Tesla $7500 Tax Credit Coming Back?

[zignice]

I imagine a lot of Oct, Nov, Dec orders will be delayed or canceled when this bill gets signed. I‘m supposed to take delivery in a couple of weeks, but seriously have to consider waiting til Jan.

EV Tax Credits Could Be Back for Popular Brands and Used EVs under Proposed Law

 

[LeonC]

But be careful, dont add FSD to your model Y since it will get the MSRP over 80k cap.

 

[HawaiianLaker]

Page 386, line 3. Exception to point 2 above:

(2) FINAL ASSEMBLY.—The amendments made by subsection (b) shall apply to vehicles sold after the date of enactment of this Act.

Subsection (b) is page 366, line 15:

"the final assembly of which occurs within North America"

So...it is not clear to me whether qualifying Tesla clean cars "sold" after enactment in 2022 would qualify if delivered in 2022. Not sure how to define "sold" (versus placed into service), and not sure if this exception does mean Teslas (and other assembled in North America) will get the rebate upon enactment of this Act.

Inquiring minds want to know. Besides I assume this draft is subject to change as it works it way through the Congress.

I'm hoping that this means that the tax credit is valid once the bill is sign, then the credit is applied at point of sale. If signed in the next month, then I should be eligible! I guess we'll see. But if not, it may be worth it to eat the order fee and price increase for this credit.

 

[nate704]

I'm hoping that this means that the tax credit is valid once the bill is sign, then the credit is applied at point of sale. If signed in the next month, then I should be eligible! I guess we'll see. But if not, it may be worth it to eat the order fee and price increase for this credit.

I will be 01/01/2023 and after.

 

[Physicslawyer]

Read one opinion that the m3 rwd would not qualify with the china lfp battery

I saw this too.

 

[kugino]

You can switch between vehicle types? I thought you can only change within the Model 3 or model Y? Just curious

i just placed a new order.

 

[kugino]

Before anyone does anything, I would wait to see if

1. This bill actually passes. and
2. If it does, what will Tesla do with pricing?

Musk has been hinting that prices will be coming down soon with tweets saying that many of their commodity prices have come down and on the earnings call saying the current pricing of their vehicles is very high.
I can def see them lowering the price of the M3 LR to meet this.

With that said, for current reservation holders, if the price goes down below your reservation price, I'm assuming you will benefit from this as well?

yeah, if tesla doesnʻt lower M3LR price to get below the $55k limit...and if the M3 RWD doesnʻt qualify bc of the LFP battery, then the LR might actually cost the same as the RWD after the tax credit. this would be...not ideal for tesla.

 

[kugino]

yeah, if tesla doesnʻt lower M3LR price to get below the $55k limit...and if the M3 RWD doesnʻt qualify bc of the LFP battery, then the LR might actually cost the same as the RWD after the tax credit. this would be...not ideal for tesla.

oops, i meant "does" lower M3LR price...

 

[pepperoni]

The only reason Tesla would drop the M3LR price would be to attract more buyers. With estimated deliveries in 2023, demand does not seem to be their problem. That could change once the competition ramps up production, but it’s hard seeing this change any time soon.

Also, does anyone have a link to the current bill?

 

[Hookemhorns]

Read one opinion that the m3 rwd would not qualify with the china lfp battery

If I'm reading the current draft correctly, the battery requirement accounts for half of the $7500 credit. So a car with a battery substantially from China would qualify for a $3750 credit.

But lotsa daylight between now and final bill, so better not for an amateur like me to pick at nits until there's a final version.

 

[LeonC]

The only reason Tesla would drop the M3LR price would be to attract more buyers. With estimated deliveries in 2023, demand does not seem to be their problem. That could change once the competition ramps up production, but it’s hard seeing this change any time soon.

Also, does anyone have a link to the current bill?

https://www.democrats.senate.gov/imo/media/doc/inflation_reduction_act_of_2022.pdf

I think that's the one.

 

[kugino]

If I'm reading the current draft correctly, the battery requirement accounts for half of the $7500 credit. So a car with a battery substantially from China would qualify for a $3750 credit.

But lotsa daylight between now and final bill, so better not for an amateur like me to pick at nits until there's a final version.

yeah, this sounds correct

 

[Physicslawyer]

Would the full $7.5k apply towards the MYLR and MYP based on the battery requirement?

 

[Rocket_man]

Would the full $7.5k apply towards the MYLR and MYP based on the battery requirement?

Most people are assuming under the current language that the MY would be covered since it is under the SUV dollar cap. But I think these are the most troubling clauses....

1. $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)
2. 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)

What does '40% of its battery critical minerals' mean? I assume they are talking about the battery cells here. What does 40% mean? By weight? By cost? Does anyone know where Tesla gets the minerals for their battery cells? Lithium? Nickel? Cobalt? Aluminum? Likewise, 50% of the battery components? I assume this is the battery structure, containment, battery controllers etc. I assume Tesla has this part easily covered since the MY battery packs are made in the US. The minerals I really have no idea where they come from. Even for manufacturers from Korea, where are they getting their minerals? Not from Korea. Australia is okay, Chile is okay, China is not.

I couldn't find an exact make up of a Tesla NCA cell, but I found this from a paper on battery recycling...

"By weight percentage (g material/g battery), a typical lithium-ion battery comprises about: 7% Co, 7% Li (expressed as lithium carbonate equivalent, 1 g of lithium = 5.17 g LCE), 4% Ni, 5% Mn, 10% Cu, 15% Al, 16% graphite, and 36% other materials"

In reality this clause could cause a lot of issues. Hopefully it changes. Establishing new sources for minerals like these take time. So how are manufactures supposed to comply with this? Who do they have to 'prove' this to? Do they self-certify the make-up of the cells are compliant? What a mess. Hopefully this whole thing gets simplified before it passes.

 

[rwiegand]

It's pretty typical for a bill like this that the bill itself provides an outline of congress's intention and that the nitty details (like how do you actually determine a percentage, or what defines an "SUV") are determined in a subsequent regulatory process done by the agency charged with implementing and enforcing the legislation. That regulatory process can take months to years to complete and is subject to intense, mostly hidden, lobbying by the interested parties. So a lot of these questions will likely not be answerable the day the bill passes and is signed into law.

As an example, you can find the current federal definition of an SUV at: 40 CFR § 600.315-08 - Classes of comparable automobiles.

 

[White Shadow]

I'm pretty sure that I read an article or two where Elon says that he doesn't believe EVs should be subsidized at all. And if that's the case, I can't see Tesla lowering prices just to get under price caps for subsidies. Besides, the demand is already crazy right now for the Model 3 and Model Y, so why would they lower prices?

 

[Seminole]

VW just started production of the ID4 at the Chattanooga assembly plant. I think the article quoted them with having a production goal of 7000 vehicles/week by 2023. So this particular model will qualify.

Interesting to think the Mach-E currently does qualify for the tax credit, but won't qualify in the new bill, while the F150 Lightning will. Not sure how this will sit with Ford. GM probably isn't thrilled that the Lyriq and Hummer EV are going to be ineligible.

To reduce the price of the vehicles; Tesla has options. They can release more models with 250-300 miles of range vs 300-400 miles of range.

The Mach-E will qualify. The bill requires production in North America.

 

[TwelveVoltMan]

Where can I find the full text of this bill? Is there a phase out on the income limit, or is anyone who makes a penny more than $300K MAGI not qualified?

If the link above is to the correct version of the proposed bill, page 376 of that proposed bill seems to say that for married filing jointly $300k MAGI (in the current or previous tax year) is a threshold limit and there would not be a phase out.

 

[sgalla04]

The only reason Tesla would drop the M3LR price would be to attract more buyers. With estimated deliveries in 2023, demand does not seem to be their problem. That could change once the competition ramps up production, but it’s hard seeing this change any time soon.

Also, does anyone have a link to the current bill?

Tesla could lower prices of any models via lowering range at purchase and requiring a software add-on later to increase range. Tesla did this in Canada to allow folks to qualify for Canadian federal tax credits.

 

[wotblake]

Question regarding incoming caps, my income (joint AGI) was under $300,000 in 2021. It will be over $300,000 in 2022 and 2023. I have a Model Y performance on order. It should be here in October. If the bill passes, should I delay delivery until 2023 in hopes of possibly getting the $7,500? I'm not sure if they will use my most recent tax return (2021) to determine if I receive the $7,500 or if they will use 2022 (even if I have not yet filed at time of delivery) or even my 2023 return.