Federal Tax Credit may be coming back for Tesla purchases

[MarcG]

Fo all those complaining about the new Model S price hike, you’ll likely get most of it back (especially if you got a $2000 discount for ordering pre-refresh announcement):

Tesla to gain access to 400k more $7k EV tax credits amid Biden's sustainability push

The bill also extends existing tax incentives available for the sale of electric vehicles. The bill increases the electric vehicle credit cap for manufacturers to 600,000 vehicles, but reduces the credit by $500 after the first 200,000 vehicles sold. This would replace the current phaseout period that begins with 200,000 vehicles sold, with a phaseout period that instead begins during the second calendar quarter after the 600,000-vehicle threshold is reached.

At the start of the new phaseout period created under the bill, the credit is reduced by 50 percent for one calendar quarter and subsequently ends. For manufacturers that already passed the 200,000 threshold before the enactment of the bill, the number of vehicles sold in between 200,000 and those sold on the date of enactment are excluded in determining when the 600,000 threshold is reached.

TL;DR - the next 400,000 Tesla buyers after the bill is passed will have access to the $7k tax credit.

 

[DukeofURL]

Yeah makes me wonder if I should change my Plaid+ order to a Plaid order to take advantage of it, at Tesla's delivery rate it probably won't be available anymore once they get around to Plaid+, haha.

 

[ct101]

Not really. First, the bill isn’t even close to law. Second, if you read it, the credit is only for lower-priced vehicles and cuts out at $40,000 income.

 

[DukeofURL]

Not really. First, the bill isn’t even close to law. Second, if you read it, the credit is only for lower-priced vehicles and cuts out at $40,000 income.

OK then that makes it easy haha

 

[SoCalDude]

Fo all those complaining about the new Model S price hike, you’ll likely get most of it back (especially if you got a $2000 discount for ordering pre-refresh announcement):

Tesla to gain access to 400k more $7k EV tax credits amid Biden's sustainability push



TL;DR - the next 400,000 Tesla buyers after the bill is passed will have access to the $7k tax credit.

Thanks MarcG for the heads up on this. I feel better about adding the upgraded wheels to my configuration.

 

[wts13]

Not really. First, the bill isn’t even close to law. Second, if you read it, the credit is only for lower-priced vehicles and cuts out at $40,000 income.

Where are you reading this? The summary text I read here only talks about a price limit and income limit for used cars

https://mikethompson.house.gov/sites/mikethompson.house.gov/files/GREEN Act 2021 sxs.pdf

 

[Needsdecaf]

Not really. First, the bill isn’t even close to law. Second, if you read it, the credit is only for lower-priced vehicles and cuts out at $40,000 income.

Seriously.

People need to read further than the headline.

 

[Kuzco]

Not really. First, the bill isn’t even close to law. Second, if you read it, the credit is only for lower-priced vehicles and cuts out at $40,000 income.

Any chance you could provide a link with more details about income/price limits? I did some quick googling & only saw info about California cracking down on their rebates.

I'm guessing maybe those are inherited from prior legislation? (Admittedly, I haven't followed this at all in the past).

 

[ct101]

Any chance you could provide a link with more details about income/price limits? I did some quick googling & only saw info about California cracking down on their rebates.

I'm guessing maybe those are inherited from prior legislation? (Admittedly, I haven't followed this at all in the past).

It’s been in the discussion of the legislation itself, from multiple sources. One of the main criticisms of the original credit by the Democrats was that it went mainly to wealthy people. The direct quote about those income limits (which line up with the current bill’s pre-owned limits) was on CNBC.

A lot of the discussion has been at the state level:

Rebates are key to Democrats’ transportation electrification package. Paying for them is a harder nut to crack. - Virginia Mercury

The chatter has been that income limits would be a condition to bringing any credit back. Right now it does directly mention used vehicles, but individual bill sponsors have directly mentioned adding an income cap.

Lobby groups have been pushing hard to limit the credit to non-luxury vehicles: Hey Congress – please fix the federal tax credit for electric cars

 

[ganderking]

Like ct101 said, this is nowhere near finalized but nonetheless on the horizon. I imagine if/when this comes to fruition, Elon will raise the prices of the vehicles to compensate so I wouldn't go cancelling your orders just yet. Also, Biden is pro-minority and low-income, so chances are any of you with decent earnings won't be able to take advantage of it with whatever constraints he'll apply. And, nothing in the summary talks about $7k and the only income/price limits are related to pre-existing electric cars; it reads:

Sec. 402. Credit for previously-owned qualified plug-in electric drive motor vehicles (§25E). The provision creates a new refundable credit for buyers of used plug-in electric cars from date of enactment through 2026. Buyers can claim a base credit of $1,250 for the purchase of qualifying used EVs, with additional incentives for battery capacity. The credit is capped at the lesser of $2,500 credit or 30% of the sale price. To qualify for this credit, used EVs must generally meet the eligibility requirements in the existing Section 30D credit for new EVs, not exceed a sale price of $25,000, and be a model year that is at least two years earlier than the date of sale. Buyers with up to $30,000 ($60,000 for married couples filing jointly) in adjusted gross income can claim the full amount of the credit. The credit phases out so that buyers with below $40,000 ($70,000 for married couples filing a joint return) in AGI may be eligible for a reduced credit.

 

[MarcG]

Not really. First, the bill isn’t even close to law. Second, if you read it, the credit is only for lower-priced vehicles and cuts out at $40,000 income.

That’s only for second-hand (used) purchases. Since the Democrats have a majority in the house and the senate, I am pretty confident the bill will pass.

Seriously.

People need to read further than the headline.

And maybe you should pay closer attention to what you read

 

[ucmndd]

Pleased to see this on the table again, but I think this thread and the conclusions being drawn are the very definition of premature celebration.

I don’t think anything is guaranteed in this Congress.

 

[Kuzco]

Sec. 402. Credit for previously-owned qualified plug-in electric drive motor vehicles (§25E). The provision creates a new refundable credit for buyers of used plug-in electric cars from date of enactment through 2026. Buyers can claim a base credit of $1,250 for the purchase of qualifying used EVs, with additional incentives for battery capacity. The credit is capped at the lesser of $2,500 credit or 30% of the sale price. To qualify for this credit, used EVs must generally meet the eligibility requirements in the existing Section 30D credit for new EVs, not exceed a sale price of $25,000, and be a model year that is at least two years earlier than the date of sale. Buyers with up to $30,000 ($60,000 for married couples filing jointly) in adjusted gross income can claim the full amount of the credit. The credit phases out so that buyers with below $40,000 ($70,000 for married couples filing a joint return) in AGI may be eligible for a reduced credit.

Wow, that seems like some NARROW criteria.

 

[Kuzco]

Pleased to see this on the table again, but I think this thread and the conclusions being drawn are the very definition of premature celebration.

So you're saying I shouldn't have already contacted HR to reduce my FIT withholding?

 

[ItsNotAboutTheMoney]

Wow, that seems like some NARROW criteria.

It's not that narrow. The price makes it used mainstream PEVs, and the income criteria is for people who're in groups that are least likely to buy new. It covers the bottom half of households.

 

[FutureShock]

Great that they’re working on this, but I blow through the income cap by... well, a lot. I’m sure plenty of ppl here are in the same boat. Not that I’m complaining, anyone with half a mind would rather have high income than a tax credit.

One of the main (and disingenuous) ways that EVs have consistently been attacked by the Koch/Exxon-puppet crowd is as ‘toys for the rich’. So, the Biden admin did need to kick the legs out from under that narrative.

That said, those caps still do sound a little low, if you ask me. Not that I’d qualify for moderately higher ones (and I’m good with that).
.

 

[Kuzco]

It's not that narrow. The price makes it used mainstream PEVs, and the income criteria is for people who're in groups that are least likely to buy new. It covers the bottom half of households.

Any one of these limits isn't too bad on its own, but the combination just seems to create a tight window. Why not bump the price cap to $35k-$40k to at least capture some baseline Model 3's? Or extend the phaseout window a bit more?

I'd also be interested to see the battery criteria for increasing the credit from $1,250 to $2,500. At $25k cap on the car purchase, we're not talking industry-leading battery tech & range. Seems like a missed opportunity to use tax policy to incentivize innovation & address range anxiety for the general population.

 

[ucmndd]

I'm perplexed and annoyed that they want to stick with this stupid per-manufacturer credit allocation system. Want to create real competition for EV dollars? Set a national limit for credits and when they're gone they're gone. The current system just ends up punishing the successful.

 

[Cleo-n-Company]

I get the feeling that Teslarati is the EV journalistic version of Newsmax

 

[Kuzco]

Great that they’re working on this, but I blow through the income cap by... well, a lot. I’m sure plenty of ppl here are in the same boat. Not that I’m complaining, anyone with half a mind would rather have high income than a tax credit.

One of the main (and disingenuous) ways that EVs have consistently been attacked by the Koch/Exxon-puppet crowd is as ‘toys for the rich’. So, the Biden admin did need to kick the legs out from under that narrative.

That said, those caps still do sound a little low, if you ask me. Not that I’d qualify for moderately higher ones (and I’m good with that).
.

Agreed. Tax incentives on a Plaid+ or Taycan Turbo will have some optics problems. There's plenty of grey area in the middle, but it seems like they really shot low here.

That used criteria is basically limiting to the Leaf/Bolt/i3 market. You'll accomplish a lot more in terms of shifting public opinion & encouraging widespread adoption If you bump that price cap up just enough to get some moderately used brands like Hyundai/Kia, or even entry-level Ford / Model 3. Then shift income limits (even if it's just through a wider phaseout) enough that you're not encouraging lower-income individuals to over-extend themselves on a $35k vehicle.