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Assuming that the "average family" is buying the "average car" is a common assumption that has no basis whatsoever in reality. That would require that all families of all incomes are buying new cars, not to mention the conflation of average with median.
That 50k income family is very unlikely to be buying a new car at all - they are probably buying a used car, letting someone of greater means eat that massive initial depreciation.
Unless "sedan" is some specific subset of new cars you are talking about, the average price of a new car is almost $34,000
flashflooder
Member
no, the $50k income family is maxing out their budget with a monthly payment by leasing a car they can't afford. At least, that's what seems to happen most often.
voip-ninja
Give me some sugar baby
Of course sedan is a specific subset of new car purchases and includes cars most similar to the Model 3. One of the reasons average new car price in the USA is $34,000 is the large number of expensive trucks and SUVs sold...
I agree. And I would go further and say that borrowing to buy a new car is a poor financial decision, considering how much more economical a used car is. If you have to go into debt to buy a car, better to buy a used one.
Caveat: The Model 3 is a special case since there's nothing quite like it on the used car market, and won't be for a few years. Some people have been waiting a very long time to get a 300-mile electric car, and could be willing to borrow in order not to have to wait another 3 or 4 years for used ones to hit the market in reasonable numbers. I would never borrow money to buy a new car. Debt is just too burdensome, both financially and emotionally.
(A special case would be if you have the money but it's invested and paying more interest than the cost of the loan. If your investment is paying 5% and you can get an auto loan for 3%, it's not the same as buying the car with money you don't have.)
SageBrush
REJECT Fascism
When you lease the car, the benefit goes to Tesla. Does Tesla help the lessee with their lease by reducing the lease payments because Tesla is getting $7500 credit?
The Lessor passes the $7500 credit back to the lessee by increasing the residual. The last time I checked, Tesla uses third party banks to underwrite their leases, usually US Bank (in the USA). So US Bank would pass the credit back to the lessee.
At some point I'm sure Tesla will create a Financial Services division where they can offer their own financing and leases, but right now, cash flow is key at this growth stage to fund capital improvements.
dgpcolorado
high altitude member
An additional point: since the tax credit is added to the residual it makes a "lease-to-own" strategy impractical. If one buys the car off-lease one loses the value of the tax credit because the residual value is increased.
A better way to do it, from the perspective of the lessee, would be for the leasing company to use the tax credit to lower the purchase price of the car and base lease payments on that lower cost and the "real" residual value, whatever it is.
This would definitely make it more appealing to the lessee as well as the ability to payoff the car at the end of the lease if you so desired.
However, from the lessor's perspective a $7500 reduction in purchase price like a capital cost reduction would reduce the calculated interest amount over the lease term. So the lessor would receive less interest since the principal amount is reduced by $7500. They would have to raise the money factor higher to offset the loss of interest. The money factor in Tesla leases are already absurdly high and would make it even higher.
Wow, slightly off topic but as far as buying expenses I just calculated that in CA taxes & fees for a 37k new car = 4,100! Ouch.
(calculator for CA here: https://www.dmv.ca.gov/wasapp/FeeCalculatorWeb/newVehicleFees.do )
Fwiw, I got to 37k by this calculation: 35k base + 1k paint +1k destination = 37k total price used for CA sales tax.
Good thing I'll save -7500 fed tax, -2500+ CA subsidy, -3500 for old car trade in or sale = 13500 to use towards loan & insurance payments...
(calculator for CA here: https://www.dmv.ca.gov/wasapp/FeeCalculatorWeb/newVehicleFees.do )
Fwiw, I got to 37k by this calculation: 35k base + 1k paint +1k destination = 37k total price used for CA sales tax.
Good thing I'll save -7500 fed tax, -2500+ CA subsidy, -3500 for old car trade in or sale = 13500 to use towards loan & insurance payments...
ElecFan
Member
If my calculation is right you'll pay 31,100$ (excl trade in). In my country NL prices for this version including taxes most probably will be ~50,000$. And for private buyers like myself there's no subsidy.
You US buyers are the lucky ones.
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WileyTheMan
Peanut Gallery Member
You talking about the CA tax credit? Don't count on that being available. Funds ran out and it hasn't been refunded yet. What money is left is being reserved for low income families.
I'm not saying this applies to you (maybe I misunderstood your calculations), but I don't quite understand why some people still think tax credit translates to a direct price reduction in cost.
omgwtfbyobbq
Active Member
Do you have any sources? The last I checked the CVRP program was fully funded.
What does the rebate waitlist mean to me?
CA has a 2500 subsidy.. you get a check. It is NOT a tax credit like the Fed 7500 one is.
And it is funded, CVRP Funding Status and as mentioned above: What does the rebate waitlist mean to me?
Funding for Electric Vehicle Rebates Approved in California
"On the final day of the legislative session, the California Legislature approved a budget bill that directs $1.5 billion in carbon auction revenues. A prior post described a bill that would have quadrupled state EV rebates: but it died."
And it is funded, CVRP Funding Status and as mentioned above: What does the rebate waitlist mean to me?
Funding for Electric Vehicle Rebates Approved in California
"On the final day of the legislative session, the California Legislature approved a budget bill that directs $1.5 billion in carbon auction revenues. A prior post described a bill that would have quadrupled state EV rebates: but it died."
The tax reform bill retains the full $7500 tax credit for 2018. So much for the doom & gloom from those that were certain the Republicans would kill the incentives. They didn’t.
on the other hand $50k will pay for a basic outpatient surgery in the US..If my calculation is right you'll pay 31,100$ (excl trade in). In my country NL prices for this version including taxes most probably will be ~50,000$. And for private buyers like myself there's no subsidy.
You US buyers are the lucky ones.
We always knew trump was gonna do the right thing. There was really nothing to worry about. I am pretty sure he has a high opinion of electric cars and is very concerned with the well being of the planet.The tax reform bill retains the full $7500 tax credit for 2018. So much for the doom & gloom from those that were certain the Republicans would kill the incentives. They didn’t.
I never, never thought for one second that he would end it.
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