Tax Credit Bill

[golfcart]

Any thoughts on how this new tax credit in the bill will impact Tesla? $80,000 cap on trucks and SUV will count towards every trim of the model Y but the $55000 cap for cars screws the model 3 LR and P trims. Not sure I understand the logic behind that distinction it seems like an EV is an EV and they shouldn't really incentivize buying trucks and SUV over sedans like that. My first instinct was that Elon needs to make the base price of the dual motor and performance model 3 $54,999 then charge $3k and $8k respectively to unlock some feature after purchase like autopilot or the second motor. If I had a RWD on order right now with a late 2022 delivery date I'd be doing everything I could to push it back. Obviously things could change a bit before it is finally signed...

Here are the main bullet points from the Elektrek article which claims to have had a lawyer look at the bill.

Senate moves forward with EV tax credit reform; Tesla (TSLA) to be included back and more

The US Senate is going to move forward with a sweeping new bill after Senator Joe Manchin finally accepted to...

electrek.co

New Vehicle Credit

1. Manufacturer caps eliminated. (Page 370, line 15)
2. Credit applies for vehicles purchased beginning January 1, 2023. (Page 386, line 1).
3. Transition provision for EVs with written sales orders dated in 2022 prior to the date of President signing the bill but delivered in 2023 allows purchaser to claim the “old” credit in 2023. (Page 386, line 20).
4. Vehicle must be assembled in North America to qualify for new credit. (Page 366, line 15).
5. North American assembly requirement applies to vehicles sold after the date of adoption of the bill. (Page 386, line 3)
6. $7,500 credit is broke into two binary pieces meaning the vehicle either qualifies for each piece of the credit or it doesn’t. No longer based on size of battery. (Page 366, line 6)
7. $3,750 of the new credit is based upon the vehicle having at least 40% of its battery critical minerals from the United States or countries with a free trade agreement with the United States. This is a list of countries with free trade agreements with the US.(Page 371)
8. The other $3,750 of the new credit is based on at least 50% of the battery components of the vehicle coming from the United States or countries with a free trade agreement with the US. (Page 372, line 13)
9. The 40% minerals requirement increases to 50% in 2024, 60% in 2025, 70% in 2026 and 80% in 2027. (page 371 line 23)
10. The 50% battery components requirement increases to 60% in 2024, 70% in 2026, 80% in 2027, 90% in 2028 and 100% in 2029. (Page line 373)
11. The government has until the end of the year to develop guidance on the battery requirements. (Page 374)
12. Beginning in 2025, any vehicle with battery minerals or components from a foreign entity of concern are excluded from the tax credit. (Page 374, line 20).
13. One credit per vehicle. (Page 375, line 12)
14. Modified gross income limit of $150k for individuals, $225k for head of household, and $300k for joint returns. Definition of MAGI (page 375, line 22)
15. MSRP of vehicle must be $80k or less for SUVs, Vans and Trucks. $55k for all other vehicles. (Page 377, line 4)
16. Dealer can apply credit at time of sale. Dealer must disclose to buyer the MSRP of the vehicle, the applicable tax credit amount and the amount of any other available incentive applicable to the purchase. (Page 378, line 6)
17. Credit terminates December 31, 2032.

Used Vehicle Credit

1. Tax credit of 30% of value of used EV with $4,000 cap (Page 387, line 23).
2. Used vehicle must be at least two model years old at time of sale. (Page 389, line 7).
3. The original use of the vehicle must have occurred with an individual other than the one claiming the used tax credit. (Page 389, line 10).
4. Used vehicle must be purchased from a dealer. (Page 390, line 3).
5. Used vehicle price must be $25k or less. (Page 390, line 5).
6. Used vehicle qualifies for tax credit only once in its lifetime. (Page 390, line 7)
7. Purchaser must be an individual (no businesses) to qualify for used credit. (Page 390, line 14).
8. Purchaser may only claim one used vehicle credit per three years. (Page 390, line 20).
9. Modified gross income cap of $75k for individuals, $112,500 for head of household and $150k for joint returns. (Page 388).
10. Credit may be applied at time of sale by dealer. (Page 391, line 15).
11. Credit terminates on December 31, 2032. (Page 391, line 12).

 

[Buckeyedoc]

If you place an order today but take delivery in 2023, aren’t you agreeing to the price at the time of the down payment? Assuming they are issuing the credit at the time of sale, would Tesla retroactively lower the final sales price once the bill becomes law?

 

[HankLloydRight]

If you place an order today but take delivery in 2023, aren’t you agreeing to the price at the time of the down payment? Assuming they are issuing the credit at the time of sale, would Tesla retroactively lower the final sales price once the bill becomes law?

Definitely not.

 

[Ben Tran]

I bought tesla model y performance in June 2022 and is not eligible for tax credit because it must be purchased from Jan 2023.
So if I trade in my car to the exact same model, due to the tax credit I would break even or lower my loan, is it right?

 

[DrGriz]

I wouldn't speculate too much here or make too many plans until we see a final bill passed. It's not guaranteed at all.

 

[RSpanner]

Tax credits don't do anything to help those who have enough to buy one but live on a fixed income and can not use the credit. Probably a minority, but that's us.

 

[OldEVDude]

Tax credits don't do anything to help those who have enough to buy one but live on a fixed income and can not use the credit. Probably a minority, but that's us.

That would depend on whether or not the final law makes it a "refundable" tax credit. If you get a refundable tax credit, and the credit exceeds your tax liability, then you get cash from the Federal Government to cover the difference.

For example, suppose you owed taxes of $2,000 for 2022, but you bought a car eligible for a $7,500 refundable tax credit. When you file your taxes in 2023, you would pay nothing in taxes, and get back a $5,500 check.

As far as I can tell, existing tax credits have been non-refundable, but we need to see what the final law looks like.

 

[Whatstreet]

The proposed 2023 EV incentive is more like a point of sale rebate. If passed, it will have nothing to do with federal income tax liability.

At this moment, I have doubts that any car by any manufacturer will qualify for the full rebate. In a year or so there might be a few built by GM that are eligible for the full tax credit. Just speculation.

I would like to find a list of cars that would qualify and for how much, but there is no such list around where I can find it. I suspect no one will bother to publish one while it isn't law. But it is information that a senator would need to know.

 

[Watts_Up]

Something that may be missing in this bill is to cover motorcycles or tricycles, like the Aptera.

Aptera and the tax credit: I don't think we're getting it guys​

 

[Whatstreet]

Something that may be missing in this bill is to cover motorcycles or tricycles, like the Aptera.

Aptera and the tax credit: I don't think we're getting it guys​

I know Watt. The number of wheels the vehicle must have, was not stipulated so even unicycle is eligible.

 

[Watts_Up]

I know Watt. The number of wheels the vehicle must have, was not stipulated so even unicycle is eligible.

I think that the DMV makes distinctions between 2 or 3 wheelers and 4 wheelers vehicles
by having different safety regulations, such as having seatbelts and air bags for example.

I think that was the point made in the above Aptera video?

15. MSRP of vehicle must be $80k or less for SUVs, Vans and Trucks. $55k for all other vehicles. (Page 377, line 4)

Something that is a little bit fuzzy is the distinction between a Sedan and an SUV.
I could not find any specifc definition beside something like:

A sedan is a type of car that has four wheels, four doors, and a low ground clearance ​

while a sports utility vehicle (SUV) is a type of car that also has four wheels ​

and four doors but has a high ground clearance.​

​

The ground clearance of the Model 3 is 5.5" and the Model Y is 6.6".
But is there a precise ground clearance value used to make a distinction between a Sedan and an SUV?

The Polestar 2 has a 5.9" ground clerance, so is it a Sedan or an SUV?

 

[golfcart]

Something that is a little bit fuzzy is the distinction between a Sedan and an SUV.
I could not find any specifc definition beside something like:

A sedan is a type of car that has four wheels, four doors, and a low ground clearance ​

while a sports utility vehicle (SUV) is a type of car that also has four wheels ​

and four doors but has a high ground clearance.​

​

The ground clearance of the Model 3 is 5.5" and the Model Y is 6.6".
But is there a precise ground clearance value used to make a distinction between a Sedan and an SUV?

The Polestar 2 has a 5.9" ground clerance, so is it a Sedan or an SUV?

I have no idea the exact distinction I’m sure there is some bureaucrat somewhere that decrees what is an SUV vs sedan. I agree the whole crossover segment really blurs that line. Hopefully they get rid of that part and just put a hard cap on the cost of any passenger vehicle that can be eligible… it is cleaner and makes more sense than the current wording IMO.

 

[Whatstreet]

I think that the DMV makes distinctions between 2 or 3 wheelers and 4 wheelers vehicles
by having different safety regulations, such as having seatbelts and air bags for example.

I think that was the point made in the above Aptera video?



Something that is a little bit fuzzy is the distinction between a Sedan and an SUV.
I could not find any specifc definition beside something like:

A sedan is a type of car that has four wheels, four doors, and a low ground clearance ​

while a sports utility vehicle (SUV) is a type of car that also has four wheels ​

and four doors but has a high ground clearance.​

​

The ground clearance of the Model 3 is 5.5" and the Model Y is 6.6".
But is there a precise ground clearance value used to make a distinction between a Sedan and an SUV?

The Polestar 2 has a 5.9" ground clerance, so is it a Sedan or an SUV?

It appears that an SUV is a vehicle that was called an SUV by the manufacturer.

 

[North75]

So does anybody know how the law affects vehicles that are still eligible under the old system between now and Dec 31st?
I’m interested in purchasing a vehicle from a manufacturer that still has full credits left. My issue is that I am over the $300,000 income limit. as far as I know there is no income limit under the old system. If I purchase the car before the end of the year can I still claim the old credit? Or does this screw it up?

I suspect that a lot of potential EV buyers are going to be over the income limits. I know you can argue whether high earners should get a credit or not, I just know that in high tax areas where EVs are popular, $300,000 for joint family income isn’t that uncommon.

 

[golfcart]

So does anybody know how the law affects vehicles that are still eligible under the old system between now and Dec 31st?
I’m interested in purchasing a vehicle from a manufacturer that still has full credits left. My issue is that I am over the $300,000 income limit. as far as I know there is no income limit under the old system. If I purchase the car before the end of the year can I still claim the old credit? Or does this screw it up?

I suspect that a lot of potential EV buyers are going to be over the income limits. I know you can argue whether high earners should get a credit or not, I just know that in high tax areas where EVs are popular, $300,000 for joint family income isn’t that uncommon.

You have to have ordered the vehicle this year before the bill is signed into law in order to claim the credit next year. If you take delivery this year you are fine no matter when you order. That was my understanding anyways… always confirm with your tax professional I am not an accountant.

 

[Watts_Up]

So does anybody know how the law affects vehicles that are still eligible under the old system between now and Dec 31st?

I think that was a complain for new EV manufacturers, like Rivian,
who could take advantage of the previous 200k vehicles limit,
but would not be eligible withe the law because of the $80k limit.

 

[al-capone]

What will Tesla do now ?

1) Change M3 RWD battery to US made one (say 4680 or NCA/whatever in MR LR right now) and increase MSRP but still keep under $55k
2) Offer a cheaper less range version of LR with US made battery priced at $55k
3) Both 1) and 2)

Hope Elon reads this. I am old school not on twitter. Maybe someone can tweet him ideas like this. Any other variation you guys can think of ?

 

[Whatstreet]

My question is which cars qualify for the full rebate. It is clear that 70% of EVs on the market today will not qualify because they are not assembled in North America. How many EVs that are assembled in North America meet the battery requirements for the full credit. Maybe none but given time some will.

How can the Model Y become the highest volume sold in 2023 with current prices, even with full incentives.

 

[Occhis]

This from a consumer reports article:

 

[vickh]

My question is which cars qualify for the full rebate. It is clear that 70% of EVs on the market today will not qualify because they are not assembled in North America. How many EVs that are assembled in North America meet the battery requirements for the full credit. Maybe none but given time some will.

How can the Model Y become the highest volume sold in 2023 with current prices, even with full incentives.

same question, but what's the cheapest 3 row SUV.

Do PHEV's qualify?