How much longer will the $7500 tax credit last?

[bob_p]

We are planning to buy a second Model S to replace our ICE - and would like to wait a little longer to see if we can get AP 2.0 hardware and a 100Kwh battery pack (which would give us 20% more range over our P85).

One factor in the timing of our decision is expiration of the $7500 tax credit. Once Tesla sells their 200,000th car in the US, it appears this will trigger a phaseout of the tax credit over the following 12 months - reducing the credit to 50% for the first 6 months and to 25% for the next 6 months.

Do we know how many US cars Tesla has sold so far? And is there any projection on when they'll hit the 200,000 car trigger for US sales, and begin the tax credit phaseout?

 

[Max*]

I think you missed a step in the phase-out. It's the 2nd calendar quarter after the 200,000th car is sold in the US, It's not an instant on-off switch, you should still have enough time to buy a Tesla after the 200,000th car is sold to get the full $7,500.

 

[Boourns]

Because of the way it works, as Max* explained, there is room for manipulation by Tesla with regard to when the clock starts ticking after the 200,000th car. That plus the uncertainty of the Model 3 ramp up mean that no one really knows. (It also doesn't help that Tesla doesn't release U.S. specific sales figures).

I think most people have guessed they will deliver car 200k sometime in 2018. My WAG is that by late next year, when Model 3 features have been made public and the first cars are about to be delivered, you will be able to buy a Model S with AP 2.0 and a 100kWh battery. That should also be plenty of time to get the full tax credit.

 

[Cnasty]

I will be getting one with my S in this year's taxes and hope it holds out until my 3 on reserve comes as well.

I guess if i am getting a refund it will expand it by $7500 is my hope but could be wrong in trying to read through the process.

 

[Max*]

I guess if i am getting a refund it will expand it by $7500 is my hope but could be wrong in trying to read through the process.

If you paid $7,500 in taxes, you will get $7,500 back*.

It doesn't matter if you're getting a refund or if you owe the IRS money. If you're getting a refund, that just means that you overpaid the IRS during the tax year from withholdings from your paycheck (or other source of income). If you owe the IRS money, that just means that you didn't pay the tax man enough during the year, and he's coming to collect. Neither of these have any effect on the $7,500 tax credit.

*This is an oversimplification.

 

[Austin Powers]

Here is a related thread on Tesla forums that has some good insights on when the tax breaks might evaporate: When Does Tesla Reach the 200,000 US Mark (end of fed tax credit)? | Tesla Motors

 

[bob_p]

That's what I was looking for... Looks like 2017 should be a safe bet - and possibly into 2018 for the full $7500.

So, we should be good for our next Model S purchase - and the Model 3 we plan to buy to replace our classic P85.

Thanks!!!

 

[jelloslug]

My bet would be the end of 2nd quarter 2018 to be the earliest point for the cut to 50%. By the sales numbers I could find it looks like Tesla has sold ~86,000 cars in the US so far.

 

[Troy]

Do we know how many US cars Tesla has sold so far?

According to my calculation they are around 82,000 right now.

And is there any projection on when they'll hit the 200,000 car trigger for US sales?

Yes, I would expect them to reach 200,000 units in the USA in Q4 2017, meaning that full credits will last until the end of Q1 2018.

You can find my detailed calculations HERE in last few columns on the right side. I updated this sheet two days ago with latest numbers.

 

[Boourns]

According to my calculation they are around 82,000 right now.



Yes, I would expect them to reach 200,000 units in the USA in Q4 2017, meaning that full credits will last until the end of Q1 2018.

You can find my detailed calculations HERE in last few columns on the right side. I updated this sheet two days ago with latest numbers.

This is all presuming no manipulation by Tesla, right? I think Elon not so discretely implied they would be doing something to make it last as long as they could.

 

[Troy]

@Boourns,

I think it all depends on how many Model 3's will be delivered in 2017. Elon said 100-200,000 Model 3's in 2017. If we take the 100K number, the count at the end of Q4 2017 is about 245,000. A manipulation seems difficult but if they make 70,000 or less Model 3's in 2017, postponing the deadline one quarter seems possible.

 

[Boourns]

I think the idea would be to deliver 54,999 of those Model 3s in Q4 2017 (getting to 199,999 delivered) and hold the remainder until Jan. 1, 2018. Then produce and deliver as many as possible over the next two quarters. It would make a big difference in how well the Model 3 competes with the Bolt and similarly priced ICE cars. But then again Elon has always maintained that he wants the 3 to be competitive without the benefit of tax credits. So who knows.

BTW your spreadsheet is awesome. Thanks for taking the time to make it.

 

[Spidy]

According to my calculation they are around 82,000 right now.



Yes, I would expect them to reach 200,000 units in the USA in Q4 2017, meaning that full credits will last until the end of Q1 2018.

You can find my detailed calculations HERE in last few columns on the right side. I updated this sheet two days ago with latest numbers.

These numbers are overstating China sales. There is no way they had record sales and Tesla kept quiet. Not very significant so far, but will be important over the next quarters to adjust for that.

 

[Troy]

Hi Spidy. I checked the numbers again and I think you might be right. I've now made adjustments in Q1, Q2 2016. Basically what happens is, Tesla releases global quarterly sales and we have the Europe numbers from the wiki project but the divide between North America and Asia/Pacific is guess work, but only for 2016. Luckily for 2014 and 2015 Tesla released the USA numbers HERE on first page, second table. Thanks for the feedback.

 

[TaoJones]

Theoretically, producing unit 200,000 in hour 1 of day 1 of Q1, and at full production capacity (heh), means that Tesla would have a full 26 weeks (the rest of Q1 plus all of Q2 to produce as many as possible for domestic delivery. At a little over 7500 cars/week, that 200,000 number becomes 400,000. Et voila.

Practically speaking, it's all about when they produce that 200,000th unit, what production rate they're able to sustain, and what percentage of production they commit for the US market in the remaining partial quarter and full quarter after that.

And even then, in the following quarter (Q3), the tax credit still exists - just at half of what it was and then tapers therefrom.

Potential manipulation might mean that other markets would wait up to 6 months extra for delivery.
Better manipulation would be to extend the cap from 200,000 to 500,000 for all EVs manufactured in the US for all manufacturers.

 

[Boourns]

^ Not to nit pick, but the phase out is measured by the number of cars sold in the U.S., not produced. I believe that this has been interpreted to mean delivered (though I can't find anything official saying that. The IRS info just says "sold.") That means that technically, Tesla could build up an inventory of cars ready to be delivered and then release them all on day 1 of the quarter to maximize the number of people who get it. Or they could deliver as many cars as they wanted to Europe without it counting against the tax credit total.

 

[TaoJones]

Good catch. Am thinking that "delivered" would be the most favorable way to interpret "sold", although with the IRS, who knows.

Agreed about Europe, except that once the 200,000th unit is sold/delivered (which essentially means produced, less the buffer for inventory/loaner/demo cars which admittedly can be sizable), the clock starts ticking for the time period inclusive of the rest of that quarter plus the one to follow. Once the timer starts, it would be best for US customers for Tesla to produce 100% domestic product.

Since the feds just announced their $4.5B loan guarantee/incentives program, one does wonder if they wouldn't just step up and increase the threshold from 200,000 to something more meaty, such as 500,000 for everybody. If it involves Congress, well, then never mind, even though it constitutes only a measly extra $2.25B for each manufacturer. That's chump change compared to what the oil lobby gets.

 

[fallen888]

Slightly off topic, but I'm wondering how to maximize on the tax credit opportunity. I just updated the W-4 forms for my job and my wife's, adding a bunch more allowances, so that less taxes are withheld from paychecks and more is owed come tax season (with the idea of the credit covering the owed). But I'm wondering if I've added too many or not enough allowances. Is anyone aware of a somewhat simple and accurate way to calculate what would optimize my savings?

 

[Boourns]

Since the feds just announced their $4.5B loan guarantee/incentives program, one does wonder if they wouldn't just step up and increase the threshold from 200,000 to something more meaty, such as 500,000 for everybody. If it involves Congress, well, then never mind, even though it constitutes only a measly extra $2.25B for each manufacturer. That's chump change compared to what the oil lobby gets.

I would love that. Not to get political, but I think there may be some chance that could happen if the Dems retake the Senate, which is looking more and more likely with Trump's numbers cratering. If Trump wins or the Republicans hold the Senate, there's no chance. I have not read the Democratic platform, but does anyone know if there was anything about the EV tax credit or EVs in general in there?

 

[dehydratedH2O]

Slightly off topic, but I'm wondering how to maximize on the tax credit opportunity. I just updated the W-4 forms for my job and my wife's, adding a bunch more allowances, so that less taxes are withheld from paychecks and more is owed come tax season (with the idea of the credit covering the owed). But I'm wondering if I've added too many or not enough allowances. Is anyone aware of a somewhat simple and accurate way to calculate what would optimize my savings?

Allowances don't matter. It's your tax burden. If you have $7500 total withholdings for the year and apply for the EV rebate, you'll get a $7500 rebate when you file your taxes. If you want to go super nuts, you could work out your withholdings to where you'd technically owe $7500, then at filing time come out without much of a refund/balance due after taking the EV credit, but that's a lot of calculations that are unique to your situation probably better left to a CPA.

Personally, I'm not changing my W4 at all. The IRS can keep my $7500 till I file and then give it back. I'll live.