LLWS
Member
You’re spending a lot of time doing analysis and posting if you think the MY is over priced. Just cut bait on the MY idea and get a different car.
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Should I wait to Order MYLR? Tax Credit?
- Thread starter acpd
- Start date
I do think that. Only time will tell. Interest rates will continue to go up, which makes everything even more expensive.
For what it’s worth: the Tesla sales manager told me that Teslas will not qualify for the new credit.
That is also my understanding from reading the relevant provision of the bill and reading analysis from tax experts.
Unfortunately very few EVs will qualify.
We don't know until the battery mineral rules are defined but it does seem very few EVs will qualify. The suspicion is waivers will be issued in 2023.
2024 and the foreign entities of concern rule is a different issue.
Snow Drift
[Off-Road Assist] Activated
I ordered to lock in the current price, but will defer until 2023 to get the credit.
These cars so expensive now. Our 2020 MY was only $53k, and unfortunately I can't buy out the lease. We need the MY-AWD to come out in volume, but I doubt it will anytime soon with demand so high for the LR at full price.
These cars so expensive now. Our 2020 MY was only $53k, and unfortunately I can't buy out the lease. We need the MY-AWD to come out in volume, but I doubt it will anytime soon with demand so high for the LR at full price.
Not sure if it’s possible to get a waiver for any provision of the law, since it’s not an administrative rule. And if they do make an administrative rule, there will be the rule making process which will delay further. Then there will be the inevitable litigation. The bill is quite a mess from a legal perspective. It’s gonna make some lawyers a lot of money though!
Snow Drift
[Off-Road Assist] Activated
Do we know what % of critical minerals in the 2170 for US cars is from approved countries?
Built in US - Check
SUV Cost under $80k - Model Y, Check
Batteries from US/Partners - ???
Critical Minerals: To be eligible for the $3,750 critical minerals portion of the tax credit, the percentage of the value of the battery’s critical minerals that are extracted or processed in the United States or a U.S. free-trade agreement partner or recycled in North America, must increase according to the following schedule:
| Year | Critical minerals minimum percent value requirement |
|---|---|
| 2023 | 40% |
| 2024 | 50% |
| 2025 | 60% |
| 2026 | 70% |
| 2027 and later | 80% |
Battery Components: To be eligible for the $3,750 battery components portion of the tax credit, the percentage of the value of the battery’s components that are manufactured or assembled in North America must increase according to the following schedule:
| Year | Battery components minimum percent value requirement |
|---|---|
| 2023 | 50% |
| 2024 and 2025 | 60% |
| 2026 | 70% |
| 2027 | 80% |
| 2028 | 90% |
| 2029 and later | 100% |
It's a bit of a mess... the law says "40%" and "50%" of the value... well carmarker can perform some interesting financial engineering to work around it.
LLWS
Member
I don't even know if I understand this properly. Okay January 1st, the dealer where you pickup the car will give you $7,500 off the car. But you need to make less than $150k single or $300k combined, and you also need a tax liability of at least $7,500 in the same tax year. If you have less than a $7,500 tax liability you get the net difference down to zero with no option to turn the $7,500 or any portion into cash. If you already are forecasting a refund you just owe it back to the Treasury anyway?
Snow Drift
[Off-Road Assist] Activated
Assuming Tesla is eligible for the credits...
Jan 1 - $7,500 credit (max) is available as a Tax Credit when you file your taxes (Cash/Finance) or Added to Residual to lower your payments (Lease). How they did it in the past.
The Lease method does not take into account your Tax Liability bc the Lease Company gets it, they are just passing along the savings to the customer.
If you Finance/Cash, then yes, you need to be under the income limits and have a Federal tax liability of at least $7,500 (which means, basically anyone who can afford this car...it's your total Federal taxes due for the entire year, net credits and such, not money owed at tax time). If you somehow have less than a $7,500 federal tax liability, or use other credits that negate this one, the credit is NON-REFUNDABLE, so you can't turn it into cash. $5,000 liability = $5,000 refund or offset, but the $2,500 is lost forever.
LLWS
Member
Agree with how they did it in the past, I did a Model S and another EV under the first 200k EV cars program. What we're talking about here is a point of sale credit. I think what I did a terrible job of asking is could you end up owing the money back anyway depending on your circumstances?
Check this out:
Check this out:
Snow Drift
[Off-Road Assist] Activated
The Point of Sale credit is not until 2024. "Starting in 2024, the Inflation Reduction Act establishes a mechanism that will allow car buyers to transfer the credit to dealers at the point of sale so that it can directly reduce the purchase price."
That is just like the current lease program. Yes, you still have to qualify (income), but not tax liability.
How will they determine eligibility? That's up for debate. They already ask for income when processing the loan/lease. They could ask for previous year tax return, but it's not based on that, and having dealers as the police officers doesn't make sense. My guess: is they will have you sign a form which requires you to attest to your income eligibility, and understanding of potentially having to pay it back. The dealer will submit it to the IRS (like your bank for a 1099). You will then have to submit something with your tax return the following April. If you do not qualify, you will have a tax liability due, possibly with a penalty.
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ucmndd
Well-Known Member
For the record, that’s worth precisely nothing.
LLWS
Member
Okay. So how do we know the Y even qualifies in the first place? China is not a free trade country and a large portion of the battery components are likely to be sourced in China.
Great question. It appears to me that most seem to agree that Tesla (and most others) will only be elibible for the $3,750 made in NA portion in 23. Waiting for the Gov or Tesla to provide more info about the other $3,750 for battery components.
Correction: both halves are battery based. NA manufacturing is merely a requirement and doesn’t provide any credit
Here’s a great summary
Thanks. This chart seems to sum it best. The MYLR seems to be in good shape for the battery components, no one seems to have any clue abut the minerals (at least publicly available info).
I would not make a decision based on assumptions you'll get the whole $7500.
LLWS
Member
So basically in ACPD’s use case. Just lost easily $1500 in interest rate hikes on a potential $3750 savings. In the use case we’re waiting 100 days to order trying to avoid both a price increase and a holiday interest rate increase to save $2000 or >$30 a month on a 72 month car loan.
I think my argument might be the total cost of the car might actually cost less now without the rebate depending on that the Fed does. I have two Y Performances coming in the next two weeks. Rates have been locked for weeks. I don’t happen to qualify for the rebate thing, but I’m curious if I end up paying less total ownership cost versus those waiting for the rebate.
If I had more time today, I’d drop this into Excel and find out.
I think my argument might be the total cost of the car might actually cost less now without the rebate depending on that the Fed does. I have two Y Performances coming in the next two weeks. Rates have been locked for weeks. I don’t happen to qualify for the rebate thing, but I’m curious if I end up paying less total ownership cost versus those waiting for the rebate.
If I had more time today, I’d drop this into Excel and find out.
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Snow Drift
[Off-Road Assist] Activated
I would just say that Fed Funds Rate is not always directly related to new car APR. I just got an email for 0% financing for another brand.
Tesla is unlikely to raise prices. Actually some think they may have to lower prices. Even more so if interest rates rise.
$3,750 or sure and highly likely $7,500 savings is coming in 3 months.
Pluses for people with cash or big down payment, interest burden isn't that bad.
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