Bye Bye Federal Tax Credit

[Sir Guacamolaf]

I'm happy to see Tesla meet it's Model 3 commitments. But this also means that the time to bid adieu to the Federal Tax credit for Tesla is nigh.

What effect will it have, if any, on resale values of current Tesla's? (S and X)

 

[AMPd]

Resale would probably tick up a bit as the "after fed tax credit" price will be gone

 

[303JeffB]

Resale would probably tick up a bit as the "after fed tax credit" price will be gone

I'd tend to agree, depending upon whether Tesla decides to drop the prices on new car sales...

 

[KidDoc]

I was thinking about this today as my Uncle is thinking of getting an X for his wife but waiting a year or two more. Does anyone have any hard data on what is going to happen to the tax credit and over what period of time? I know it is a phased out decrease I just don't know how quickly.

I'm only worried about the federal not state one as Texas doesn't have a state credit for Tesla specifically, only EVs sold at dealerships (lame!).

 

[sdorn]

I was thinking about this today as my Uncle is thinking of getting an X for his wife but waiting a year or two more. Does anyone have any hard data on what is going to happen to the tax credit and over what period of time? I know it is a phased out decrease I just don't know how quickly.

I'm only worried about the federal not state one as Texas doesn't have a state credit for Tesla specifically, only EVs sold at dealerships (lame!).

Internal Revenue Bulletin - November 30, 2009 - Notice 2009-89

Relevant provision copied and pasted below.

"The new qualified plug-in electric drive motor vehicle credit phases out for a manufacturer’s vehicles over the one-year period beginning with the second calendar quarter after the calendar quarter in which at least 200,000 qualifying vehicles manufactured by that manufacturer have been sold for use in the United States (determined on a cumulative basis for sales after December 31, 2009) (“phase-out period”). Qualifying vehicles manufactured by that manufacturer are eligible for 50 percent of the credit if acquired in the first two quarters of the phase-out period and 25 percent of the credit if acquired in the third or fourth quarter of the phase-out period. Vehicles manufactured by that manufacturer are not eligible for a credit if acquired after the phase-out period."

As an example, if they hit the 200,000 mark during Q1 2018, then the phase out period would start in Q3 2018. In Q3 2018 and Q4 2018 you would get 50% of the credit (or $3,750) and in Q1 2019 and Q2 2019 you would get 25% of the credit (or $1,875).

 

[Tesmotorfaqcom]

Resale price will likely take a hit as MS/MX hardware continue to improve and M3 hitting the market. As we know Tesla can drop the MS and MX price by the amount of the federal tax credit to attract buyer. While Tesla always stated it can survive without government incentive in reality tax incentive play a big part in attracting buyers.

 

[RayW]

Resale price will likely take a hit as MS/MX hardware continue to improve and M3 hitting the market. As we know Tesla can drop the MS and MX price by the amount of the federal tax credit to attract buyer. While Tesla always stated it can survive without government incentive in reality tax incentive play a big part in attracting buyers.

How do "we know Tesla can drop the MS and MX price by the amount of the federal tax credit to attract buyer." ?

Resale price impacts from improvements to new vehicles has always occurred for all manufacturers and is independent of tax credits. When the tax credits end, the net price of new vehicles will increase $7,500 for most buyers and used vehicles should increase somewhat as well.... the price of used Teslas will no longer drop by $7,500 when delivered (and the credit is taken).

 

[Tesmotorfaqcom]

How do "we know Tesla can drop the MS and MX price by the amount of the federal tax credit to attract buyer." ?

Of course, no one will know, but when the 60 was discontinue everyone was shocked the 75 price drop with added features like power liftgate and glass roof. If Tesla is currently pushing the MS/MX number every quarter, imagine how much harder it will be to hitting the delivery number without tax incentives. On a base model MS that's almost a 10% increase in price which would push more people to M3 which likely a lower margin vehicle.