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What happens to the federal tax credit once Tesla reaches 200,000 cars

Discussion in 'Model S' started by mrjedistud, Aug 26, 2015.

  1. mrjedistud

    mrjedistud Member

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    I was reading through some IRS materials on the EV tax credit. Unless extended it appears to expire after a manufacturer reaches 200,000 cars. I'm not sure if this is overall or for each model (ie, Model S and X count separately). If the former, credits for Teslas may run out in late 2016 or early 2017, which is before the arrival of the Model 3. Any tax accountants out there that can clarify?
     
  2. techmaven

    techmaven Active Member

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  3. mikeash

    mikeash Active Member

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    Once they hit 200,000 cars, the credit continues until the end of the quarter, and the next quarter. Then it gradually phases out over the next year, with the credit applying at 50% for the first two quarters, and 25% for the last two.

    Note also that the 200,000 number is for vehicles sold in the US. Tesla is approaching 100,000 vehicles sold, but that's worldwide. I don't know when the US number could be expected to hit 200,000, but that's a factor to consider.
     
  4. Max*

    Max* Autopilot != Autonomous

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    And it's per manufacturer, not per car. Roadster + Model S + Future Model X.
     
  5. Vgsllc1

    Vgsllc1 Member

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    well then they need to hurry up with MODEL 3. i want another Tesla!
     
  6. BBryson

    BBryson Member

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    I understand why and fully support the EV credit, but I anticipate the US Congress will repeal the credit before Tesla reaches the 200,000 mark.

    Regardless of my option, US taxpayers subsidizing purchases of +$100K luxury cars is a tempting target for big oil to go after, or the dealerships could use it as well. It would be interesting to see what the auto makers stance would be if their dealerships try to impede Tesla in a way that impacts the entire EV market.

    Does anyone have any insight into how much warning we would have before the credit is repealed or changed?
     
  7. igotzzoom

    igotzzoom Member

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    As unpopular as this may be to hear to hard-core EV fans, it's ultimately in the long-term best interest of the EV market to not be as reliant on subsidies, credits, exemptions, etc. Sure, you can make the case for all the subsidies the oil industry gets, and how the cards are stacked against EVs, but similarly to the solar market, where costs have come down dramatically, the more attractive EVs can be on their own, separate from any "sweeteners" will ultimately strengthen their market standing.
     
  8. jeffro01

    jeffro01 Active Member

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    I tend to disagree with the idea that Congress shouldn't renew this credit, why? Because Congress, and by extension the IRS, artificially keeps the price of gas suppressed in the US. So long as it's the policy of this government to prop big oil up and thereby keeping gas prices artificially low then it seems only fair.

    Feel free to disagree... :)

    Jeff
     
  9. jerry33

    jerry33 S85 - VIN:P05130 - 3/2/13

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    I doubt the credit is going anywhere because they would actually have to repeal it, making them even more unpopular than they already are.
     
  10. cpa

    cpa Member

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    I have no crystal ball, but these are really small potatoes in the overall scheme of things. The maximum credit allowed per manufacturer ($7,500)(200,000) equals $1.5 billion, plus the final 1+year where the credit reduces to $3,750 and finally $1,875. Also note that this credit does not carryforward or back so any unused credit evaporates. So, maybe $2 billion total times all the manufacturers out there. Someone probably know how many car makers there are, but almost all of them now have some sort of BEV or PHEV available for sale, so my take is that by 2020 many of these manufacturers will have exceeded their allotment, rendering repeal of this credit moot.

    Now, they very well might tweak the credit with a new Congress in 2017 (maybe putting AMT back into the equation, or a phase out if income is over a certain threshold), but that is another show.
     
  11. TaoJones

    TaoJones Beyond Driven

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    Seems that the cumulative effect of efficiency *and* subsidies would make (insert product here) more attractive to more people, with the possible exceptions of pundits, politicians, and AM radio windbags, no?

    It's an imperfect world...
     
  12. wdolson

    wdolson Active Member

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    As slow as things move through Congress, I suspect we would have a lot of warning.

    The cause for not giving the rich more tax breaks led the California legislature to do away with the state tax credit for EVs based on yearly income. In Washington State the sales tax exception was done away with for any EV worth more than $35,000. Washington doesn't have income tax and anything that smells like a tax related to income ends up in the courts. I do wish they could tie the exemption in some way to income instead of the price of the car. There are a fair number of people with moderate incomes stretching their budget to afford a Tesla Model S (and probably the same for a Model X).
     
  13. TomServo

    TomServo Member

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    I tend to agree it should be based on INCOME. Someone making $150+K a year and buying a Tesla really doesn't need any tax payer assistance.

    Just an opinion
     
  14. Troy

    Troy Member

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    #14 Troy, Feb 12, 2016
    Last edited: Feb 12, 2016
    Hi,

    I have done some calculations and the most likely scenario is, full tax credits will continue until the end of 2018. Initially I calculated that Tesla will reach 200,000 in late June 2018 but they could easily push that to July if they send more cars to Europe for a few weeks. Therefore the most likely scenario is like this:

    Full Credit Amount50% of Full Amount25% of Full AmountNo Credit
    $7500 USD$3750 USD$1875 USD
    Jul Aug SepOct Nov DecJan Feb MarApr May JunJul Aug SepOct Nov DecJan Feb Mar
    201820192020

    Summary:

    Full federal tax credits for Tesla will continue until the end of:
    ◘ Dec 2018 (70% likely)
    ◘ Sep 2018 (30% likely)
    ◘ Mar 2019 (0% likely)

    Details:

    RoadsterModel S & Model XModel 3USA TotalRunning total
    2010-121500USAUSA / GlobalGlobalUSAUSA / GlobalGlobal15001500
    Q3 2012
    250100.00%250


    2501750
    Q4 2012
    2,400100.00%2,400


    2,4004150
    Q1 2013
    4,83298.39%4,911


    4,8328982
    Q2 2013
    5,12099.19%5,162


    5,12014102
    Q3 2013
    4,28877.79%5,512


    4,28818390
    Q4 2013
    4,22361.27%6,892


    4,22322613
    Q1 2014
    3,38452.41%6,457


    3,38425997
    Q2 2014
    3,90751.55%7,579


    3,90729904
    Q3 2014
    4,78461.45%7,785


    4,78434688
    Q4 2014
    5,34554.35%9,834


    5,34540033
    Q1 2015
    5,65256.27%10,045


    5,65245685
    Q2 2015
    5,63048.82%11,532


    5,63051315
    Q3 2015
    4,87642.02%11,603


    4,87656191
    Q4 2015
    7,30842.00%17,400


    7,30863499
    Q1 2016
    8,71341.00%21,250


    8,71372212
    Q2 2016
    8,71341.00%21,250


    8,71380925
    Q3 2016
    8,50040.00%21,250


    8,50089425
    Q4 2016
    8,50040.00%21,250


    8,50097925
    Q1 2017
    14,28440.00%35,710


    14,284112209
    Q2 2017
    13,92739.00%35,710


    13,927126136
    Q3 2017
    13,92739.00%35,710


    13,927140063
    Q4 2017
    13,92739.00%35,710250.00100.00%25014,177154240
    Q1 2018
    22,79638.00%59,9901,600.0080.00%2,00024,396178636
    Q2 2018
    16,79728.00%59,9902,800.0070.00%4,00019,597198233
    Q3 2018
    22,79638.00%59,9904,800.0060.00%8,00027,596225829
    Q4 2018
    22,19637.00%59,9908,000.0050.00%16,00030,196256025
    Color codes:
    Yellow = Estimate
    Orange = Estimate (click here for more details)
    Green = Numbers published by Tesla.
    Blue = Calculation based on estimates
    Red = The assumption is Tesla will reduce USA deliveries
     
    • Informative x 1
  15. Spidy

    Spidy Member

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    On what are you basing those USA / Global %?

    Especially Q4 is heavily biased with those 2k cars going to Denmark.

    Also SUVs are more popular in the US and most reservations are US as far as I know.
     
  16. Troy

    Troy Member

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    Hi Spidy. USA/Global percentage is an estimation based on quarterly California deliveries numbers published by CNCDA.org (California New Car Dealers Association). They will publish Q4 2015 California deliveries this month. When they do, I will update the table HERE which has more details.
     
  17. Spidy

    Spidy Member

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    I was more thinking about the overall long term trend. I just can't think of any reason why % would go down and not up, especially in 2016.
     
  18. dhanson865

    dhanson865 Active Member

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    I find your production estimates to be way low and you aren't running the projection out into 2019.

     
  19. Half Dollar Bill

    Half Dollar Bill Traveller, teacher, poet, accountant

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    Troy - from Tesla's 2/10 earnings release letter:
    US Model S sales 2014 = 16,689 2015 = 25,202
    Your 2014 numbers are a tad high and your 2015 are a tad low, but net to be under by about 1,000 vehicles. This excludes the nominal X sales as well.

    I guess I'm surprised that only half the 2015 sales were in the US; I thought it would be more. I'd bet that your 2016/17 US percentages are low too, but even so, I think it means the 200K sales amount isn't reached until sometime in late 2017.

    But who has a crystal ball, really? Nice strawman.
     
  20. Drivin

    Drivin Member

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    If big oil wasn't propped up, then higher gas prices would impact the economy, and anyone who buys gas - invariably poorer people get disproportionately negatively affected.

    Compare that to the EV subsidies which are utilized by rich people (and yes, if you can spend 75k for a car, even if it means stretching your budget, you are rich).

    It is like saying "well, since we have subsidies for milk, it is only fair that we subsidize caviar and champagne"
     

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