 from 51.3 in April. (…)

Non-manufacturers maintained their pace of inventory building last month. The ISM inventory index held at 55.5. The prices index edged up to 61.4 from 60.8. Just as in the manufacturing report, non-manufacturers report higher prices for food and steel products. (Charts from Bespoke Investment)

Hotels are a big part of the service sector and are directly impacted by the economy. In its latest weekly measure, Smith Travel Research reported that U.S. industrywide hotel revenues per available room (revpar) increased 7.7% Y/Y during the week ended May 31 from year-ago levels following growth rates of 9.2%, 9.6%, 10.6%, and 13.6% respectively during the previous 4 weeks.

And by the way, average daily room rates are up 4.7% Y/Y nationally.

Widening U.S. Trade Gap Dims Growth Views

The nation’s trade deficit widened 7% in April from a month earlier to its highest level in two years, the Commerce Department said Wednesday. Imports rose 1.2%, but exports fell 0.2%, marking the fourth decline in five months.

The report suggests American households and firms stepped up spending after snowstorms and icy weather walloped the economy in the winter. But much of their spending—on items like cars, cellphones and machinery—flowed outside the U.S. to foreign firms, undercutting domestic growth.

The export drop suggests sluggishness in overseas economies like Europe is sapping demand abroad for American-made products and services. Exports declined across the board, hitting farmers, jewelers, jet-engine makers and drilling-equipment manufacturers.

Credit Suisse economists on Wednesday said they expect the economy to grow at a 3% annual rate from April through June, down from a previous estimate of 4%. Several other economists made similar moves. Barclays Capital dropped its estimate to 2.9% from 3% in light of the trade figures.

Note that non-petroleum imports rose 5.7% in the 3 months to April, 25% saar!

China Composite PMI Employment Drops At Fastest Pace Since Feb 2009

China’s Services PMI printed at 50.7 – its lowest since August 2011, as the business expectations index dropped to an 11-month low. The Composite PMI improved (after 3 months of contraction) but most notably, the composite employment declines at the fastest pace since Feb 2009. What is perhaps most worrisome is, as Markit notes, “The latest survey signalled the second-weakest degree of optimism since the series began in November 2005.”

Euro-Zone Retail Sales Rose in April

Eurostat said the volume of sales rose 0.4% from March, and 2.4% from April 2013. That was the largest year-to-year increase since March 2007, when sales rose 3.0%.

Figures released by Eurostat Wednesday showed consumer spending rose by just 0.1% in the first quarter, and the prolonged weakness of household expenditure has been a major contributor to the weak performance of the euro-zone economy since the 2008 financial crisis.

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High five However, core retail sales declined 0.1% in April following no change in March. January and February were up 1.6% in total. Last 4 months: +1.5% or +4.6% saar.

High five But Markit just released its May Retail PMI for the Eurozone, suggesting that retail sales were weak for a third consecutive month:

Eurozone retail sales were broadly unchanged from the previous month in May, according to the latest PMI® data from Markit. This stagnation at the aggregate level masked contrasting trends across the big-three eurozone nations, however, with a solid drop in sales in Italy countering a notable rise in trade in Germany and a slight uptick in France.

The Markit Eurozone Retail PMI – which tracks month-on-month changes in the value of retail sales – registered at 49.9 in May, broadly in line with the 50.0 mark that separates expansion from contraction and below April’s three-year high of 51.2. When measured on a year-on-year basis, eurozone retail sales were down to the greatest extent for three months, albeit only moderately.

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Pointing up This recent lull could mean troubles in coming months:

Stocks continued to accumulate, however, growing for the sixth straight month partly as a consequence of sales being lower than targeted levels. The gap
between actual sales and plans was indeed the widest since last October. As well as trimming their spending, retailers also parted with more staff during May, extending the current sequence of decline in eurozone retail employment to nine months. The rate of job shedding was little-changed from the modest pace
recorded in the previous month. Only in Germany did retail staffing levels rise since April.

May’s survey meanwhile showed a further easing of the rate of wholesale price inflation faced by eurozone retailers, to the slowest in more than four years. In spite of cost inflation having moderated, however, gross margins again fell sharply and to the greatest extent in four months.

Confused smile Expired Corporate Tax Breaks May Have to Wait Out November Elections

Businesses will likely have to wait until after the November elections to know if there will be a renewal of popular expired business tax breaks, ranging from credits for R&D to deductions for equipment purchases.

A bill to extend the tax breaks failed in May, and on Tuesday Senate Majority Leader Harry Reid (D., Nev.) said a deal is unlikely before the midterm elections in November, according to a Reuters report.

The bill to extend the tax credits had been approved by the Senate Finance Committee, but Senate Republicans blocked a vote on the bill on the floor.

In recent weeks, the House had moved to renew and make permanent the expired tax breaks, including the research credit and bonus depreciation, which would allow businesses to deduct 50% of many capital purchases up front. However those don’t stand much of a shot in getting through the Senate.

“The House and Senate…can’t even agree on which measures should be renewed, at what levels and for how long,” Corey Boles, a senior analyst at political consultancy group Eurasia Group, said in a note to clients this week.

Though these tax breaks are often retroactively renewed, businesses are already changing their business plans while they wait out the stalemate in Congress.

Previous tax breaks “allowed us to hire three or four more new positions as well as purchase over $1 million worth of equipment,” Dominic Wade, president and owner of Mohawk Fabric Co., told CFO Journal.

While larger businesses can afford to wait out Congress, many smaller businesses like Mohawk don’t have the cash flow.

“I can’t make plans today or six months from now if I don’t know… what the tax code is,” Mr. Wade said.

Berlin paves the way for fracking

Germany is set to lift its ban on fracking as early as next year, after caving in to business demands that it should reduce its dependency on Russian energy and boost competitiveness with US manufacturers.

Applications to carry out the controversial process for extracting the country’s estimated 2.3tn cubic metres shale gas reserves will be subject to an environmental impact assessment under new legislation to be discussed by the cabinet before the summer recess. (…)

Germany’s estimated reserves of shale gas are significantly smaller than those of Poland and France, which have the biggest recoverable reserves in Europe. However, German shale gas, which is concentrated in its northern states, still has the potential to provide a long-term domestic supply. (…)

“Through fracking technology, Germany could obtain more than 35 per cent of its gas consumption from domestic sources,” the BDI statement said. (…)

ELECTRIC CARS
Why Atlanta Is Juiced for Electric Cars

Atlanta has become a surprise success for electric car makers and the reasons—state subsidies and unfettered access to carpool lanes—offer a telling lesson in what it takes to lift demand for the vehicles.

Georgia provides more than $4,000 in income-tax credits on average for an electric-car purchase, cut-rate electricity, employer support of recharging stations and, in Atlanta, access to high-occupancy vehicle lanes in the city’s congested roadways.

Atlanta’s emergence as the No. 2 metropolitan market in the U.S. after San Francisco for electric-vehicle sales, according to researcher IHS Automotive, illustrates how public subsidies remain key to luring buyers away from gasoline-powered vehicles, and the extent to which employers and friends can influence plug-in car sales.

Atlanta recently leapfrogged Seattle to claim the second-highest level of electric vehicle registrations among major U.S. metropolitan areas in the 12 months through March. San Francisco is still No. 1. Cheap electric power helps: Georgia Power Co., the primary utility in Atlanta, offers a plug-in charging, off-peak rate of 1.3 cents per kilowatt-hour. The average cost across the nation is 11.88 cents a kilowatt-hour, says the U.S. Energy Information Administration.

The share of electric cars in Atlanta is small—just 2.15% of registrations—but that is more than five times the national average share of .38%, according to researcher IHS. Atlanta is the only city in the top 14 that isn’t on the West Coast and number 15 is Austin, Texas, which has .47% share of registrations.

“I think it’s because the technology and understanding and how it fits into the lifestyle of people is really starting to resonate,” said Jules Toraya, the Zero Waste manager with the city of Atlanta, which has tried to streamline the process for businesses to install charging equipment. Residents are saying, “when you factor what you pay, and what I am saving, it is essentially a free car.”

(…) Capitol City tells prospective buyers they can lease a Leaf for two years for as low as $199 a month after a $2,499 down payment. Including $1,387 in taxes and other fees, and an estimated $15 a month for electricity, that is $9,022 to drive the car for 24 months. But after factoring in the $5,000 Georgia tax credit, and savings on gasoline, the dealership says driving the Leaf will cost just $28 a month.

Atlanta’s electric car boom also highlights the risk auto makers run when they rely on government policy to support sales.

Georgia spent $943,665 on tax exemptions for 233 residents in 2012, according to the state, the most recent year for which figures were available. Auto makers said last year’s outlays are certain to have grown substantially as volumes jumped. Some Georgia lawmakers, concerned by the rising costs of electric car subsidies, want to phase them out.

“There are times when it makes sense to bootstrap a technology if that is for the greater good. But at some point, where a subsidy on a two-year lease makes it essentially free, I think that is too generous and not good policy,” said Alpharetta, Ga., Rep. Chuck Martin, who proposed the bill to eliminate the tax credit of up to $5,000 a car.

Coca-Cola’s downtown Atlanta headquarters recently doubled to 75 the number of parking spaces available with charging spots. “The idea there is that employees are here eight or nine hours a day. They will get the equivalent of half a tank,” said Eric Ganther, a transportation planner for Coca-Cola.

Coke estimates that more than 100 of its Atlanta employees drive to work in electric cars out of 4,900 workers on campus.

Tim Goudie, who works in marketing at Coca-Cola, says his Leaf cost $320 a month to lease with the credits figured in. Its electricity costs him $20 a month, compared with between $200 and $220 a month in gasoline. Combine that with access to the high-occupancy vehicle lane, and the advantages are strong for an electric vehicle, he said.

Mr. Goudie says a co-worker asked about his Leaf, “and I went through the facts and the figures and the savings and have convinced him to go buy it.”