Tesla EV Tax Credits coming back?

[ItsNotAboutTheMoney]

Will the Model Y's qualify? Since they are crossover SUV?

See the link posted in the post upthread:

Tesla EV Tax Credits coming back?

I'm curious if any Tesla vehicle will qualify for the full $7500. It looks like the $7500 is split into two $3500 allowances: According to this site, Tesla Model 3 Standard Range, all Model Y's, and the CyberTruck will qualify for the full $7.5K credit...

teslamotorsclub.com

That would be a yes.

Corollary: when you see an article saying "The majority of new vehicle sales in the USA are trucks", take it with a large bag of salt.

 

[M3BlueGeorgia]

If I were Tesla, I would raise price by $7,000 and include the "Full Self Driving" option with each car. Then they can call it a $3,000 discount when they are actually raising the average transaction price by quite some margin.

Then none of their vehicles would qualify for the tax credit...

 

[randmness]

I'm still curious to see what vehicles will actually qualify. Does any Tesla (or OEM) meet the 40% of its battery critical minerals, and 50% of the battery components, origin thresholds?

Proposed Tax Break for Buying Electric Vehicles Is Too Hard to Get, Auto Makers Say

Draft rules for battery parts and minerals mean few current vehicles would be eligible, say lobbyists.

www.wsj.com

"Tesla has been investing in a battery supply chain for longer than traditional auto makers. Still, its vehicles likely wouldn’t qualify for tax credits under the proposed rules, people familiar with the company said. The company didn’t reply to a request for comment."

 

[ElectricIAC]

It’s clearly just cover for passing a Tax and Spend initiative. Why else would you significantly bolster the budget of the most hated three letter agency.

It’s not for those greedy awful billionaires, I assure you.

 

[dipper]

I was reading 70% of PHEV/BEV automatically disqualified. And 0 EVs will qualify in 2024.... for full credit.

Even the mighty Tesla will have issues with FTA sourced battery materials.

Guess I will not buying an EV until full credit is available. Or I will have to buy my next EV through business write off.

I think EV sales may slow down with this new bill, Tesla exempt of course.

 

[ElectricIAC]

I was reading 70% of PHEV/BEV automatically disqualified. And 0 EVs will qualify in 2024.... for full credit.

Even the mighty Tesla will have issues with FTA sourced battery materials.

Yuuuup! That regret is gonna set in fast as audit notices start getting sent at record pace.

All it cost was fixing an EV credit policy that wasn’t necessarily broken.

 

[MP3Mike]

And 0 EVs will qualify in 2024.... for full credit.

There is no way to know that at this point. Mineral sourcing/refining could change before then.

 

[dipper]

There is no way to know that at this point. Mineral sourcing/refining could change before then.

You are telling me that automakers' contracts for cars in production (or near) will change in the next 15 months?

Aren't contracts written in years ahead for supply stability?

I can see adding new materials contracts if a product is a hot seller. Outside of Tesla, EVs have not really move off the shelf without incentives.

 

[Norbert]

There is no way to know that at this point. Mineral sourcing/refining could change before then.

The first $3750 depend on the percentage of "critical minerals" "extracted or processed" in the US or a country with free trade agreement (or recycled in North America).

Not an expert in reading such texts, but maybe a lot depends on how exactly the term "processed" will be interpreted. Perhaps it does not mean that the raw material needs to be *mined* in such a country, but only that the raw material is then processed in such a country. If so, this might be easier to achieve. Or is this too optimistic an interpretation?

The second $3750 depend on the percentage of the "components" in the battery that were "manufactured or assembled in North America".
So it might be enough for the final assembly of the battery pack to happen in North America.

Apparently both conditions depend on how exactly they are "prescribed by the Secretary".

I'd think at least the second $3750 should be practical, and that is a meaningful value, without the limitation by number of vehicles per manufacturer. Even if much smaller than the indirect cost of climate change.

 

[MP3Mike]

Not an expert in reading such texts, but maybe a lot depends on how exactly the term "processed" will be interpreted. Perhaps it does not mean that the raw material needs to be *mined* in such a country, but only that the raw material is then processed in such a country. If so, this might be easier to achieve. Or is this too optimistic an interpretation?

Yep. The problem is, and Elon has complained about it, is that almost all refining/processing is done in China. Requiring shipping all over the place, and back again.

But, yeah, does taking a mineral refined in China but finally turned into the Anode in the US count? What if it is mined in Canada and then refined in China?

I'd think at least the second $3750 should be practical, and that is a meaningful value, without the limitation by number of vehicles per manufacturer. Even if much smaller than the indirect cost of climate change.

Yes, the Model Y will most likely qualify for that portion.

 

[Norbert]

Yep. The problem is, and Elon has complained about it, is that almost all refining/processing is done in China. Requiring shipping all over the place, and back again.

Shipping it back? Why is processing something to be done in China? Is it difficult to do in the US?
Where did Elon talk about that?

But, yeah, does taking a mineral refined in China but finally turned into the Anode in the US count? What if it is mined in Canada and then refined in China?

Yes, I was wondering if it could be mined anywhere, yet processed (whatever qualifies as "processed") in the US.
Assuming that would increase the options available...

 

[MP3Mike]

Shipping it back? Why is processing something to be done in China? Is it difficult to do in the US?

I don't know why specifically. But almost all refining is currently done in China. It may be due to environmental regulations that make it too expensive to do in the US and compete on price. Though this bill should put more value on that, of course that could raise the price of the minerals, and therefore the vehicle, which could bump some over the $55k/$80k limits.

Where did Elon talk about that?

It has been in multiple earnings calls. It has been part of their talk on localizing the supply chain.

 

[Norbert]

I don't know why specifically. But almost all refining is currently done in China. It may be due to environmental regulations that make it too expensive to do in the US and compete on price. Though this bill should put more value on that, of course that could raise the price of the minerals, and therefore the vehicle, which could bump some over the $55k/$80k limits.

At least when the price of battery packs further decreases (some predictions are below $100/ kWh pack price quite soon), then $3750 will be a substantial percentage of that. So I'd expect that some FTA countries will be interested in "processing" if feasible in any way.

That should matter for both Model 3 (at least standard range) with $55k limit and for Model Y with $80k limit (and Cybertruck and any new mainstream model).

 

[patmurphey]

Tesla is holding the information om materials sourcing pretty close. It's likely bad news for that credit half. It's probably good news for the manufacturing of Model Y battery components with Giga Nevada and Giga Texas. I think that I would be very wary of giving up a delivery spot for a half credit when an interest increase could eat up a lot of it combined with more waiting.

 

[pipestem]

The most specific info I have seen is this article which lists which cars are eligible for which credits.
The Inflation Reduction Act would renew tax credits for the Tesla 3, Tesla Y, and Chevy Bolt

They list the RWD Model 3 at $7500 next year. They say "As a result, most EV tax credits are at risk of lapsing in 2024, when the battery sourcing requirements begin to phase in."

That sounds optimistic to me and in my reading I did not see that 2024 text. Does anyone have more specific credit references ?

Not suprisingly, I have a Model 3 RWD on order that just got the EDD pushed up to August 30 - Sep 13. They must be getting some cancellations. I ordered the car without expecting the credit, but now if there is a resonable chance of getting a credit I would delay or drop it. A new model Y has a currently estimated date of April-June, I might order one just in case it slips in.

Thougths on current strategy ?

 

[dipper]

I doubt Model 3 SR will get full $7500. The battery is not going to be qualified. China made battery is a no no.

In fact, what percentage of Tesla sourced battery are from China? So maybe Model Y might not qualify for full $7500 either.

Not until auto makers tell the Fed, the IRS doesn't know either to make their list.

 

[patmurphey]

We probably have to wait until the final bill is signed AND the Secretary issues rules to really know how the battery materials/battery manufacturing applies to different models and manufacturers. There have already been text "adjustments" even though the bill has been passed.

 

[jsmay311]

The most specific info I have seen is this article which lists which cars are eligible for which credits.
The Inflation Reduction Act would renew tax credits for the Tesla 3, Tesla Y, and Chevy Bolt

They list the RWD Model 3 at $7500 next year. They say "As a result, most EV tax credits are at risk of lapsing in 2024, when the battery sourcing requirements begin to phase in."

That sounds optimistic to me and in my reading I did not see that 2024 text.

It’s very possible — likely even — that the authors of that article know more about this stuff than me. That said, I share your skepticism…

When I read the relevant section of the bill pertaining to critical battery mineral sourcing, I don’t see anything saying that it doesn’t go into effect until 2024.

On page 378 it says:
“the applicable percentage…” [for critical battery minerals, that is] “…shall be—
(i) in the case of a vehicle placed in service after the date on which the proposed guidance described in paragraph (3)(B) is issued by the Secretary and before January 1, 2024, 40 percent.”

And then later on page 381, in the paragraph that I think is the “paragraph (3)(B)” referenced above:

“DEADLINE FOR PROPOSED GUID- ANCE.—Not later than December 31, 2022, the Secretary shall issue proposed guidance with respect to the requirements under this subsection.”

So, if I’m reading that right, the 40% minimum requirement for the sourcing of critical battery minerals will be in effect in 2023.

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

 

[pipestem]

It’s very possible — likely even — that the authors of that article know more about this stuff than me. That said, I share your skepticism…

When I read the relevant section of the bill pertaining to critical battery mineral sourcing, I don’t see anything saying that it doesn’t go into effect until 2024.

On page 378 it says:
“the applicable percentage…” [for critical battery minerals, that is] “…shall be—
(i) in the case of a vehicle placed in service after the date on which the proposed guidance described in paragraph (3)(B) is issued by the Secretary and before January 1, 2024, 40 percent.”

And then later on page 381, in the paragraph that I think is the “paragraph (3)(B)” referenced above:

“DEADLINE FOR PROPOSED GUID- ANCE.—Not later than December 31, 2022, the Secretary shall issue proposed guidance with respect to the requirements under this subsection.”

So, if I’m reading that right, the 40% minimum requirement for the sourcing of critical battery minerals will be in effect in 2023.

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

Thanks. I’m not really upset with the GM-UAW bill but the rushed timing and lack of guidance is really galling.

 

[ElectricIAC]

Thanks. I’m not really upset with the GM-UAW bill but the rushed timing and lack of guidance is really galling.

Par for the course with the inmates running the asylum.