EV and Battery Credits

[Buckminster]

https://twitter.com/x/status/1706952179855286770

 

[Buckminster]

Not credits related. UK have reneged on 100% EVs by 2030. Now 2035. However, still 80% tbc for 2030. Numbers look sensible:

https://twitter.com/x/status/1707378239805505834

 

[Buckminster]

https://x.com/mortenlund89/status/1709140384998117546?s=20

It turns into a point of sale rebate, that is just a time shifted version of the current non-refundable tax credit. One still needs to qualify for it, lest they repay it at filing time.
2023:
Pay full price for car; pay $7,500 less in federal tax
2024:
Pay $7,500 less for car; pay normal federal tax

This bears repeating.

I think people underestimate the impact of the point of sale rebate. The decision to buy becomes a lot easier when the government is handing you a free down payment. For many buyers, this makes the loan smaller and the all-important monthly payment smaller as well.

Tesla is going to sell a lot more cars because of this one little change.

One item I'd like clarified. I assume if you buy a car for say $40K, you will pay sales tax on the full $40K and THEN get the $7500 off the final amount. In short, I am assuming it will NOT reduce the actual purchase price for SALES TAX purposes (much like the current tax rebate doesn't impact that at all). Does that sound correct? I bring it up as the sales tax on $7500 is about $470 here in Texas and other areas are probably similar.

That is my understanding. It is applied as a credit, not a price reduction.

 

[Buckminster]

Most Canadian provinces offer even greater incentives for buying EVs than that of the US. (Table below in CAD). These rebates (Model Y RWD would apply) are not tied into one's income and taxes paid like the US, straight rebate for all buyers. When possible Tesla delivers their EVs to Countries that allow maximum advantage of government incentives.

View attachment 979232

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www.canadadrives.ca

 

[Buckminster]

Thanks go to Sawyer Merritt for sharing this.

Updated guidelines on $7500 tax credit for point of sale. Released today.

View attachment 980132

Gary would be correct, except he doesn't understand the purpose of the price cuts. If it was just to generate more sales then he would be correct in saying advertising makes more sense.

But what Tesla also needs to do is block out the competition, or there wouldn't be enough battery materials for everyone. When Elon said he doesn't see a shortage of battery materials he meant after Tesla destroys much of the competition.

This explains why Tesla is already heavily discounting megapacks despite being sold out for years - to dissuade competitors from starting their own megafactories.

Competitors Tesla can block out now will probably be blocked out forever. As Tesla increases volume, lowers prices and ties up materials supply there will be no way for them to enter.

This doesn't hurt the mission because the competitors who get blocked out will be the ones who were going to use battery materials the least efficiently.

Why can't people provide links to the information?

The actual guidance:

https://www.irs.gov/pub/irs-drop/rp-23-33.pdf

The press release:

https://home.treasury.gov/news/press-releases/jy1783#:~:text=WASHINGTON%20%E2%80%93%E2%80%AFAs%20part%20of%20Bidenomics%20and%20the%20Biden-Harris,sale%20for%20new%20and%20previously%20owned%20clean%20vehicles.

Two important points:



i.e. if they didn't have the tax liability to support the full credit that they received at the point of sale that they will repay the extra they received.



i.e. This doesn't bypass the MAGI limitations.

Relevant bit for folks who were unsure what happens if you take the credit then later realize you didn't qualify for some/all of it:

Section 30D(g)(10) provides that in the case of any taxpayer who has made a
vehicle transfer election with respect to a new clean vehicle and received a payment
from an eligible entity, if the section 30D credit would otherwise (but for section 30D(g))
not be allowable to such taxpayer pursuant to the application of the modified AGI
limitations in section 30D(f)(10), the income tax imposed on such taxpayer under
chapter 1 for the taxable year in which such vehicle was placed in service must be
increased by the amount of the payment received by such taxpayer.



So as suggested previously- IRS will reconcile with you when you file taxes and you'll owe the $ back at that time.... this might also hit you with underpayment penalties depending on the amounts involved and other circumstances- so you'll want to insure you understand the credit qualifications before taking it as POS.

It's the opposite
There is only recapture if you violate the income cap (which is lesser of current or previous year). There is no clawback if your tax burden is under $7,500.

 

[Buckminster]

The federal government has been trying to make the EV credit more accessible for over a decade. CBO estimated only 20% of potential tax filers would have over $7,500 tax liability back in 2011. If that's still anywhere accurate, this means ~80% of people in the US are newly eligible to get the full $7,500 off a Tesla with the transfer of credit starting 2024.

Q4: What if a buyer has insufficient tax liability to fully use a transferred credit? (added October 6, 2023)​

A4. The amount of the credit that the electing taxpayer elects to transfer to the eligible entity may exceed the electing taxpayer's regular tax liability for the taxable year in which the sale occurs, and the excess, if any, is not subject to recapture from the dealer or the buyer.​

https://twitter.com/x/status/1710367562683306177

 

[Buckminster]

Ugh, this sets up a 4Q situation a little like last year. Why would I buy a Tesla now if I can wait until January and get the credit immediately off the top... and remove uncertainty about getting the full credit (How much will I be paying in income tax this year after deductions and whatnot? Let's see, how much did I pay last year? Where did I file that 1040? Nevermind I'll just wait until January)

Because you don't know how much IRA credit the Tesla will be eligible for in 2024 when additional restrictions kick in?

As you say, if you buy at the end of Q4, you only have a few weeks to wait until you can file and get your refund. Some may wait, but (as @mongo tells us) they may lose half of the $7,500 rebate by buying after imported LFP packs become ineligible.

I think the more important factor will be if there are a significant number of lower-income customers who would not otherwise qualify for the full $7,500 in 2023, but will get access to the revamped rebate program after Jan 1st. However, that's increase in demand and NOT deferred demand.

Of course, all Tesla needs to do to move cars at Christmastime is signal those price increase coming in January. This will also help manage the flood of buyers, and can be tweeked as necessary with inventory discounts and the inevitable prices cut in Q1.

Anybody remember buying a IBM-compatible* PC during the 1990s? Are you the type that had to have it as soon as possible, or did you wait for that 'irresistible' price?

Cheers to the Patient!
*so do you also remember the PHEONIX BIOS?

 

[Buckminster]

https://twitter.com/x/status/1711972353284903410

Sounds like a crippling amount of paperwork

 

[Buckminster]

 

[Buckminster]

Omar mentioned on an X space a couple of things that I wasn't aware of regarding credit from Jan:

1. CA have a 10% sales tax - therefore $7500 off the price saves another $750
2. Annual? registration will be reduced?

 

[mongo]

Omar mentioned on an X space a couple of things that I wasn't aware of regarding credit from Jan:

1. CA have a 10% sales tax - therefore $7500 off the price saves another $750
2. Annual? registration will be reduced?

Point of sale credit acts as additional down payment, it doesn't lower the purchase price. In fact, legislation prevents dealer from using it as an incentive.

 

[tivoboy]

Omar mentioned on an X space a couple of things that I wasn't aware of regarding credit from Jan:

1. CA have a 10% sales tax - therefore $7500 off the price saves another $750
2. Annual? registration will be reduced?

Not to get too technical but CA has a 7.25% sales tax. But many counties and localities can drive that up to 10-10.25% at the top. Certainly the two Democratic population center areas of the state fall into somewhere between 9-10%

The majority NON Democratic areas of the state which is the majority or the state do NOT have the increased local and county taxes but they also are not the traditional or volume buyers or Teslas or ANY EV for that matter.

 

[Buckminster]

Lots of extra money coming to Tesla in future quarters from other OEMs whose fleet fuel economy average is going to plummet from their pullback on EVs…

 

[Buckminster]

https://twitter.com/x/status/1719501414437650880

 

[Buckminster]

Tesla has lowered the price of the base Model Y in The Netherlands to 44.990 euro.
That means that a 3.000 euro subsidy will be applicable, so a base price of 41.990 euro!
In combination with the possibility of the transfer of free supercharging for some previous Tesla owners.

We will most likely see a lot of sales of Model Y in The Netherlands in the fourth quarter!

 

[Buckminster]

https://twitter.com/x/status/1719748599385350167

 

[Buckminster]

https://twitter.com/x/status/1725607335895208042

 

[Buckminster]

https://twitter.com/x/status/1726996368693031074

 

[Buckminster]

Got an email from Tesla Policy Team to contact Canadian province British Columbia's Minister of Energy, Mines and Low Carbon Innovation, to congratulate on the passage of Zer Emission Vehicles Amendment Act
British Columbia, Canada - Bill 39

This act was originally passed on May 30 2019, and it required automakers, and their dealers to sell or lease an escalating % of new zero emission vehicles (ZEV) vs new ICE in the province. and to reach certain ilestones:
10% ZEVs by 2025
30% by 2030
100% by 2040

This new amendment updated it to:
26% ZEVs by 2026
90% by 2030
100% by 2035

 

[Buckminster]

https://twitter.com/x/status/1729584128310264246