Model 3 and Federal tax credit

[GIdoc]

Loving the initial response to Part 1 of model 3 unveiling. I do wonder though, how many of these reservations will be able to actually get the full $7500 tax credit by the time delivery start.

My guesstimate is that by the time first Model 3 deliveries start, about 125,000 to 150,000 Model S and Xs would have been delivered in USA. It means about 50 to 75k model 3s will get full tax credit.

I think Tesla management is aware of this and that is why during presentations Elon said that "You will not get a better car for 35k" without any mention of tax incentives.

I think this is a good thing to be aware of for those who are planning to make a reservation now and assuming that they will still get full federal tax credit.

 

[rnelsonee]

Oh yeah, Tesla has always steered clear of mentioning the tax credit when talking about the Model 3. If Tesla is at 150,000 vehicles by the time the 3 comes out, than it will take less than 50,000 Model 3's to trigger the beginning of the phaseout because Tesla's going to keep making the S and X.

But note 200,000 is really only the trigger that starts the delay that starts the phaseout. If the 200,000th vehicle is delivered 2 years from now, and they're putting out 10,000 cars/month, then the first 50,000 of those cars above, plus 60,000 over the 6 months get the full credit. Then 60,000 get the $3750 and 60,000 out the $1875.

 

[Lunarx]

Do any of you understand this:

The qualified plug-in electric drive motor vehicle credit phases out for a manufacturer’s vehicles over the one-year period beginning with the second calendar quarter after the calendar quarter in which at least 200,000 qualifying vehicles manufactured by that manufacturer have been sold for use in the United States (determined on a cumulative basis for sales after December 31, 2009) (“phase-out period”). Qualifying vehicles manufactured by that manufacturer are eligible for 50 percent of the credit if acquired in the first two quarters of the phase-out period and 25 percent of the credit if acquired in the third or fourth quarter of the phase-out period. Vehicles manufactured by that manufacturer are not eligible for a credit if acquired after the phase-out period.

Plug-In Electric Drive Vehicle Credit (IRC 30D)

How do you interpret the 2nd Calendar Quarter?
Does it seem like people still get the full Tax Credit until then?
How many days are in that limbo period (of full Tax Credit)?

Also, does it seem like if 200K gets hit early in a quarter, then the whole rest of that quarter is a bonus limbo period?

 

[igorEV]

There is a "We the People" petition going on, that started suspiciously right after Model 3 reveal
If half of people who reserved sign it by May 2, it'd hit the 100k signatures and require some action. Long shot, but might as well!
Increase the EV tax credit cap per manufacturer. | We the People: Your Voice in Our Government

 

[S3XY]

Do any of you understand this:


Plug-In Electric Drive Vehicle Credit (IRC 30D)

How do you interpret the 2nd Calendar Quarter?
Does it seem like people still get the full Tax Credit until then?
How many days are in that limbo period (of full Tax Credit)?

Also, does it seem like if 200K gets hit early in a quarter, then the whole rest of that quarter is a bonus limbo period?

1) There are many posts explaining this in detail. Please do a search
2) Yes they do.
3) It varies. Once they hit 200k, all US buyers get the full credit for the rest of that quarter plus all buyers in the full next quarter get it.

 

[model3fan]

I wrote out the incentive stuff here with help from prior tmc posts, might help you understand

Incentives

Do any of you understand this:


Plug-In Electric Drive Vehicle Credit (IRC 30D)

How do you interpret the 2nd Calendar Quarter?
Does it seem like people still get the full Tax Credit until then?
How many days are in that limbo period (of full Tax Credit)?

Also, does it seem like if 200K gets hit early in a quarter, then the whole rest of that quarter is a bonus limbo period?

 

[Lunarx]

^ Thanks for the link.
The dhanson865 quotes describe 2 scenarios.

One scenario shows the crossing quarter and 1 subsequent quarter getting the full credit.

Other scenario shows the crossing quarter and 2 subsequent quarters getting the full credit.

Can both scenarios be right?

 

[Jersey Shore Tom]

^ Thanks for the link.
The dhanson865 quotes describe 2 scenarios.

One scenario shows the crossing quarter and 1 subsequent quarter getting the full credit.

Other scenario shows the crossing quarter and 2 subsequent quarters getting the full credit.

Can both scenarios be right?

It is crossing quarter and 1 subsequent quarter getting full credit.

The interesting point is when during the crossing quarter does the 200,000th US sale occur. For example, let's say the 200,000th sale happens on March 30th, 2018. Then sales for the remainder of the quarter, one day, March 31 and all of the next quarter (until June 30) qualify for the full credit.

If on the other hand a delivery truck gets delayed, wink wink, and that 200,000th US sale does not happen until April 2, 2018, then sales up to September 30, 2018 qualify for the full credit.

 

[Bimbels]

It is crossing quarter and 1 subsequent quarter getting full credit.

The interesting point is when during the crossing quarter does the 200,000th US sale occur. For example, let's say the 200,000th sale happens on March 30th, 2018. Then sales for the remainder of the quarter, one day, March 31 and all of the next quarter (until June 30) qualify for the full credit.

If on the other hand a delivery truck gets delayed, wink wink, and that 200,000th US sale does not happen until April 2, 2018, then sales up to September 30, 2018 qualify for the full credit.

And everyone is hoping that if they don't extend the credit, that truck gets lost.

 

[porsche1662]

.

 

[Jersey Shore Tom]

.

Porche1662, I guess you are literally speechless

 

[Stretch2727]

One interesting thing with the tax credit expiring is that up until this point that the tax credit was lost to "depreciation" on an electric car. If the new EV was $30K it immediately became worth $22.5K or less when you drove off the lot. No one would pay more than a new one for a used car of the same model. Essentially it discounted the car but it also set the ceiling for the price of used cars. There was no way to get the credit back when you sold the car.

The people that do get an early model 3 will not be effected by this. As soon as the tax credit expires their cars will be worth $7500 more as the ceiling price will be purchase price of a new one. Given the demand for these cars the resale values for the early buyers is going to be quite good to the point they will likely profit even after owning the car for a few years.

 

[brg2290]

It is crossing quarter and 1 subsequent quarter getting full credit.

The interesting point is when during the crossing quarter does the 200,000th US sale occur. For example, let's say the 200,000th sale happens on March 30th, 2018. Then sales for the remainder of the quarter, one day, March 31 and all of the next quarter (until June 30) qualify for the full credit.

If on the other hand a delivery truck gets delayed, wink wink, and that 200,000th US sale does not happen until April 2, 2018, then sales up to September 30, 2018 qualify for the full credit.

Without taking a day off, reserving online was my best option. I was able to secure my reservation about 7:40 p.m. Thursday night. When Elon came on stage at 8:30 p.m., he said reservations were up to ~ 115,000, so I figure I'm probably somewhere near 115,000 + / -. My whole goal for signing up early is to qualify for the full $7500 incentive.

The phase out scenarios portrayed by Tom present some interesting questions. As a stock holder, I typically like to see as many sales as possible in a given quarter to meet or exceed guidance. But, if my Model 3 is scheduled to be delivered on the bubble of an incentive decrease, I would prefer to see that delivery truck temporarily "delayed".

What just occured to me is that, by not wanting to take the day off and incur travel expenses to attend a brick an mortar signup, I may lose access to part or all of the tax incentive. Ouch!

 

[model3fan]

Without taking a day off, reserving online was my best option. I was able to secure my reservation about 7:40 p.m. Thursday night. When Elon came on stage at 8:30 p.m., he said reservations were up to ~ 115,000, so I figure I'm probably somewhere near 115,000 + / -. My whole goal for signing up early is to qualify for the full $7500 incentive.

The phase out scenarios portrayed by Tom present some interesting questions. As a stock holder, I typically like to see as many sales as possible in a given quarter to meet or exceed guidance. But, if my Model 3 is scheduled to be delivered on the bubble of an incentive decrease, I would prefer to see that delivery truck temporarily "delayed".

What just occured to me is that, by not wanting to take the day off and incur travel expenses to attend a brick an mortar signup, I may lose access to part or all of the tax incentive. Ouch!

I took the day off and was in line freezing at 6:20am EST, ordered placed 10:19am EST. If it makes you feel any better, I'm doubting I'll get the full tax incentive since I won't be getting a loaded model, and I'm east coast. Be great to get 50% but as the pre-orders roll in, it gets less and less likely in my eyes - I'll be lucky to even get the 25% ($1875). Ironically, if I knew I was going to get full or even half rebate, I'd probably spend the amount on extras if the pricing worked out to just about cover it.

 

[TwoM3's]

This might put some people's minds at ease.