Look up "tax incidence". It is the concept that tax burdens are shared between the buyer and seller. It applies to credits as well, however, Tesla clearly didn't share the credit, they took 100% of it by inflating the price of the battery upgrade to $9K. There is no way that the 90 extra miles were actually worth $9K when you could buy an entire car for $35K.
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Did we pay more for tax incentive in 2018
- Thread starter JetFalcon
- Start date
Uncle Paul
Well-Known Member
Same thing happened when Henry Ford passed on the savings of mass production to lower the pricing on his Model T.
Same thing happened when companies began making their stuff in China. Consumer prices dropped.
Same thing happened when people began buying on the internet. Lower prices, plus no sales taxes.
Same thing happened when the Tech bubble broke. Stocks fell and people were able to buy them cheaper than the original purchaser.
Same thing happened when the housing bubble broke. Peoples houses were worth far less than they paid for them.
Same thing happened when the big box stores like WallMart or Costco offered tremendous savings over traditional retailers.
Same thing happened when the gas shortages were resolved and gas costs dropped dramatically.
Same thing happens all the time. Tesla made dramatic reductions in their costs of production, eliminated hundreds of expensive real estate leases and let go thousands of unnecessary employees. They were able to pass these cost savings to their customers. This is what consumers have been yelling about forever. They felt taken advantage of when the lower costs of doing business were not passed on, but kept as additional "unearned" profits by the fat cats.
People were throwing their money at Tesla with wild abandon, in order to get their cherished Tax Deductions. They got a bit greedy and pushed like crazy to buy up every car that Tesla could produce at full list price. Then the Tax credits were cut in half, and Tesla knew they needed to do something.
I believe Tesla looked at all the new competition coming and the going away of the tax credits. Knew they needed to get ahead of the oncoming lower priced EVs from Asia and Europe.
Believe they adapted and because of this they will survive.
Same thing happened when companies began making their stuff in China. Consumer prices dropped.
Same thing happened when people began buying on the internet. Lower prices, plus no sales taxes.
Same thing happened when the Tech bubble broke. Stocks fell and people were able to buy them cheaper than the original purchaser.
Same thing happened when the housing bubble broke. Peoples houses were worth far less than they paid for them.
Same thing happened when the big box stores like WallMart or Costco offered tremendous savings over traditional retailers.
Same thing happened when the gas shortages were resolved and gas costs dropped dramatically.
Same thing happens all the time. Tesla made dramatic reductions in their costs of production, eliminated hundreds of expensive real estate leases and let go thousands of unnecessary employees. They were able to pass these cost savings to their customers. This is what consumers have been yelling about forever. They felt taken advantage of when the lower costs of doing business were not passed on, but kept as additional "unearned" profits by the fat cats.
People were throwing their money at Tesla with wild abandon, in order to get their cherished Tax Deductions. They got a bit greedy and pushed like crazy to buy up every car that Tesla could produce at full list price. Then the Tax credits were cut in half, and Tesla knew they needed to do something.
I believe Tesla looked at all the new competition coming and the going away of the tax credits. Knew they needed to get ahead of the oncoming lower priced EVs from Asia and Europe.
Believe they adapted and because of this they will survive.
I am 'out' $2250, but I do get the tax benefit a year earlier which is worth something in opportunity cost and then you never know when a tax law is going to get screwed. I'm not mad. Chagrined maybe. If I can get the good parts of AP for $2000 I'll be happier. Recent EAP buyers are probably feeling more screwed.
MagnusMako
Member
It really varies depending on what you ordered when you ordered in 2018 and how much tax liability you had. For example, having a tax liability of ~$3750 with 2018 delivery just ordering a standard build for AWD versus one now after the price drops, comes out to a $6k straight loss. But other people who got the full $7500 and didn't order EAP/FSD when it was higher came out ahead or just a tiny bit behind.
If Tesla intends to be a long-term business they have to keep their long-term high value customers happy. With these latest moves they didn't do that. The fiasco with what they're doing with AP/EAP/FSD pricing shows they don't care about long-term customers. I have 2 Teslas but I am beyond thrilled other manufacturers are coming out with solid EVs in the coming year. Whereas before these moves I'd probably only consider Tesla now I will most certainly not when it comes time for my next vehicle.
If I were to buy an expensive car with the intention of switching in 3-5 years, I would just lease it. Then it doesn't matter if the manufacturer hurts the residual since you aren't the one paying for it.
FlatSix911
Porsche 918 Hybrid
All things considered... If you purchased a Tesla last year you came out ahead as you got to drive the best EV a year early! 
Agreed - that's why I don't have many issues with the price reductions on the car. I do have a big issue with the price reductions on the autopilot/fsd software. Many of the features were undelivered "pre-orders" and generally if you pre-order something and the price drops prior to delivery then you get the reduction in price. If they're now saying that the value of the undelivered FSD is $5k then that means everyone should pay $5k (so someone who's already paid $5k for EAP should not have to pay anything extra).
Anyway - this is just my opinion and at the end of the day Tesla can make their own business decisions but I'm just saying this doesn't sit right with me as a long-time Tesla supporter.
Glamisduner
Active Member
That's not true, many, if not MOST people got their cars End Of Sept/ early October - December. Many of those ended up at a body shop for a month or more. So we paid an extra 6k for getting sup par cars 3 months earlier.All things considered... If you purchased a Tesla last year you came out ahead as you got to drive the best EV a year early!
I think it's funny how everyone was telling P3D- buyers to suck it up over 5k package loss, but now that it's $2000-$3000 so many people are very upset. Not just FSD purchasers.
I felt the same way over the P3D- fiasco, it's not fair to reward some buyers and leave the others out in the cold. It would have been better to do NOTHING.
My solution to not feel to bad on the FSD being 7k for me, is to simply not buy it. At least not for way more than it will cost other people. Fool me once, shame on me, fool me twice... So what if I get a sub-par EAP for the same price. At least until the new FSD features are working, but I'll wait for them to get ironed out before spending any more money on this money pit.
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StealthP3D
Well-Known Member
If that's true, then I like getting screwed. Because with two new Tesla Model 3's in 2018, it was a very good year indeed!
No way would I have gone without the Model 3's in 2018 to save a few thousand bucks. I'm just glad they were available at any price - I've been loving them and can never go back to a gas car.
It's an early adopter tax that we paid. Difference for me ended up being about $2500 with the options I chose. The bottom line for me was that if I didn't value the car enough to pay what I paid for it then I wouldn't have purchased it.
Does it suck that I could have gotten the car for less 6ish months later than I got it? Definitely. I don't see it a huge deal that Tesla, as a business has had to adjust it's prices to remain competitive while still being profitable as they become more efficient at manufacturing. It's pretty well documented that Tesla survived 2018 by the skin of their teeth. 2019 is still going to be a challenge for them.
This is just life being a technology enthusiast. I pay extra to get game consoles when they release knowing full well that within the year they will either reduce the price or bundle free stuff that I'm not getting on day 1. Same for graphics cards, 4k TVs, and other cool electronics. To me it's a way to support emerging technologies and get them off the ground.
In Tesla's case I'll take the tax credit and a fairly close bottom line since it helped them and helped cement EVs as the future. In return, I've been able to enjoy the car before most of the masses while still getting the updates and benefits coming over the air.
Does it suck that I could have gotten the car for less 6ish months later than I got it? Definitely. I don't see it a huge deal that Tesla, as a business has had to adjust it's prices to remain competitive while still being profitable as they become more efficient at manufacturing. It's pretty well documented that Tesla survived 2018 by the skin of their teeth. 2019 is still going to be a challenge for them.
This is just life being a technology enthusiast. I pay extra to get game consoles when they release knowing full well that within the year they will either reduce the price or bundle free stuff that I'm not getting on day 1. Same for graphics cards, 4k TVs, and other cool electronics. To me it's a way to support emerging technologies and get them off the ground.
In Tesla's case I'll take the tax credit and a fairly close bottom line since it helped them and helped cement EVs as the future. In return, I've been able to enjoy the car before most of the masses while still getting the updates and benefits coming over the air.
SunCharged
Member
Right, Tesla pocketed the tax credit that was intended to inspire consumer adoption. Just wait until the politicians figure this out. Essentially tax payers propped up Tesla's business directly. Not indirectly by stimulating tax incentives at the benefit of consumers (tax payers). You can kiss similar tax credits goodbye forever once they do figure out what happened. And expect a tweet storm from Trump....
SammichLover
Banned
SammichLover
Banned
If they intend to be a long-term mainstream business that brings a sea-change to automobile & energy sectors, rather than a high-end niche business, they need to be pushing their prices down.
They aim to sell as many vehicles in 2019 as they had sold in the first decade+ of the company. You don't do that by artificially keeping prices for new vehicles high.
sreams
Member
Tesla didn't "pocket" any tax credits. They needed the prices to be inflated a bit in order to cover their expenses and survive so that they could get to this point.
Well, define "pocketed" any way you like, but the fact is they inflated the cost of the car to capture the tax credits and they are lowering the cost as the credits decline. I agree it was for a good purpose, but it is still manipulation.
In early/mid 2018 a white LR RWD with AP was (35 + 9(LR batt) +5(premium) +1(pearl) +5(EAP) +1 (doc/destn)) = 56k - 7500 = 48.5 after-tax
Now same car is 35 + 8(LR Batt and premium) + 2(pearl) +3(AP[but no autopark etc] + 1.2(doc/dest)) = 49.2 - 3750 = 45.45 after-tax
A difference of only $3k and the newer car doesn't have EAP (have to FSD to get autopark, summon, etc.) and didn't get to drive it for the last year.
If you want to upgrade to FSD the 2018 can do it for $3k now, while 2019 needs $5k at time of purchase, shrinking the price difference.
Buying in 2018 was at least as good a deal -- primarily for the value of getting an awesome car earlier.
Now same car is 35 + 8(LR Batt and premium) + 2(pearl) +3(AP[but no autopark etc] + 1.2(doc/dest)) = 49.2 - 3750 = 45.45 after-tax
A difference of only $3k and the newer car doesn't have EAP (have to FSD to get autopark, summon, etc.) and didn't get to drive it for the last year.
If you want to upgrade to FSD the 2018 can do it for $3k now, while 2019 needs $5k at time of purchase, shrinking the price difference.
Buying in 2018 was at least as good a deal -- primarily for the value of getting an awesome car earlier.
Yet Tesla is barely profitable...doubt Tesla would have existed without the tax credit.
sreams
Member
My point was simply that the tax credit is doing exactly what it was designed to do. It isn't lining anyone's pockets. It is helping to keep Tesla alive, which helps the adoption of EVs. Now that Tesla can afford to drop prices, that further helps the adoption of EVs.
I took delivery of my 3 in April of 2018. I payed more than someone buying the same configuration now. As a TSLA shareholder, and as someone who wants to see EVs move into the market as quickly as possible, I am fine with that.
