So is the US federal tax credit for EVs going away?

I agree with some of that (except the "smaller" idea - dictating to people never works, ends up creating resentment - instead, electrify whatever it is consumers want, big, small, that's up to the consumer); however, this bill gives no transition time for automakers. The ioniq 5, for example, can't just have a switch flipped and start building tomorrow in Tennessee. The bill should have had a transition time for the North American manufacturing requirement. All this will do is create a further bottleneck, because many folks now simply won't buy an EV. That list is pretty paltry, or, has EVs not yet for sale, or sold out for years.

So sure, on principle, I agree with trying to reduce cost and bring manufacturing to Mexico... err... I mean the US. But that will take years. I actually think this will SLOW EV adoption in the meantime. The only affordable, palatable EV on that list that is *maybe* actually available for ME is the ID4. So it gives me ONE to choose if I want the tax credit. And my wife only hates the ID4 design slightly less than the Bolt.

Anyone remember when battery cost were predicted to hit $100 per kWh? Meaning the extended Range F150 pack was have been only like 13 or 14k of the insane 80k they are asking?

 

I often wonder about this. Right now large SUVs are incentivized by tax laws that make them far more profitable for automakers. So naturally they pour tons of advertising money into convincing people that this is what they want. In some cases people are convinced they “need” it for their families despite family size being smaller than ever in history.

I for one want a small sporty vehicle, which is ever harder to find. So I’m glad I got a Mini SE when I could. This bill could kill the import of them completely.

Be careful not to conflate battery costs with vehicle MSRP. Battery cells are under $200/kWh but then they are assembled into packs and integrated into vehicles. And every step adds labor, materials, and profits.


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True enough. Just as an example, I have owned an f150 for over 20 years. I had a 2002 and now I have a 2016, both purchased used. I love having a truck because its the ultimate do-everything vehicle for where I live. I can drive to work with it, I can work on my house and yard, I can go hiking, backpacking, and tow our tent trailer. And its got loads of space for vacations. I always get a 6.5' bed so I can sleep in the back when needed at trails for hiking. That's what I want, someone else might want something totally different. I'm just saying we need to provide LOTs of options, not just tell everyone to go buy a Bolt. (I actually like the bolt, my wife hates-hates-hates it)

Of course, for me the EV truck is still a dilemma. In some ways they are far far superior to my truck. And yet, the most basic gas f150 can do things the Lightning simply cannot do - 400 real world miles of range on the highway and refuel in 5 minutes. I just did a camping trip with my son, towing our tent trailer, that the lightning extended range couldn't even do. And my f150 cost less than half the cheapest extended range Lightning. And I have a 6.5' bed, not even an option on the Lightning.

I realize its a slow process, and it will be awhile to have EV options that fit everyone's needs. But I don't see how the tax credit changes help with any of this. We just reduced choice. Anyway, don't mean to argue about it. Just my 2 cents.

 

Nice of Consumer Reports to neglect the MINI SE. It should be listed in the "NOPE" section.

 

I'm certainly not first to notice this. That Ford Lightning you mention neatly illustrates the trend.

Raw materials considered, smaller vehicles weigh less and therefore require less battery capacity to move around. The first production scale EVs were small for that reason.

Manufacturing EVs in larger numbers are currently constrained by battery chemistry that is deployable today.

Bigger vehicles require bigger batteries which cost more.

QED

https://qz.com/2161731/why-electric-cars-are-getting-pricier-while-batteries-get-cheaper/

 

But restricting tax credits to North American built, while giving manufacturers like Hyundai no time to adapt, helped how?

It didn't, it made EVs even more unaffordable.

I understand your point that more EVs can be built if the batteries are spread around. But bigger or smaller is consumer choice.

This tax credit move restricts choice. There should have been a phase in period.

 

Those manufacturers that do qualify will no doubt raise their prices. Why shouldn't they? Why give away that $7500 gap, when you don't have to? All corps are in the business of making money, and they will certainly take advantage of this opportunity.

 

Maybe so. I just put in a pre order for the only thing on that list that I really could, the ID4. The ID4 went up for 2023 but only by about $1k. But they already had the credit.

It will be interesting to see what Chevy does, especially with Kia and Hyundai and Toyota and Subaru out.

 

The biggest (and I would say biggest legitimate) knock against the prior tax credit is that it only helped tax filers that owed at least $7500 to the IRS. The provisions to offer rebates at the point of sale offer a real incentives - to all buyers.

This is tax policy - supporting US industry.

It's not subject to Libertarian mythology.

The

 

That's one thing on which I totally agree, a Pont of sale credit is a good idea. But that's not the issue I was describing. I just wanted a phase in period to give manufacturers at least a reasonable chance to meet the new requirements. That's not a tall order to ask. Ymmv.

 

I think the the legislation will be viewed by the Public - those not currently in line to purchase - was important. It will be *very difficult* to attack legislation that scrupulously avoids transfers to Chinese companies.

Is it abrupt? Certainly. Their are provisions to cover buyers that have a signed buyer's order from 2022 but take delivery in 2023.

*In my opinion* the most important result will be rapid price reductions of unsold vehicles that don't qualify in the last week of December.

I expect this will kill off Polestar in the US and have ever BYD redirected to other markets.

 

I just don't see the difference between assembled in Mexico and South Korea. Is Mexico really that much better in terms of labor conditions and free trade agreements? I honestly think Manchin hoodwinked his party on this issue. What's more important - made in North America, or expediting EV adoption? Because those are not the same thing, and I personally value the first as higher priority. Anyway, I'm just going to agree to disagree, as we could argue about this for weeks. I'm going to let the thread go back to any updates on the bill, and what vehicles do and don't qualify. I put in an order for an ID4, when what I really wanted was an Ioniq 5. And my wife wanted a Etron Q4. But at least someone can say, it was assembled in North America. Yippy.

 

I think we will both get what we want, through implementation of this bill and its provisions, but not immediately in either case.

Note the lower thresholds for both vehicle prices and eligibility caps.

As I've said before, it will accelerate domestic production, already underway in Georgia, Tennessee and Kentucky.

https://techcrunch.com/2022/05/20/hyundai-to-open-6-5b-ev-factory-in-georgia/?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAALTvqlG6B2lWC2v12kn9DAGsP4E38NrFPehXDhC1MWGGkN2yFmAwBKBY0XPsa0CWaSTSt-M1QrW7ldWv3kL0I9fqoOH59Y24KLm072yixTvznSijxZxBLgHyFgYVXg7yRuWzl7HmAY-Iwm22FLn_TN6-7B_2NkL4l64BP6zxMEES

 

As other people have said, incentives aren't a key to buying EVs... or else Telsa wouldn't be so popular.

I think where this matters is in the lower priced EVs and also brands that carry the same model in ICE, hybrid, PHEV, EV flavors. People would be less motivated to buy the PHEV/EV version if it's $10k over the others without some incenvtive.

Also, the way I've read the proposed bill... the final assembly requirement (of the car, not the battery) takes effect as soon as the bill is signed.... meaning a bunch of the cars will become ineligible for even the standing $7500 Fed credit before 2023. So I agree with @danrjones that this should be phased or at least after 12/31/22 like the other requirements.

 

I just received an email from VW, I'll try to post it in whole.

 

Dear Daniel,
Today, Congress passed the Inflation Reduction Act of 2022 (“the Act”), substantially changing the requirements for federal income tax credits associated with the purchase of an electric vehicle. We want you to be as informed and comfortable as possible throughout the process and to continue to be excited about your reserved Volkswagen ID.4!
Currently, Internal Revenue Code Section 30D (“Existing Law”) provides a credit for Qualified Plug-in Electric Drive Motor Vehicles, including passenger vehicles and light trucks of up to $7,500 (“EV Tax Credit”)1 . While uncertainty remains, we would like to provide some information and suggestions as events continue to develop rapidly. Please consult your own tax or legal advisor for further advice.
Vehicle Eligibility
First, some background on vehicle eligibility. Volkswagen expects but cannot guarantee, that each of the Model Year 2022 and Model Year 2023 ID.4 vehicles meet the requirements for EV Tax Credit qualification under the provisions of 30D(d)(1) of the Internal Revenue Code of 1986. So, based on the Act’s transition rule (transitioning from the current EV Credit to the new and different EV credits), the best chance for a customer to be eligible for the current EV Tax Credit is to enter into a “written binding contract to purchase” (more on that below).
Volkswagen cannot guarantee that any vehicle will ultimately qualify for the EV Tax Credit or that the Act’s transition rule requirements will be met. Individuals must still meet all of the eligibility requirements to receive any tax credit, which includes several factors such as personal income tax situations. Additionally, EV Tax Credits are only available on vehicle purchases (not leases).
“Written Binding Contract to Purchase” Language from Act’s Transition Rule
While there is no guarantee that any individual will receive an EV Tax Credit when they purchase a Volkswagen ID.4, the “written binding contract to purchase” requirement means that it is highly likely that those with only reservations (and without a purchase contract) will lose or risk their ability to claim the EV Tax Credit under Existing Law. The law suggests, though, that you can take steps to try to reduce that risk.
If you would like to increase your chances of being eligible to claim the EV Tax Credit under the Act’s transition rule, you may elect to enter into a “written binding contract to purchase” for the ID.4 you have reserved with your preferred Volkswagen dealer before the Act is signed into law (which could happen in the next few days). If the requirements of the Act’s transition rule are met, the EV Tax Credit would be able to be claimed in the year the vehicle is placed in service.
It’s important to note that reservations are not currently considered or addressed in the Act and that Volkswagen of America does not contract for the sale of vehicles directly with customers in the U.S. Instead, we use our franchise dealer network for the distribution and sale of vehicles to customers, which is why we have suggested contacting your dealership to hold those discussions.
We also ask that you understand that there will likely be many other ID.4 reservation holders that will be contacting their preferred dealership in the coming days to discuss establishing contracts. Like all of us, Volkswagen dealers have been working to understand what these changes can mean and preparing to best support their future ID.4 owners through this process.
We want you to love your ID.4! We also think it’s just as important that you understand and are comfortable with the terms of any agreement that you enter. We hope that this message includes helpful information for you to consider. If you have questions about this information, Existing Law, the Act, or your current or future eligibility for any EV tax credit, please consult with a tax and/or legal advisor before deciding what to do.

Best Regards,

Volkswagen

 

Not sure what to make if this? I'm fairly confident that a 2023 ID4 will qualify. Is VW uncertain? Are they simply covering themselves legally? Or are they using the situation to drum up more business by forcing commitments?

Me personally, I don't think I'll sign. I can't qualify for my local rebate until October, and I have no idea what signing would do.

 

My first post - that email compelled me to create an account. I'm on code 3 locked and paid the $400 on top of the initial $100. I have no idea if I have been reassigned a 2023 that would indicate TN or not. Anyone who had that reassignment recall how that process happened? Was it an email notification? Did you have to reselect anything? The $7,500 is kind of a big deal for me and the decision to buy this car. I ordered in early January the AWD Pro S.

Illinois has a $4,000 additional rebate. If I lock in a purchase agreement, I have no idea how that will affect eligibility. Buying a car sure got complicated.

 

Quoted from the VW letter, above:

"It’s important to note that reservations are not currently considered or addressed in the Act and that Volkswagen of America does not contract for the sale of vehicles directly with customers in the U.S. Instead, we use our franchise dealer network for the distribution and sale of vehicles to customers, which is why we have suggested contacting your dealership to hold those discussions."

To qualify for the transition period exception, a "written binding contract" must be signed with *a dealer*, and a reservation with VW isn't sufficient.

This is notice is to benefit VW and (if the deposit isn't refundable) amounts to a cash grab.

******

If automakers want to sell more EVs they need to make less expensive models and stop the blatant scalping by dealers.

 

It is the battery prices that set the floor for what an EV costs. And while they seem to gradually drop, it will take a while to be broadly affordable.