Major EV Makers kicked out of the Tax Credit feeding Trough

Perfect

 

Not to mention some other majors already kicked out, can't think of the name, but it starts with a "T"

If we go way back to the Hybrid tax credit of 2005/2006. the whole design of the program was limit Toyota's ability to profit from it, and give USA manufacturers a chance at it,

Crazy to say "has to be assembled" in USA...mind you, we USA do NOT want to make the raw material or parts, that's dirty work using dirty tech. We want the high tech green part: assembly.

 

And you’ll pay full price for a certain model P

 

From article:

The Treasury said the new requirements effective on Tuesday will also cut by half credits for the Tesla Inc Model 3 Standard Range Rear Wheel Drive to $3,750 but that other Tesla models will retain the full $7,500 credit.​

This Model 3 is the LiFePO battery chemistry car. The LiFePO batteries are currently, China-only sourced. I remember one claim that the Chinese government considers LiFePO to be a critical national asset that may preclude exporting manufacturing.

Originally used to reduce cost of the most efficient, bottom trim Model 3, a LiFePO battery loses a USA subsidized, $3,750. I don't have hard costs (no one outside of Tesla does,) to determine if this is good or bad for future Tesla buyers of the bottom trim. But if future, bottom trim Model 3s shows up with NMC batteries, good! In effect, the subsidy promotes higher energy and power density packs in the bottom trim.

Once again, Tesla relearns the lesson to vertically integrate.

Bob Wilson

 

is there still a leasing loophole?

 

Tesla originally went with LFP because of requirements to appease the Chinese government. The long range packs in the Model 3 for there come from a Chinese company, and aren't the same type as found in other market models. Using LFP outside of China lowered costs for Tesla, but more importantly, it increased their available battery supply. If they can't use LFP for the US or Europe, they'll have to make fewer cars.

Since the law hasn't changed, I'd say yes.

 

I was just thinking about this last week.

Leasing is one of the few ways a normal individual can actually realize the EV Federal Incentive.

For many if they don't lease the Federal Incentive is just pie in the sky.

When we bought our PHEV I had to convert a large amount of money from my 401K to a Roth IRA to generate a Federal Tax Liability in order to claim the incentive.

Unless you normally have quite a Federal Tax Burden you may never be able to realize the EV Federal Incentive.

What I believe bisco is talking about is that some enlightened Auto Manufactures will take off the Federal EV Incentive from the actual price of the car when you leases it. In the past if you bought an EV Kona or Niro EV Hyundai or KIA would deduct the $7,500 from the price of the car when you leased it. This way the consumer actual got to see a benefit from this incentive in a straightforward way.

If I were to buy a new vehicle that was eligible for the current EV Incentive one of my stops would be to the Dealer Finance Officer and ask him if we could swing a deal where I lease the vehicle they knock off the Incentive from the price of the vehicle and my lease would have a no penalty buy off clause where I could buy the car outright. I don't know if this is even possible but I will certainly find out if I am ever in that position.

 

Normal people don’t make ~$55k (or about $75k for a couple)?

I certainly understand that some people don’t. But I think there are lots of “normal” people that do.

In 2022 the Median US income was ~$56,400. This would be enough to qualify for the full incentive.

 

Rolling the tax credit amount into a lease is the norm. What bisco was asking about was the commercial tax credit for EVs.

The rules for the tax credit for a commercial EV are different; they don't have the assembly point or battery production requirements. Cars purchased for leasing use those rules if they don't qualify for the consumer EV credit. A bZ4X doesn't get a credit if you buy it, but the leasing company gets the commercial credit(I think it's the same amount) that they might apply to the lease agreement.

Is that counting the standard deduction amount?

 

Excellent point, I suspect it doesn’t.
That would raise the needed income for someone filing single over the median by about $13k. For couples filing jointly it would come in right about the median income.

So, technically in the minority of all people. Likely still in the majority of new car buyers.

 

Looks like the Bolts are going to get the full credit. People were thinking it was going to get cut in half after 4/17, so they were lined up to get them. Maybe now, the factory can catch up now that the rush should be done.

 

Yeah, I believe the Medial US income $56,400 is definitely not the taxable income figure on Line 14 of 1090. I think it is a gross income amount. So, take the standard deduction of $12950. Now net taxable income is only 43,450. And from the IRA tax table, for someone earning a median income and filing single the tax amount would be $5,182. Not enough to cover the entire $7500. And that is if the person is not doing more to save on taxes. Family of 4 with two young kids, both parents working, my feeling is they have very little tax liability after taking the refundable tax credits. So, they will totally miss out on the EV tax credit.

 

Didn't they get several extra months of incentives due to the glacial pace of bureaucracy? I.e. Congress set the cutoff date earlier, but the IRS just couldn't write new rules fast enough?

 

The last 3 or more months was the extra from that glacial pace. The rules for battery sourcing were set and went into effect the first of the year by law, but the accounting system for tracking the part and mineral content and where they came from wasn't ready. So the treasury suspended the rules for a quarter vs saying no one got a credit until the system was in place.

 

I suspect it has no effect in Europe. As for the USA, it comes down to $3,750 and the Tesla backlog. Regardless, here is the current price not including the Federal tax credit:



There are reports of significant improvements coming in the Model 3 which would make a half tax credit into 'sofa change.' Musk has a remarkably independent point of view about Government either State or Federal. For example, he calls the SEC the "Shortseller Enrichment Commission." Furthermore, the Tesla headquarters moved from California to Texas.

Bob Wilson

 

I was commenting on the possible fallout of China restricting LFP exporting.

 

I think China has no problem exporting LFP products but don't want LFP manufacturing to leave their shores ... much like some parts of the USA want to embargo our technology.

Bob Wilson

 

For now. With rumors of them limiting rare earth metal exportation, anything is possible.

 

I can understand and appreciate the capitalistic tendencies of Chinese communists. On the other hand, I have no respect for Soviet/Russian klepto-communism.

Bob Wilson