X Fan
Active Member
Presuming someone has the right tax profile, might as well take advantage of the $7,500 discount/additional vehicle items.
-
Want to remove ads? Register an account and login to see fewer ads, and become a Supporting Member to remove almost all ads.
Official: 7,500 Tax Credit for deliveries before Dec 31 2018
- Thread starter autospy
- Start date
From my reading, it looks like the 7,500 comers off the basis, so it helps out business purchases when they sell the depreciated asset...
dhanson865
Well-Known Member
Don't think of it as 200,000 or 300,000 people in one line, think of it like
* 50,000 people in line for $64,000 Performance trim
* 100,000 people in line for $53,000 AWD "all in" AWD + PUP + LR
* 50,000 people in line for $49,000 "First available" - PUP + LR - NO AWD
* 50,000 people in line for $48,000 AWD LR - NO PUP
* 50,000 people in line for $44,000 AWD PUP - NO LR
* 50,000 people in line for $44,000 LR, no PUP, no AWD
* 50,000 people in line for $40,000 PUP, no AWD, no LR
* 50,000 people in line for $39,000 AWD - NO PUP - NO LR
* 50,000 people in line for $35,000 BASE BASE BASE Model 3 with no major options.
Any talk of what they can do in 3 months is for the top configs and there is a long line waiting behind that for cheaper configs.
Any time the queue empties more people like me with no reservation jump in and place an order.
Ugh. They NEED to make an SR option available though. It will eventually become unfair to those less fortunate if the tax credit phases out and the SR option doesn’t become available to a good portion of reservation holders.
I get the need to make money though. So hopefully they will make good on the statement that they will start making the SR once they are profitable.
dhanson865
Well-Known Member
I'd expect non LR configs to go live in Nov or Dec with Jan deliveries. It's $9,000 cheaper battery pack and only $3,750 difference in tax credit.
Also the VAST majority of those price sensitive enough to need both the non LR pack and the tax credit won't be able to claim $7,500 anyway. I've never in my life had a tax liability that high (my high mark was 5,xxx but I don't expect to hit that again anytime soon) .
Heck I sold some bitcoin last year and even the long term capital gains didn't push me above the $3,750 mark.
The vocal east coast and west coast minority will complain, higher cost of living, more taxes. But the majority of the US has a lower cost of living than LA, NY, and Miami.
Tesla can pump out 3-4,000 a week of the non LR and another 2-3,000 of the LR and performance in Q1+Q2 2019 and still service about 100,000 non LR pack orders (after pumping out full credit LR pack cars in Q3+Q4 2018 which should take care of another 100,000 or so). That should get the line waiters cleared out at half credit levels or better, and leave the later reservations for Q3+4 2019 and the $1,875 credit (which is still not a bad deal for price sensitive customers with low tax liability).
If the half credit of $3,750 is a deal breaker I'd suggest waiting for late 2019/early 2020 and trying to get a 2 year old Model 3 used. I'd bet you save more than $3,750 by letting someone else pay the depreciation.
Last edited:
I've been shouted down when I've tried to point this out in the past. A lot of people on the forum owe more than $7500 a year in federal income tax, but the majority of Americans don't. Through aggressive savings and generally a low overhead, I was able to buy an S, but I didn't use the full $7500 credit. I didn't even itemize that year, which I normally do, and I still only used about 2/3 of the credit.
There is a tax scenario out there for a family of 4 with a $100K household income who just barely owes $7500 in federal taxes.
For most people in the top couple percent of income, federal income taxes are a big bite of their total taxes, but for the bulk of the population, it's not that big compared to other taxes. Regressive taxes like sales tax, social security, and medicare taxes hit the lowest income earners the hardest. As a total percentage of income, someone making minimum wage is going to pay a bigger percentage of their total income to these taxes than someone making a few hundred thousand a year or more. Especially people with a lot of investment income which is not taxed for social security and medicare.
The Congressional Representative from Vermont proposed a bill to extend the tax credit another 10 years. It probably won't pass between the Democrats being in the minority and Congress being somewhat paralyzed to do anything, but a better proposal would be to give a government rebate on EV sales.
The incentive was designed to encourage high income earners to become early adopters of EVs and help the technology mature and get cheaper. In Tesla's case, it worked perfectly (the credit began phase out just as the first mass produced long range EV started hitting mass production numbers), but only so-so for other makers who burned up their credits with compliance cars. To push EVs down more into the middle class, a rebate off the purchase price would be a far more effective incentive.
A future EV incentive should be structured like the Cash for Clunkers program was. Give people a rebate on a new EV if they trade in an ICE for being taken off the road.
ℬête Noire
Active Member
But did you do any tax planning with your accountant to get extra income? The main strategy is to roll an IRA into a Roth, though I understand there are a few other potential ways (that you'd need to talk to your account about).
However, I'm not sure who shouted you down about the latter but I wholeheartedly agree that the Plug-in EV rebates are poorly structured and seem to have been drafted with the underlying assumption that EVs would always be extremely expensive. It's been over 10 years old so it isn't surprising that it needs a very serious rework, economic legislation like this rarely holds up even that long without active maintenance of adjustments to market conditions.
The $7500 just doesn't make much sense for the price tag of vehicles we're now starting to see (aside from the regressiveness of the whole thing to begin with, likely an artifact of getting the Congress votes to get it to pass in the first place).
voip-ninja
Give me some sugar baby
I don't think Tesla will offer a completely stripped down Model 3 SR until Q2 or Q3 of next year.
They will offer SR + PUP until the tax credits are nearly gone or until demand slacks off and they start to build inventory they can't quickly ship overseas.
dhanson865
Well-Known Member
Yeah, I didn't say completely stripped down base model. I just said non LR. I'm not confident on when the full on base model will make an appearance.
Currently I am leaning toward Tesla building SR+PUP at end of this year, the only difference is the battery pack. Probably much easier to manage the ramp and protect the margin.
chronopc
Active Member
They could just software restrict the battery and offer an option to unlock LR for $10k at a later time.
Highly doubt Tesla will do that, 25KWh battery is at least $2500 on the battery cell level.
ℬête Noire
Active Member
That's a pretty high % of sale price sitting there unsold, though. Probably about an extra $3300 manufacturing cost to them. They'd need really high conversion rate within the year or so (and $10K into an already used vehicle is a lot to sell)....plus the extra weight is going to pull the Wh/mi down.
ℬête Noire
Active Member
chronopc
Active Member
Didn't they do that on the S at one point though? I'm not sure how much of the battery was restricted by software though. Maybe not 25KWh worth.
60kWh on a 75kWh pack for sure.
Tesla remotely extends range of vehicles for free in Florida to help owners escape Hurricane Irma
Edit: also the 40/60, I think.
Last edited:
Yes, they did it on S/X. Keep in mind S/X are low volume vehicles and the price/margin are much higher than Model 3.
I don't have an accountant, my finances aren't complicated enough to justify it. There was no way to raise my income enough to get to $7500 owed.
My income has more in common with the typical Model 3 buyer than the typical Model S buyer. I was only able to afford the Model S because my overhead is significantly lower than the average American. I've always avoided debt and the only debt I've ever had was a mortgage, which is now fairly small. I also never had kids.
Tesla is not going to include expensive hardware in a car the end user isn't paying for unless they are pretty sure it's going to be unlocked someday. They came out with the software restricted 75 to 60 as an enticement for Model 3 reservation holders. They expected that a fairly large percentage of buyers would eventually pay to unlock the 75 KWH battery. It was a limited time offer to try and get some Model S sales from people waiting in line for the Model 3.
Tesla originally had the 40 KWH battery option (limited 60) to fulfill the requirements of the loan from the federal government. They had to make a car available for around $40K. The original plan was to make a battery pack that was only 40 KWH, but they found that for the volumes they expected to sell, making a 60 KWH pack and software limiting it was cheaper. Especially when they considered most buyers would eventually upgrade to a 60.
The Model 3 does have the full AP hardware suite whether you pay for it or not, but they expect a world where full autonomous driving will be a thing in the not too distant future and most people who didn't opt to full autonomy will end up forking over money to unlock it.
The battery situation is a different issue. There are enough superchargers around the short range Model 3 will be able to go on road trips, though not as conveniently as the LR, but most people holding out for the SR have said they aren't interested in the longer range because they don't expect to ever need it.
Considering the surprisingly long range of the Model 3 LR, I expect the SR will have a range somewhere in the ballpark of the Model S 75, which is fine for most people who aren't doing a lot of roadtrips and sufficient for the occasional road trip. Tesla would probably lose money making one battery pack and software locking it because not enough people would pay to unlock it down the road. Tesla had to do a special incentive, reduced price offer to get enough people to unlock the Model S 60 battery to make it worthwhile.
