US Federal $7,500 Electric Vehicle Credit Expiry Date By Automaker

[wdolson]

The expiring incentive is far more likely to hurt legacy auto makers. The incentive worked perfectly for Tesla. The incentive was intended to give PHEV and BEV an advantage in the marketplace until the cost of production comes down to a point where they can compete with ICE. The Model 3 hit production stride and started eating the lunch of a lot of established ICE right at the time the incentive hit 200K and started sun setting for Tesla.

Tesla will be able to sell cars just fine after the incentive goes away. Their costs will be even lower when the incentive completely runs out and they might lower their prices by then (or add a lot more features at the same price, which is more their normal pattern). GM is facing the worst problem as they burned up their incentive runway on PHEVs and BEVs only built in low volume and cannot be built at a profit on their own when the incentive runs out. Other automakers will be in that position in a couple of years.

 

[Runt8]

The expiring incentive is far more likely to hurt legacy auto makers. The incentive worked perfectly for Tesla. The incentive was intended to give PHEV and BEV an advantage in the marketplace until the cost of production comes down to a point where they can compete with ICE. The Model 3 hit production stride and started eating the lunch of a lot of established ICE right at the time the incentive hit 200K and started sun setting for Tesla.

Tesla will be able to sell cars just fine after the incentive goes away. Their costs will be even lower when the incentive completely runs out and they might lower their prices by then (or add a lot more features at the same price, which is more their normal pattern). GM is facing the worst problem as they burned up their incentive runway on PHEVs and BEVs only built in low volume and cannot be built at a profit on their own when the incentive runs out. Other automakers will be in that position in a couple of years.

The people who think the expiring incentive is bad for Tesla are the same ones who think the legacy automakers are going to come out with amazing EVs right out of the gate. In my view the learning curve is steep enough that the first couple generations will be lacking behind Tesla is several very important areas.

 

[wdolson]

The people who think the expiring incentive is bad for Tesla are the same ones who think the legacy automakers are going to come out with amazing EVs right out of the gate. In my view the learning curve is steep enough that the first couple generations will be lacking behind Tesla is several very important areas.

Ultimately Tesla is the only company able to turn a profit on EVs. The other BEVs out there have some compelling features, but the two areas where everyone is way behind Tesla is in the cost to build and fast charging networks. With the current design, expanding the CCS network the way it is now, it will still be inferior to the supercharger network.

Even if someone built CCS stations next to every supercharger in the world, they would still be harder to use (there is a slew of different networks that require different cards to activate), less reliable (CHaDEMO and CCS chargers often go down for weeks or months), there is a less consistent network to check if a charger is up (Tesla has a unified network that isn't perfect, but it doesn't rely on crowd sourcing to test whether a charger is up or not like Plug Share), and there is no consistency in power available. A CCS charger could be 350 KW, but it's more likely to be 50 KW.

The Leaf and i3 aren't bad cars, but they are both small and both have short range. The Bolt has reasonable range, but again it's pretty small. The iPace will be available soon. It has a more luxurious interior than Tesla cars, but it is smallish and only has so-so range. Nobody will be able to produce EVs in the quantity of the Model 3 for another 3-4 years, which will be a crisis trigger for the rest of the car market if the public suddenly realizes EVs are better cars than ICE (which is happening now that the Model 3 is getting out there).

All the major car makers are competing in a world-wide market. The US is a large market, but it isn't the biggest anymore. Expiring incentives will hurt car makers that have overly focused on the US market like Ford, GM, and Fiat-Chrysler. GM especially who are really only concentrating on the North America, a bit of South America, and China now. All three have many vehicles that only really sell in North America like full sized pickups.

GM does have a platform that could become the basis for multiple EV models in the Bolt, but they don't have enough batteries at a price that can compete with Tesla. I suspect LG will be increasing capacity, but will reserve that extra capacity for their own brand of EV that will be coming out in the next decade. I think they teamed with GM to learn the fine points of making cars. And if they come to the US with an EV, they will start with 0 EVs sold.

 

[Brenzo]

I'm curious to see what this does to production lag for those who just recently ordered after it was opened up to non-reservation holders (like myself). I know the fact that credit was expiring is what spurred me to pull the trigger and get my order in.

It really makes sense why Tesla shifted priorities around production of the 35K base model. Just looking on this forum there appears to be a lot of people in similar situation as me where you maybe would get the smaller battery, perhaps even the base model, but that federal incentive is enough to make the leap into a slightly upgraded model for not a lot more money. Tesla probably views those people as being more likely to take advantage of credit (or at least needing it more) than the average buyer for 35K base model with no additional options added. Added revenue to their bottom line doesn't hurt either.

 

[JBare]

I'm curious to see what this does to production lag for those who just recently ordered after it was opened up to non-reservation holders (like myself). I know the fact that credit was expiring is what spurred me to pull the trigger and get my order in.

It really makes sense why Tesla shifted priorities around production of the 35K base model. Just looking on this forum there appears to be a lot of people in similar situation as me where you maybe would get the smaller battery, perhaps even the base model, but that federal incentive is enough to make the leap into a slightly upgraded model for not a lot more money. Tesla probably views those people as being more likely to take advantage of credit (or at least needing it more) than the average buyer for 35K base model with no additional options added. Added revenue to their bottom line doesn't hurt either.

I have always planned to order a White, SR battery Model 3 with PUP/EAP. I'd rather dip my toes in the EV world before committing another $10K to it as I plan to keep my old F150 as a 3rd option for a year or two. The way I see it playing out without some sort of last minute hailmary / appreciation gift for line-waiters there is 0 chance of getting the full credit on a SR version. I'm not all that happy about it but I understand Tesla needs to make money so it is what it is.

I've been running scenarios from the start on the annual cash outlays, comparing a replacement truck (coming in at $42K with a monthly gas cost of $211 based on 1300 miles/month) with the Model 3 but have had to now add a column for LR Model 3 with full tax credit, SR Model 3 with half tax credit, and then the truck. Based on my scenario both the Truck and LR/Full Tax credit come in at ~$55K after 60 months with both being paid off. The SR with half credit is at $48K. So the difference is $116/mo to get long range. Certainly doesn't sound like much but negates a lot of the gas savings.

A funny note, both versions of the Model 3 scenario shows a total 60 month cash outlay at or less the purchase price of the car (not much in case of SR). Meanwhile the truck costs $13K more over that same time period. Once that tax credit is gone it will make everything much more even for the first 5 years, but way cheaper every day after that.

(for comparison - the SR/Half credit would be equivalent of buying a new car getting 25mpg at $39K).

Tesla Or No

• JBare
• Aug 8, 2018

 

[Brenzo]

I have always planned to order a White, SR battery Model 3 with PUP/EAP. I'd rather dip my toes in the EV world before committing another $10K to it as I plan to keep my old F150 as a 3rd option for a year or two. The way I see it playing out without some sort of last minute hailmary / appreciation gift for line-waiters there is 0 chance of getting the full credit on a SR version. I'm not all that happy about it but I understand Tesla needs to make money so it is what it is.

I've been running scenarios from the start on the annual cash outlays, comparing a replacement truck (coming in at $42K with a monthly gas cost of $211 based on 1300 miles/month) with the Model 3 but have had to now add a column for LR Model 3 with full tax credit, SR Model 3 with half tax credit, and then the truck. Based on my scenario both the Truck and LR/Full Tax credit come in at ~$55K after 60 months with both being paid off. The SR with half credit is at $48K. So the difference is $116/mo to get long range. Certainly doesn't sound like much but negates a lot of the gas savings.

A funny note, both versions of the Model 3 scenario shows a total 60 month cash outlay at or less the purchase price of the car (not much in case of SR). Meanwhile the truck costs $13K more over that same time period. Once that tax credit is gone it will make everything much more even for the first 5 years, but way cheaper every day after that.

(for comparison - the SR/Half credit would be equivalent of buying a new car getting 25mpg at $39K).

Tesla Or No

• JBare
• Aug 8, 2018

Have you factored in that the SR version may or may not be available the 1st half of 2019, meaning if you take delivery July 2019 onward then you're looking at only $1,875 in credit. Also what about factoring in cost of fuel between delivery of LR (presuming if you ordered now you'd have by October-November) and waiting until delivery of SR.

 

[ccutrer]

Have you factored in that the SR version may or may not be available the 1st half of 2019, meaning if you take delivery July 2019 onward then you're looking at only $1,875 in credit. Also what about factoring in cost of fuel between delivery of LR (presuming if you ordered now you'd have by October-November) and waiting until delivery of SR.

Plus the time-value of money (saved or spent, depending on how you decide to model the fuel savings or cost of vehicle) if you do it earlier. These are several reasons why I don't obsess over the minutia of cost comparisons like this. I like to know about them, but realize that I can never perfectly accurately model what might have been if I take another choice, and instead allow them to inform what is ultimately an emotional decision.

 

[JBare]

Plus the time-value of money (saved or spent, depending on how you decide to model the fuel savings or cost of vehicle) if you do it earlier. These are several reasons why I don't obsess over the minutia of cost comparisons like this. I like to know about them, but realize that I can never perfectly accurately model what might have been if I take another choice, and instead allow them to inform what is ultimately an emotional decision.

it does start to drive me crazy.....need something to pass the time until my test drive on Friday!

 

[ChrisH]

it does start to drive me crazy.....need something to pass the time until my test drive on Friday!

I just did my test drive Monday and ordered yesterday. First time driving a Tesla. The acceleration may be enough to sell you on it by itself. I wanted to wait for SR but there is too much unknown at this point and the $ difference seems to be getting closer between RWD LR and the SR version.

 

[Brenzo]

Plus the time-value of money (saved or spent, depending on how you decide to model the fuel savings or cost of vehicle) if you do it earlier. These are several reasons why I don't obsess over the minutia of cost comparisons like this. I like to know about them, but realize that I can never perfectly accurately model what might have been if I take another choice, and instead allow them to inform what is ultimately an emotional decision.

THIS. I crunched some numbers in my head, factoring in that I have an existing loan on currentl vehicle and guessing where I'll come out on that with trade-in, while also trying to consider the Fed tax credit, then cost of gas vs. electric (helps that I live in multi-tenant building where HOA pays for common area/garage electric) + cost to install charger and so on and so forth... and what it ultimately boils down is that after my test drive, I simply WANT this car and that's why I pulled the trigger.

 

[Nguyenning]

If you know for certain you want the $49,000 "First available" - PUP + LR - NO AWD, then wouldn't it make sense to buy now vs. few months from now? Feel like you'd literally be throwing away $7,500 tax credit in this scenario by waiting...

I guess what I'm saying is, why would anyone wait to buy this version? Buying it after 12/31/18 makes no sense at all.

 

[JBare]

If you know for certain you want the $49,000 "First available" - PUP + LR - NO AWD, then wouldn't it make sense to buy now vs. few months from now? Feel like you'd literally be throwing away $7,500 tax credit in this scenario by waiting...

I guess what I'm saying is, why would anyone wait to buy this version? Buying it after 12/31/18 makes no sense at all.

Not sure if you're responding to me but my plan all along was to get the SR version (PUP/EAP/white). I would've ordered back in April if I could swing it.

Currently I'm rolling with no car payment and minimal maintenance (knock on wood) so financially best decision is to drive this truck and sell just before a major repair is needed (impossible to know when).

 

[JBare]

I just did my test drive Monday and ordered yesterday. First time driving a Tesla. The acceleration may be enough to sell you on it by itself. I wanted to wait for SR but there is too much unknown at this point and the $ difference seems to be getting closer between RWD LR and the SR version.

I loved driving the S before waiting in line to put down a deposit. I have no doubt that I'll enjoy tomorrow's ride as well.

If anyone's at the Tyco location at 1 let me know if you want to ride/drive along!

 

[ChrisH]

Not sure if you're responding to me but my plan all along was to get the SR version (PUP/EAP/white). I would've ordered back in April if I could swing it.

Currently I'm rolling with no car payment and minimal maintenance (knock on wood) so financially best decision is to drive this truck and sell just before a major repair is needed (impossible to know when).

Part of me wishes I had your discipline. Lost patience and started to worry the SR wouldn’t end up being much cheaper than the LR once it finally comes out.

 

[Nguyenning]

Not sure if you're responding to me but my plan all along was to get the SR version (PUP/EAP/white). I would've ordered back in April if I could swing it.

Currently I'm rolling with no car payment and minimal maintenance (knock on wood) so financially best decision is to drive this truck and sell just before a major repair is needed (impossible to know when).

Wasn't responding to you. Was just making a blanket statement... for anyone who already knows they want the LR RWD $49k version, it makes sense to just buy now vs waiting right? You'd literally be throwing away $7,500 tax credit by waiting...

 

[wdolson]

If you know for certain you want the $49,000 "First available" - PUP + LR - NO AWD, then wouldn't it make sense to buy now vs. few months from now? Feel like you'd literally be throwing away $7,500 tax credit in this scenario by waiting...

I guess what I'm saying is, why would anyone wait to buy this version? Buying it after 12/31/18 makes no sense at all.

If you buy in the first half of next year, you still get a $3750 tax credit. Some people are not in a position to buy now, but may be early next year and some people may not need the full $7500 credit. We also don't know what the pricing will be early next year. To remove the sting from the incentive going down, Tesla might lower prices a little or may offer some new incentive that is enticing.

 

[Nguyenning]

some people may not need the full $7500 credit.

Pretty sure everyone would want the full $7500 in this specific scenario (long range model)... so why not just order now instead of waiting and cutting that in half to $3750 by ordering later?

 

[dsvick]

Pretty sure everyone would want the full $7500 in this specific scenario (long range model)... so why not just order now instead of waiting and cutting that in half to $3750 by ordering later?

Because, as he said, some people are not in a position to do so right now. Maybe they have a lease they are waiting to expire, or have some other bill that is going to be paid off in the next few months, or they are waiting on bonus check or some other payment they expect in order to pay for the car or down payment, maybe they are in the middle of moving, or just had a baby ... There are many reasons why someone may not be buying now just because it makes sense from one point of view doesn't mean it is the right decision for everyone at this time.

 

[mongo]

Because, as he said, some people are not in a position to do so right now. Maybe they have a lease they are waiting to expire, or have some other bill that is going to be paid off in the next few months, or they are waiting on bonus check or some other payment they expect in order to pay for the car or down payment, maybe they are in the middle of moving, or just had a baby ... There are many reasons why someone may not be buying now just because it makes sense from one point of view doesn't mean it is the right decision for everyone at this time.

@Nguyenning

Yah,
Or they have less that $7,500 in tax liability, so the delta between now and later is not the full $3,750 .

 

[sooner]

Brown introduces bill to credit buyers of U.S. assembled vehicles

An alternative tax refund, which just proposed, so not even close to passing, which would benefit Tesla as they currently are.