$7500 Tax Credit vs Lease

[rwiegand]

Financially savvy people buy a 2-3 year old used Corolla and drive it for 15 years.

 

[SageBrush]

Financially savvy people buy a 2-3 year old used Corolla and drive it for 15 years.

You memorized an old playbook.

If a car is good for 200k miles, how much do you expect to pay to fuel an ICE?
How much do you expect the maintenance and repairs to cost ?
How much externalized pollution costs have you caused ?

 

[ATPMSD]

This, of course, presupposes that you have greater than a $7500 tax bill. Otherwise your credit is only as large as your tax bill. But you knew that.

Keep in mind that "Tax Bill" means your total taxes and NOT how much more you have to pay after withholdings and any estimated taxes you paid; your total tax is line 24 from the 1040.

Note also that the credit does not carry-forward. If you do not use it all this year you do not get a credit for the unused portion next year.

 

[rwiegand]

You memorized an old playbook.

If a car is good for 200k miles, how much do you expect to pay to fuel an ICE?
How much do you expect the maintenance and repairs to cost ?
How much externalized pollution costs have you caused ?

I wish I were, but I don't think so.

1) The cost per mile for fuel for our Model Y and for our current RAV4 hybrid are almost exactly the same (ranging from 8 to 10 cents a mile). So I expect to pay the same for fuel either way. In states with lower electric rates than ours electrics have an advantage, but we don't live there.
2) Our last hybrid Camry went 140,000 miles over 14 years, the only maintenance costs were for tires, brakes, and periodic oil changes. Score a brake jobs and 20 oil changes for the electric. probably an extra set of tires or two for the electric, ~$1K difference maybe? (I hope!-- we'll see if the promise of very low maintenance cost for the Tesla holds up) Our experience with a CMax hybrid, now our daughter's car, has been similar, it's currently at 80,000 miles and 10 years old with no maintenance other than brakes, tires, and oil/filters. My Mini Cooper was a whole different story, and very much supports your argument-- but it was fun to drive!
3) I wish I knew. Believable and reliable (and complete) life cycle costs for both classes of vehicles, and for the environmental destruction caused by producing the energy required to drive them are still pretty skimpy and questionable at this point. Petroleum is clearly a disaster, with relatively well-defined (if still mostly unappreciated) costs, but costs of "green energy" that are to a large extent hidden away in less developed countries and China are pretty darn opaque, as is what the recyclability of electric vehicles will actually turn out to be (we can hope it's better than plastic bottles!). I hope and pray that electricity production will come out better in the long run, but having seen some of the "Superfund on steroids" horror show that solar array manufacturing causes in China and the abject human misery that rare metal mining causes in Africa I'm not completely confident. Clearly with my last vehicle purchase I'm betting on electric, but that's based more on hoping the industry will clean up its act than on current practice.

Driving a lot less is the only really clear win from an environmental perspective.

 

[SageBrush]

I wish I were, but I don't think so.

I don't care to analyze your specific situation, so suffice it say that no matter what, you would have to prove that your specific case is a good representation of the median, mean or some percentile of the national if you want to make sweeping statements.

Second, when faced with uncertainty you should disclose a range, and weighted average based on age and quality of the publication. Just saying 'there is not concensus' is a cop-out.

E.g., I pay 1.5¢ per kWh for electricity because I live in NM and have solar panels I installed and can be used for self-consumption. Obviously that rate is not available to everybody. About 75% of dwellings are privately owned; about 70% have roofs amenable to PV, and only a small fraction of homeowners are self-installers. Commercial installation is about 3x more expensive than my array so about 1/2 of dwellings start with a baseline of ~ 5¢ a kWh, but then net metering policies and domestic consumption behavior modify that rate.

 

[rwiegand]

Medians or averages have nothing to do with it. We're talking actions by a hypothetical "financially savvy" person which means carefully researched choices to choose highly reliable, very high miles/energy unit, low total cost of ownership per mile vehicles. What the Hummer or Porsche buyer experiences is a whole 'nother matter.

My solar panels are net metered at the current retail price, so whether I put those kilowatts into my car or back into the grid the financial impact on me is identical. They are worth the same amount either way, not somehow cheaper because I generate them on site, ie I either pay 34 cents to buy one from the power company or forego 34 cents of income when I put it into my car instead of selling it back to the power company This is, admittedly, a regulatory artifact that doesn't make a lot of financial sense

 

[SageBrush]

Medians or averages have nothing to do with it.

Everything to do with your earlier proclamation that

Financially savvy people buy a 2-3 year old used Corolla and drive it for 15 years.

At best, speak for yourself. When you venture to generalize based on your take of your personal situation your comment is likely to be foolish.

My solar panels are net metered at the current retail price, so whether I put those kilowatts into my car or back into the grid the financial impact on me is identical. They are worth the same amount either way, not somehow cheaper because I generate them on site, ie I either pay 34 cents to buy one from the power company or forego 34 cents of income when I put it into my car instead of selling it back to the power company This is, admittedly, a regulatory artifact that doesn't make a lot of financial sense

kWh, not kW
Second, if you have 1:1 volumetric net metering you are very fortunate. Your description of your arrangement with your utility reads as wrong. In garden variety 1:1 net metering you incurred an opportunity cost when you installed the panels, and you gain by not paying retail volumetric utility costs over time equal to production.

I also have 1:1 net metering, with an interesting twist: I am +/- not paid for excess production, but my balance (if any) is carried over indefinitely. It is a fantastic deal for me because the amortized marginal cost to add extra panels was about 1¢ per kWh. It strikes me as a poor deal for the utility so I don't expect it to last, and I take steps to self-consume to not burden the grid.