I think it is a safe assumption new non-Tesla EV prices will almost immediately drop significantly — formally and/or as part of the usual negotiating game — as the $7500 tax credit disappears. But given the reservations backlog Tesla will not have to follow suit for at least a year or more. While I don’t want to wait, I do have a budget for this second, daily driver car and have thought that if I wait two years, Model 3 prices will be lowered. Thoughts?
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ChadS
Last tank of gas: March 2009
It is possible, but not a given. Hybrid prices did not drop when their tax credits went away. Most EV manufacturers are operating on pretty slim margins and may not be able to afford price reductions (although "cost" is a complex topic that varies with volume, especially when considering compliance value).
EV prices in various countries and states do not seem to vary according to incentives, either.
As for Tesla specifically, they seem to prefer adding content when they can afford it to lowering prices.
EV prices in various countries and states do not seem to vary according to incentives, either.
As for Tesla specifically, they seem to prefer adding content when they can afford it to lowering prices.
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insaneoctane
Well-Known Member
I tend to think OP is correct. Loss of the credit seems likely to have most companies literally give up on their compliance vehicles. They were designed with the credit in mind. They know that they only sell because of the credit in today's environment. In most cases they are already losing money per vehicle anyway. So, since the cars are already somewhat of a write off for them, I think they know that they will have to deeply discount them to move them or risk stock piling them. Unfortunately, this will likely flood the EV market with a bunch of discounted vehicles. Tesla won't do this. The million dollar question is how does this affect the value of the Model 3 in 1 or 2 or 3 years? What will this do to Tesla's pricing after the pre orders that don't get canceled are filled?
These are the reasons why I think EV adoption rate is going to be seriously delayed by this:
[POLL] How much will loss of EV tax credit slow EV adoption rate?
These are the reasons why I think EV adoption rate is going to be seriously delayed by this:
[POLL] How much will loss of EV tax credit slow EV adoption rate?
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Uncle Paul
Well-Known Member
Tesla has a history of dropping prices when their costs also drop, but not in instances of local taxing variations.
They sell like hot cakes when local taxes make them less expensive than ICE vehicles, but at more normal rates when they are at parity.
I expect the prices of used Tesla's to increace in prices if the Federal Tax Credit is eliminated, as most buyers expect to compare the value of a used Tesla to what they could buy a new one for, including any tax breaks. If new Teslas cost more, the used ones will typically cost more as well.
They sell like hot cakes when local taxes make them less expensive than ICE vehicles, but at more normal rates when they are at parity.
I expect the prices of used Tesla's to increace in prices if the Federal Tax Credit is eliminated, as most buyers expect to compare the value of a used Tesla to what they could buy a new one for, including any tax breaks. If new Teslas cost more, the used ones will typically cost more as well.
Many cars are priced similarly across the globe with variations on import duties and exchange rates. Why would the prices drop $7500 or so in the USA when it's not priced at those discounts in other countries. Supply and demand will ultimately decide what people will pay for an EV and how much a discount the automakers are willing to give.
david_42
Member
I expect the advertised prices to go up, because most EV prices are advertised WITH the tax credit. The real price is generally in smaller print. Tesla, at least, advertises their price and says you might be able to get tax credits. And always keep in mind, even if you buy within the window, if you don't own enough in taxes, you lose part of the credit.
If the big auto minds are smart, short-sighted, and decide to act on their greed, they'll keep EV prices where they're at and drop some of their ICE prices in an effort to sway folks from going EV. I expect ICE makers to fight the EV movement until they absolutely have to get serious about making the switch to EVs.
CarlitoDoc
Member
Nope. In any case the eligibility for the tax credit is based on when you take possession of the vehicle and put it in to service, not when you paid for it. And if you had Tesla title the car to you so that you had "put it in to service" then it would be 100% your responsibility and you would likely need to start your insurance. (What happens if the vehicle is totaled while sitting on a Tesla lot when it is no longer their car.)
An article from The Economist, linked in a thread somewhere here on the TMC forums says that 2018 will be the year that BEVs become mainstream and everyone wants one. But with limited supply, demand will keep prices from dropping. In a decade, when the big automakers are taking BEVs seriously and building them in significant numbers, prices will come down.
If you cannot afford a Model 3 without the tax break, maybe consider a Leaf. Shorter range, no battery cooling, but otherwise a good car.
If you cannot afford a Model 3 without the tax break, maybe consider a Leaf. Shorter range, no battery cooling, but otherwise a good car.
alseTrick
Active Member
I think prices would drop. But i think Tesla would have a longer delay before dropping prices and have a smaller drop in price than competitor EVs.
whitex
Well-Known Member
The "negotiation at the dealer" doesn't change. You get the rebate after you buy the car, the dealer doesn't get it. The dealer cost, and therefore profit, doesn't change when the rebate goes away, so whatever your best price you can negotiate today will be the same if the rebate goes away - the only difference is you won't be able to get your rebate on next year's taxes.
What will change is some lease specials where the leasing company gets the $7,500 as the legal owner, so no more things like Leafs at $199 per month with $0 down.
The manufacturers are not likely to drop their prices since they are already complaining how low profit, or in some cases a loss, the EV is for them. If they could, they would have dropped the prices abroad where there is no $7,500 rebates.
You could buy an inventory model (which is not the same as CPO) so you dont have to wait until your custom car is completed in 2018, but you will take delivery still this year, and be eligible to get $7500 tax credit. Have you determined your model and features yet?
I disagree. When you are negotiating with the dealer, the dealer knows (today) that you will get the tax credit, so will hold out for a higher price. When the tax credit goes away (which it will eventually, now or later) the dealer knows that you are not getting the tax credit and so cannot use that as a negotiating point.
The tax credit lowers your total cost, but works against you in the negotiation. When it ends, the absence of the credit becomes a point in your favor when negotiating. The dealer does not have a set price. He wants to get as much out of you as he can, and will hold out for more if he knows you're getting the tax credit.
In addition, if the end of the tax credit does result in reduced demand and there are cars sitting on the lot, the dealer will settle for a lower price to get them off the lot. Prices will drop when the tax credit ends, though they will not drop as much as the credit.
Tesla is a different story because there is no negotiating. I like that about Tesla.
Sunshine State
Automotive Enthusiast
It is no secret and not disputed that tax credits are designed to aid the manufacturers and not the tax payer anyway. The idea is to offset higher invoice pricing until the manufacturers can lower the build costs to be competitive with mainstream manufacturers. If the prices on EV’s down come down with higher efficiency in scale and lower manufacturing costs then it is due to greed on the manufacturers part.
Sunshine State
Automotive Enthusiast
A large part of the reason why Tesla cars sell without discounts in other countries is the fact that some US niche product carries a premium in those countries. If they needed to discount that would happen without question. Premium US products carry a certain aura in other countries like well worn US jeans, Apple phones, and classic American cars. The higher pricing in those other country’s also has to due with market size and tighter availability. Most products are cheaper in the US and if Tesla wanted to lower sales in their core market (certainly not their objective) they could maintain pricing when the prices effectively go up by the $7500. Go price a Lexus or Genesis outside the US or look at the warranty outside the very competitive yet prized US market.
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Big-T
Member
I was talking about the Model 3 specifically. I've since seen the comments that while it might be technically possible, if Tesla signed a title over to me, I'd need to insure the vehicle and assume all responsibility for it.
On one hand, 3-4 months of extra insurance is going to be a fraction of the $7,500 I'd get back, and the chances of the Tesla getting totaled on the trailer to the store are minimal, but I'm not sure if an insurance company would even insure a car that doesn't exist yet.
Ah I see. I strongly doubt it, AFAIK you can only register and take possession once the Vin has been created. I am afraid you may be missing out on that $7500, per the proposed new tax plan to make anyone who orders after 12/31 ineligible. I hope Trump will be stopped, but that is the plan...
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