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

[dbsb3233]

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?

I don't. All we're told is that it will be made official on FuelEconomy.gov on April 17. So presumably they gave manufacturers a deadline a little before that.

You're missing the point. Doesn't matter what the deadline is for manufacturers, the government should have not make the consumer/taxpayer change until many months after that, so they have time to react.

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[dbsb3233]

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.

This was from a year ago...

https://electrek.co/2022/04/22/tesla-using-cobalt-free-lfp-batteries-in-half-new-cars-produced/

Doesn't say CATL specifically but CATL is the main producer of LFP's. I think by a large margin.

 

[athomas43]

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:

I can’t believe you’re still waiting on your mme, that’s insane. On the brightside, imo, the car is so worth the wait, but wow it’s been a while for you lol

 

[RickMachE]

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?

In years past, dealerships sometimes worked with consumers to "do the paperwork" before delivery, due to expiring manufacturer incentives. This was between the dealership and the manufacturer. Recent changes by manufacturers like Ford have made that mostly unnecessary, as you can get the best offer from time of order OR delivery, whichever is greater. Of course if you ordered a year ago, and an offer was put in place 3 months ago and ending just before your delivery, it might still be a relevant tactic.

However, on the federal tax credit, that's a whole different ballgame. As was stated, the government requires the vehicle to be put into use, which is impossible, since it's not yet at the dealership (whereas if it was there, you could do the paperwork, drive it a mile, drive back, and then let them do final prep the next day).

If a dealership and a consumer attempted what you asked about, they'd both be committing tax fraud. Tax fraud isn't a mistake, like when you mistakenly list a donation for $200 that is really $20, and agree to pay the owed tax, penalty and interest. Willful tax fraud is much more serious.

So the answer is no, there is nothing you can do beyond buying a car on the lot, or hoping Ford gives some adjustment.

 

[4sallypat]

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?

Is this true:

"proposed regulations go into effect 4/18/23.
But there’s a public comment period running through June on the proposed regulations, when the real regulations go in effect."

 

[dbsb3233]

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.

Mostly because EV supply is still well below demand. Some buyers will bail, but there's still enough lined up behind them really wanting an EV that it shouldn't effect the overall total much.

 

[RickMachE]

Is this true:

"proposed regulations go into effect 4/18/23.
But there’s a public comment period running through June on the proposed regulations, when the real regulations go in effect."

It's misleading.

Rule goes into effect 4/18/23.

They consider public comments. They are unlikely to change anything.

 

[dbsb3233]

How do you know that the car companies haven't lobbied to not divulge that data until the 17th, because it will depress sales?

I forgot to comment on this part. I would think it would have the reverse effect in the near term... boosting sales since many models will be dropping from $7500 to $3750 when the rules take effect.

Once they take effect, sure, tax credits have an impact on sales. That's their intended purpose.

Whether manufacturers lobbied for something or not is irrelevant to any blame though, IMO. All sides lobby for what helps their position. Government's job with public policy is to weight all sides and make policy that's best on balance.

On a related note, I stopped at a Hyundia dealership last week during a road trip (there were 2 Chargepoint chargers there). I was shocked how many Ionic 5's were on the lot, presumably reflecting the impact of the loss of the tax credit. Counted 10 of them sitting there getting dusty.

 

[4sallypat]

I forgot to comment on this part. I would think it would have the reverse effect in the near term... boosting sales since many models will be dropping from $7500 to $3750 when the rules take effect.

Once they take effect, sure, tax credits have an impact on sales. That's their intended purpose.

Whether manufacturers lobbied for something or not is irrelevant to any blame though, IMO. All sides lobby for what helps their position. Government's job with public policy is to weight all sides and make policy that's best on balance.

On a related note, I stopped at a Hyundia dealership last week during a road trip (there were 2 Chargepoint chargers there). I was shocked how many Ionic 5's were on the lot, presumably reflecting the impact of the loss of the tax credit. Counted 10 of them sitting there getting dusty.

Ioniq 5 captures the full tax credit under IRS 45W which remains unaffected by the 4/18 rule change.

$7500 Lease Cash Bonus is offered on their entire EV line.

Many other non North American EV manufacturers are enticing EV buyers by offering the tax credit as a net cap cost reduction...

 

[dbsb3233]

Manufacturers have to be scrambling to juggle all this. They probably get battery cells from multiple suppliers, some with source materials that would qualify and some that won't. They probably want to deploy those cells in a way that gets the qualifying cells the tax credit. That would mean allocating the qualifying cells to the models and trims that qualify (made in NA, under the $55k/$80k limits, etc), while allocating the non-qualifying cells to the other units. That may result in a single plant in needing two battery cell supply chains. Will the sub-$80k trucks get the US packs and the over-$80k trucks get the China packs?

We may end up with battery cells inefficiently shipped all over just to put the "right" ones in the vehicles that qualify and the "wrong" ones in the vehicles that don't.

That also likely means higher prices from the battery suppliers for the "good" cells. A hot commodity that demands a higher price. Ford may pay $3000 more for a qualifying pack just so it can get an extra $3750 credit for the buyer.

 

[AKgrampy]

I understand the angst many feel as they have placed orders based on the potential tax rebate. Perhaps, and I know this is probably not most people’s opinion, but the BEV industry should stand on its own two feet without the American taxpayer paying a portion a the car cost for those who can afford an EV when many can’t afford them. As @RickMachE has mentioned I was one of those ignorant people that ordered the car not realizing I would get the credit (thought I made too much money even though retired) but was certainly surprised to qualify but it did not make an impact on my purchase. I just made a green choice with no ADM and realized even in Alaska the overall operating costs were cheaper than a new ICE vehicle. Anyone who was interested should have known since last fall that this is where we were heading with the tax incentives. I do wish Ford would do something for those that should have their cars by now but I find that doubtful.

 

[dbsb3233]

Ioniq 5 captures the full tax credit under IRS 45W which remains unaffected by the 4/18 rule change.

$7500 Lease Cash Bonus is offered on their entire EV line.

Many other non North American EV manufacturers are enticing EV buyers by offering the tax credit as a net cap cost reduction...

Hyundai could be eating the cost by lowering the price, but it's not my understanding that it actually qualifies for the tax credit because it's not assembled in North America (the first prerequisite). It eventually will as they're building a plant in GA, but that's future.

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