IRS releases new EV credit rules - effective 4/18/23

[4sallypat]

Guess you haven't been following this closely. Yes, there are clearly EVs that won't get the full credit, and EVs that won't get any credit, based on the upcoming rules. This was known last December when they published the rules.

The manufacturers know exactly what their vehicles qualify for, and haven't divulged that yet because it will depress sales.

Beginning April 18, the full tax credit will be divided into two parts. To qualify for the first $3,750, at least 50 percent of a vehicle’s battery components must be produced or assembled in North America. To get the second $3,750, at least 40 percent of critical minerals used in the battery must be extracted or processed in the U.S. or in a country that is a U.S. free-trade agreement partner, or they must have been recycled in North America. Buyers must take possession of the car before April 18 or else the new rules will apply, a White House spokesperson told Consumer Reports. It’s not enough to simply order or purchase the car before then. This restriction won’t apply to used vehicles and may not apply to leased vehicles.

Oh I have been following this closely as it directly impacts my 1 year old ordered MME from April '22.

I know the intent of the law - but in order to get the full credit, it's very discouraging to hear that no manufacturer will qualify for the full tax credit after 4/18.

Since I am going to be the test case on what happens if my ordered MME does not make it before 4/18/23 which is why I am worried.

Will Ford make it right for those that waited so long and to have the tax credit split in half because their transport logistics are so awful ?

My MME has been sitting in Mexico since December 2022 with delivery ETAs slipping over 10 times:

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[ab13]

Oh I have been following this closely as it directly impacts my 1 year old ordered MME from April '22.

I know the intent of the law - but in order to get the full credit, it's very discouraging to hear that no manufacturer will qualify for the full tax credit after 4/18.

Since I am going to be the test case on what happens if my ordered MME does not make it before 4/18/23 which is why I am worried.

Will Ford make it right for those that waited so long and to have the tax credit split in half because their transport logistics are so awful ?

My MME has been sitting in Mexico since December 2022 with delivery ETAs slipping over 10 times:

Do you fall under the transition rule?

 

[RickMachE]

Do you fall under the transition rule?

Almost no one does. You have to have had a binding contract in place before 8/16/22, with at least a 5% downpayment.

 

[dbsb3233]

The NPRM is filed for public inspection and will be published in the Federal Register on April 17, 2023. Vehicles placed-in-service on or after April 18, 2023 will be subject to the critical mineral and battery component requirements laid out in the rule. On that date, FuelEconomy.gov will contain a list of eligible clean vehicles that qualified manufacturers have indicated to the IRS meet the requirements to claim the new clean vehicle credit, including the amount of the credit.

What a horrible way to manage public policy, giving people one day to know whether their car purchase will qualify for a huge $3750 savings (credit) or not. This should have been decided now but not made effective for at least 6 months down the road. Especially since most EVs have to be pre-ordered months in advance now.

Even the other $3750 is no slam dunk to know in advance, although seems pretty likely that if the car is assembled in North America, they'll assemble the battery pack here too to qualify for that $3750.

I'm guessing some Tesla models *might* qualify for the full $7500 since they make many of their own battery cells in Nevada and probably have some critical components sourced from the US, Chile, or Australia. But which ones is hard to say. Probably none of the models using LFP.

Here's the countries the US has free trade agreements with that would qualify for critical materials sourcing: Australia, Bahrain, Canada, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Israel, Jordan, Mexico, Morocco, Nicaragua, Oman, Panama, Peru, Singapore, and South Korea.

 

[RickMachE]

Oh I have been following this closely as it directly impacts my 1 year old ordered MME from April '22.

I know the intent of the law - but in order to get the full credit, it's very discouraging to hear that no manufacturer will qualify for the full tax credit after 4/18.

Since I am going to be the test case on what happens if my ordered MME does not make it before 4/18/23 which is why I am worried.

Will Ford make it right for those that waited so long and to have the tax credit split in half because their transport logistics are so awful ?

My MME has been sitting in Mexico since December 2022 with delivery ETAs slipping over 10 times:

The law was specifically written to force manufacturers to move battery production to the states. They're doing that, but not fast enough to comply, which encourages them to spend even more money to do it as fast as possible.

I would expect that Ford will consider those with 2022s that became 2023s should perhaps get additional PCO money if they miss the tax credit. Anyone else, I wouldn't expect it.

As you know, mine began production in mid-January 2022, and completed it on March 1st. It was then assigned guard duty in the Mexico lot, ensuring that all Mach-Es were safely shipped out, and then closed the gate as it left in early May, for a May 17th delivery. That worked out to 50.4 weeks from time of order. Some have been longer, and you are getting close. It's clearly painful to experience, and to watch. We had our 2021 that we bought from a cancelled order, same car, same price, same financing, so it wasn't a big deal.

 

[RickMachE]

What a horrible way to manage public policy, giving people one day to know whether their car purchase will qualify for a huge $3750 savings (credit) or not. This should have been decided now but not made effective for at least 6 months down the road. Especially since most EVs have to be pre-ordered months in advance now.

I'm guessing some Tesla models *might* qualify for the full $7500 since they make many of their own battery cells in Nevada and probably have some critical components sourced from the US, Chile, or Australia. But which ones is hard to say. Probably none of the models using LFP.

Here's the countries the US has free trade agreements with that would qualify for critical materials sourcing: Australia, Bahrain, Canada, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Israel, Jordan, Mexico, Morocco, Nicaragua, Oman, Panama, Peru, Singapore, and South Korea.

I think this is way off base.

All the car companies have known, since the law was passed in August 2022, what their specific models would qualify for under the law. There is no surprise involved, except in the auto companies revealing that information publicly. To maximize sales, none of them wanted to provide advanced notice.

 

[dbsb3233]

I think this is way off base.

All the car companies have known, since the law was passed in August 2022, what their specific models would qualify for under the law. There is no surprise involved, except in the auto companies revealing that information publicly. To maximize sales, none of them wanted to provide advanced notice.

Wasn't talking about the car companies knowing, was talking about US consumers/taxpayers knowing.

 

[timbop]

I know the intent of the law - but in order to get the full credit, it's very discouraging to hear that no manufacturer will qualify for the full tax credit after 4/18.

That is not a permanent condition. Plants and mines are being planned and built, but they aren't in play yet.

The law was specifically written to force manufacturers to move battery production to the states. They're doing that, but not fast enough to comply, which encourages them to spend even more money to do it as fast as possible.

THIS. The fact that EVERY manufacturer is suddenly rushing to start manufacturing here suggests that the law is indeed having its intended effect. What is unclear is what the unintended consequences will be globally.

 

[RickMachE]

Wasn't talking about the car companies knowing, was talking about US consumers knowing.

Right, but you're putting the blame on the government. The blame is on the car companies, they could have told us in August. Farley said today that they're getting ready to tell us, buying more time.

 

[dbsb3233]

Right, but you're putting the blame on the government. The blame is on the car companies, they could have told us in August. Farley said today that they're getting ready to tell us, buying more time.

I think the blame does lie with the government. When making public policy, they need to include reasonable time for BOTH consumers and manufacturers to adjust. If the government set the deadline for manufacturers to report their sourcing to the govt by April 17, then they should have started the clock for consumers 6 months after that.

And if the government failed to set a sooner deadline for manufacturers to report their sourcing, that's on govt too.

A tax credit is a government construct, administered by the IRS. The eligible models will be identified by the government (at FuelEconomy.gov). Even if car company or salesman *says* the car they're trying to sell you qualifies, they're not the determiner. And not the greatest idea to trust them over tax matters anyway. That's the government's responsibility.

 

[4sallypat]

Right, but you're putting the blame on the government. The blame is on the car companies, they could have told us in August. Farley said today that they're getting ready to tell us, buying more time.

So judgement day on 4/18 - we shall see who gets what credit....

Does anyone venture to guess if EV sales will change as a result of post 4/18 rules ???

 

[RickMachE]

I think the blame does lie with the government. When making public policy, they need to include reasonable time for BOTH consumers and manufacturers to adjust. If the government set the deadline for manufacturers to report their sourcing to the govt by April 17, then they should have started the clock for consumers 6 months after that.

And if the government failed to set a sooner deadline for manufacturers to report their sourcing, that's on govt too.

A tax credit is a government construct, administered by the IRS. The eligible models will be identified by the government (at FuelEconomy.gov). Even if car company or salesman *says* the car they're trying to sell you qualifies, they're not the determiner. And not the greatest idea to trust them over tax matters anyway. That's the government's responsibility.

How do you know when the government deadline to the manufacturers is/was?
How do you know whether they have the data yet or not?
How do you know that the car companies haven't lobbied to not divulge that data until the 17th, because it will depress sales?

 

[RickMachE]

So judgement day on 4/18 - we shall see who gets what credit....

Does anyone venture to guess if EV sales will change as a result of post 4/18 rules ???

EV sales won't change much, because many taxpayers are clueless. And many EVs already were above the cutoffs, and many taxpayers are also.

Ford knew this was coming, and raised Lightning prices again yesterday. This will do nothing noticeable.

 

[Guss-E 2021]

Most of those battery plants were already planned long before the IRA.

And I think it was the other way around (Tesla including CATL LFP first).

I thought mass production of CATL's newer LFP batteries was, well, new ?. I only read about Tesla's plan this morning (Insideevs.com I think). Regardless of the exact why, I'm glad it is happening.

 

[athomas43]

Interesting. I have a delivery date if 5/1-5/8, could I finalize my transaction with the dealer on 4/17 to ensure I get the credit?

You need to have it put in service by 4/17. The dealership would need to submit a bunch of forms by then. Many would be wary of doing that considering it’s fraud. So to sum up, unfortunately no.

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