EV Tax Credit Eligibility update by Jim Farley

[goose123]

Quote from a transcript of the Q3 2022 earnings call from 2 days ago:

Ford EVs and our PHEVs remain eligible for the $7,500 tax credit until guidance is issued at the end of this year. Next year, we believe we’ll meet the $3,750 critical minerals credit requirement on certain Mustang Mach-E and F-150 Lightning models. In ’24, the rules will further restrict this critical materials credit. So, we believe it’s a fairly level playing field right now for all the OEMs as our supply chain of critical minerals extracted or processed in the US and FTA develops.

I understand this means:

1. Anything delivered/picked up/sales order signed until December 31st, 2022 gets the full $7,500
2. Anything sold starting on January 1st, 2023 (at least for now) will only receive $3,750 tax credit. I think it's important to say that he said "we believe" which doesn't certify it, after all, he's just talking to investors.

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[J40MME]

I thought the critical mineral requirement was the harder portion to meet, so I wonder if this means they believe they’ll meet criteria for all $7500.

 

[FirstPony]

I thought the critical mineral requirement was the harder portion to meet, so I wonder if this means they believe they’ll meet criteria for all $7500.

That seems closer to what he meant.

The MME would get $3750 at minimum in 2023 anyway, because they are built and assembled in Mexico.

The other available $3750 is the materials source ratio requirement. He is saying they feel like "some" of their vehicles will meet that next year... but he doesn't specify *when* next year. Basically, this portion of the credit is a question mark but Ford is saying it might be in play.

Tax credit for an MME in 2023 will be $3750 minimum, $7500 maximum, and we don't know which number it might be and when.

 

[phil]

Tax credit for an MME in 2023 will be $3750 minimum, $7500 maximum, and we don't know which number it might be and when.

$0 minimum. Buyers with high enough incomes get no tax credit next year.

 

[FirstPony]

$0 minimum. Buyers with high enough incomes get no tax credit next year.

Right. Sorry, I forgot to include the income aspect, which effects the entire possible $7500. Was just trying to separate the materials ratio from the sourcing country portion. Income arches over all of that.

 

[Maquis]

Right. Sorry, I forgot to include the income aspect, which effects the entire possible $7500. Was just trying to separate the materials ratio from the sourcing country portion. Income arches over all of that.

It’s not just income. Most Lightning ERs will exceed the $80K maximum MSRP.

 

[franzn]

That seems closer to what he meant.

The MME would get $3750 at minimum in 2023 anyway, because they are built and assembled in Mexico.

The other available $3750 is the materials source ratio requirement. He is saying they feel like "some" of their vehicles will meet that next year... but he doesn't specify *when* next year. Basically, this portion of the credit is a question mark but Ford is saying it might be in play.

Tax credit for an MME in 2023 will be $3750 minimum, $7500 maximum, and we don't know which number it might be and when.

Half is based on battery minerals sourcing, half is based on battery components sourcing. Needs to be a certain percent from USA or a country we have a free trade agreement. That's for the actual money portions but to be able to qualify for either of those the vehicle also has to be manufactured in North America. Price caps also apply of course.

 

[voxel]

Half is based on battery minerals sourcing, half is based on battery components sourcing. Needs to be a certain percent from USA or a country we have a free trade agreement. That's for the actual money portions but to be able to qualify for either of those the vehicle also has to be manufactured in North America. Price caps also apply of course.

This.

There is no such thing as a $3750 credit for being assembled in NA.

Both halves are based on the battery.

https://pluginamerica.org/wp-content/uploads/2022/09/2022-09-07-PIA-IRA-webinar-for-publishing.pdf

 

[FirstPony]

This.

There is no such thing as a $3750 credit for being assembled in NA.

Both halves are based on the battery.

https://pluginamerica.org/wp-content/uploads/2022/09/2022-09-07-PIA-IRA-webinar-for-publishing.pdf

Oh, well that's interesting. Thanks for clarifying.

 

[kindofblue]

We will have to wait until the Treasury Dept (IRS) comes out with its timelines and stipulations w/respect to the issues of the battery credit.

 

[kindofblue]

Oh, well that's interesting. Thanks for clarifying.

That's not what I've read of the actual bill that's passed. I think this is in error and they don't provide any source for that statement.

$7,500 credit split into two equal parts which have different eligibility requirements:
○ Critical minerals ($3,750)
○ Battery components ($3,750)

 

[generaltso]

That's not what I've read of the actual bill that's passed. I think this is in error and they don't provide any source for that statement.

$7,500 credit split into two equal parts which have different eligibility requirements:
○ Critical minerals ($3,750)
○ Battery components ($3,750)

Which part of that do you think is an error?

 

[kindofblue]

Which part of that do you think is an error?

What I read was that $3.75k was for being built in North America (which includes Mexico) and the other half about the battery sourcing. And the IRS has yet to provide guidelines about the batteries. I'd bet a dollar to a hole in a donut that those guidelines will be phased in slowly and probably not starting until later next year to give companies time to build out battery factories.

 

[generaltso]

What I read was that $3.75k was for being built in North America (which includes Mexico) and the other half about the battery sourcing.

Go back and read the bill again. That’s not what it says.

The vehicle needs to be built in North America to qualify at all. Then half the credit is based on where battery components are assembled and the other half is based on mineral sourcing.

 

[4sallypat]

Go back and read the bill again. That’s not what it says.

The vehicle needs to be built in North America to qualify at all. Then half the credit is based on where battery components are assembled and the other half is based on mineral sourcing.

This part is correct - I spoke to VW iD4 owners and they said current 2022 iD4 vehicles on the lot, if sold after the IRA was signed will not get the $7500 due to manufacturing in Europe.

Apparently VW is moving production to the US to comply and qualify for the manufacturing credit.

Just don't know how DOT/IRS will interpret the mineral / battery assembly part.....

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