IRS definitions of what's a car vs SUV by manufacturer for $55k vs $80k price limit

[yobigd20]

I guess it depends on what the IRS considers the "base retail price".

So for a theoretical base $55k Model Y, would $55k be "base retail price"? Or the final cost with any customer spec'd add-ons such as color, wheels that would contribute to the base MSRP? But FSD is not a physical equipment?

...

So what's the "base retail price" or MSRP in my case?
I would argue that the base is $41k + $8990 for the total of $49,990.
Then $4k of "optional equipment" for a total MSRP of $54k

I am the opposite. FSD is listed on the sticker but I do not have FSD nor did I pay for it. My MVPA price is $68900, not $85190.

Now lets say this was a 7 seater under the current rules, my MVPA is under $80k but the sticker is above $80k. Now if this was a 7 seater and if I had bought this next month instead of a few days ago, would it have qualified ? According to the sticker, No. But according to the MVPA, then yes. So which is it? Man this is going to be a clusterf*** for so many people.

 

[RoBoRaT]

I highly doubt they will do that. Instead they might just discontinue the 5 seater, and only sell 7 seaters to get the tax credit.

I'd buy a 7 seater MY Performance, if Tesla make them. It's listed under $80K limit.

Tesla prolly list it $77,999 just to get under $80K if with paint or interior upgrade.

 

[Seminole]

Dollars to doughnuts The IRS is going to simply go by whatever the MSRP on the window sticker is less destination charge. The discussion of “physical” vs “software” means nothing because the intent of the language is basically the MSRP of the car as it is delivered to the dealer. There’s a ton of features on cars you could argue as software only, Blue Cruise and Super Cruise for example, Sirus XM capability, certain tech packages. A lot of cars these days come with the hardware already installed and a separate fee is charged for the software to be activated. There’s no way the IRS will be doing the administrative burden of determining which features are physical vs not. I bet clarifying language is put out regarding this.

The smart move is for Tesla to make it a “dealer accessory” so it’s outside the MSRP and not listed on the window sticker.

 

[randmness]

Dollars to doughnuts The IRS is going to simply go by whatever the MSRP on the window sticker is less destination charge. The discussion of “physical” vs “software” means nothing because the intent of the language is basically the MSRP of the car as it is delivered to the dealer.

The smart move is for Tesla to make it a “dealer accessory” so it’s outside the MSRP and not listed on the window sticker

Agreed. I really doubt the IRS is going to care about what’s on the sticker of the car vs what is in the MVP/registration/titling details with the state.

Tesla already has a subscription option for FSD, so paying $15k upfront probably will make even less sense (should prices drop to meet this.)

 

[AndrewZ]

@ the comparisons to the Volkswagens: I'm trying to figure out why the ID.4 Pro would qualify while the Standard does not, it has a bigger battery right? But that of course doesn't apply to the Y 7-seat vs 5-seat.

But I would wonder how many ID.4's and Pros are even manufactured domestically or in FT companies or with battery components or minerals that don't come from a foreign entity of concern, this might mostly be a moot point and moreso the government trying to wrangle resource/manufacturing investment etc away from other countries

 

[BrownOuttaSpec]

Couldnt they sell a 'nerfed' battery option with a software locked pack of say 90 miles for $55k and then you pay the $10k or whatever extra to unlock the full battery after purchase. Seems rather shady, but so does the IRS's definition of a 'SUV'.

 

[Unclepaul]

The Government will make the rules. Telsa will adapt to the rules. Customers will decide based on Tesla adaptations.

 

[randmness]

While we now know the price brackets for the eligible EVs, has anyone found info on how much credit each vehicle qualifies for?

I’m guessing they have until the 2023 tax season to nail down, but just curious really.

 

[acpd]

While we now know the price brackets for the eligible EVs, has anyone found info on how much credit each vehicle qualifies for?

I’m guessing they have until the 2023 tax season to nail down, but just curious really.

$7500

 

[WyoDude]

This matches my initial guess. based on the number of seats. I am guessing Tesla will make 5 seats Y starting from $55000 and 7 seats option for additional $5000 or more instead of $3000

Why would they change the price of the seats?

 

[WyoDude]

I wonder if they’ll lower the price of FSD, or potentially option out the equipment entirely. I can’t imagine the take rate has been particularly high the last quarter. $15K FSD option on a $55K car sounds wild.

A part of me thinks that’s the point of the 15k price point. They are pushing people to the subscription which is better on both side in many ways. It allows them to keep it as an option, provides a large cushion for all the future unknowns for those who do take it and makes the subscription look like a better deal.

 

[WyoDude]

If Tesla decides to keep the MYLR5 under the bracket then they'll have to make the MYAWD5 (SR) something like $50k to 52k, not sure if they're willing to do that. Maybe Tesla will only lower MYAWD5 to $55k, and lower MYLR5 to $57k to compensate its disqualification. The 7 seater option is a tricky one, I can see them increase the option cost significantly, but still worthwhile for customer to pick.

If MYLR5 was lowered to 57k I’d be pretty happy at that price point.

 

[kenstl]

If they reduce the MY LR to under $55k, that will make this past end of year run of $7500 discount a total bust for buyers, and even worse for those that purchased in November / first part of December at the $65,900 price. Yikes! I was torn on whether to take a December delivery or not with all of the unknowns with the IRA and the economy / demand in 2023. It will be interesting to see how pricing shakes out.

 

[kabin]

Gotta wonder if the administration is applying a little competitive pain to the Model Y 5 seater. Oh well, if it stands the 7 seater will be the the high production model Y.

 

[randmness]

$7500

The IRS said it’s eligible for $7500?

 

[MP3Mike]

The IRS said it’s eligible for $7500?

It is either $7500 or nothing, at least until the mineral guidance is released in March.

 

[hmmwv]

@ the comparisons to the Volkswagens: I'm trying to figure out why the ID.4 Pro would qualify while the Standard does not, it has a bigger battery right? But that of course doesn't apply to the Y 7-seat vs 5-seat.

But I would wonder how many ID.4's and Pros are even manufactured domestically or in FT companies or with battery components or minerals that don't come from a foreign entity of concern, this might mostly be a moot point and moreso the government trying to wrangle resource/manufacturing investment etc away from other countries

It's actually quite amusing, for IRS the ID.4 has to have AWD to qualify as "Sport," but having AWD doesn't save Mach-E at all, and since Model Y are all AWD you'll have to have 7 seat to qualify for the "utility" part. I know I know the "standard" is completely nonexistent here. It's like IRS is actively trolling the public here.

 

[Thud]

55k Tesla would have to be the base model. Throw just one option and you’re over. More likely, Tesla starts selling a whole bunch of 7 seaters at Fremont and now Austin. MYP is out of the picture.

Yeah then the tow hitch effectively becomes an $8500 option if it crosses the threshold. You’d be better off getting a loaded MYLR with 7 seats compared to a base model 5-seater with just 1 option.

This assumes that the base price of the Y will drop by $11k in the first place which is not likely.

 

[pipestem]

For several makers the list shows this text below. Others are surprising also. This might not be the last update for Tesla of any other.


This manufacturer has entered into a written agreement with us to become a "qualified manufacturer" but hasn't yet submitted a list of specific makes and models that are eligible. Please check back here for updated information.

 

[barjohn]

I think this ruling is challengeable under the IRA law. The following is the law as written:

`(11) Manufacturer's suggested retail price limitation.--
``(A) In general.--No credit shall be allowed under
subsection (a) for a vehicle with a manufacturer's
suggested retail price in excess of the applicable
limitation.
``(B) Applicable limitation.--For purposes of
subparagraph (A), the applicable limitation for each
vehicle classification is as follows:
``(i) Vans.--In the case of a van, $80,000.
``(ii) Sport utility vehicles.--In the case of
a sport utility vehicle, $80,000.
``(iii) Pickup trucks.--In the case of a
pickup truck, $80,000.
``(iv) Other.--In the case of any other
vehicle, $55,000.
``(C) <> Regulations and
guidance.--For purposes of this paragraph, the Secretary
shall prescribe such regulations or other guidance as
the Secretary determines necessary for determining
vehicle classifications using criteria similar to that
employed by the Environmental Protection Agency and the
Department of the Energy to determine size and class of
vehicles.''.
So, since the EPA has defined vehicle classes and even lists the vehicles that fall into each class, it appears that the IRS should adopt those classifications. The Tesla Model Y falls under the small SUV class. If they used the same criteria, they should produce the same results. Granted they are given some flexibility but why have two different government agencies creating different definitions? This is confusing to the public and appears to fly in the face of the intent of the law which is to encourage EV sales.