11.02.23
The U.S. Department of the Treasury and the IRS today began allowing car dealers (including Tesla) to register for the IRS Energy Credits Online portal.
That means that from January 1, 2024.
every buyer of a qualified EV will receive an automatic $7500 credit off at purchase.
Qualifications requirements are:
Price - $80k max limit for Trucks, SUV's and vans.
$55k max limit for Sedans.
Assembly - North America.
$3750 rebate for Battery assembly - minimum 50% of value from free trade countries.
$3750 rebate for Battery critical minerals - minimum 50% of value from free trade countries.
From 2024, any battery components from a “Foreign Entity of Concern” (FEOC), including China, will disqualify a vehicle from the $3,750 credit; from 2025, any FEOC critical minerals will disqualify a vehicle from the $3,750 critical mineral credit.
⚠️ If buyer ends up unqualified for the Tax rebate at time of filing Tax return the year later for reasons of
- not enough tax paid or
- too high income, or
- already collected 1 rebate in 3 years.
The amount will be added to the tax bill in full or partially depending on the circumstances.
This obviously benefits consumers buying qualified EV's, and will boost sales due to the convenience and the immediate price reduction.
In light of Legacy auto cuts, slow, delayed EV plans lately, it is hard to not notice that Tesla will benefit the most from the quick consumer rebate.
A very interesting loophole/ backdoor credit was awarded to leased EVs (No idea about the logic, other than appeasing the Auto and Union lobby)...
Lenders get the commercial EV tax credit of $7,500, and can pass some of the credit to the lessee in terms of a lower lease payment.
Lenders can access the commercial EV tax credit for vehicles and buyers that would NOT qualify for the consumer EV tax credit.
- No assembly in North America required.
- No requirements on battery content and critical minerals.
- No maximum caps on EV prices.
- No caps on household incomes.
Many are not aware, but The 2022 IRA bill also grants battery manufactures directly $35 rebate on every 1 kWh cell qualified, and another $10 per kWh on the pack level.
That is a $3700 commercial rebate to the manufacturer for an 82 kWh battery, and a $2800 for a 62 kWh battery. (Pretty much 7% of the cars retail price is going to profit margins).
Although it is true that many PHEV (plugin hybrids are qualified for the consumer rebate, the commercial rebate is negligent for the 5-10 kWh batteries in the PHEV.
Furthermore, consumers interest in PHEV will diminish as fast as the demand for BEV will grow and the prices of BEV will drop due to Battery cost drop and Tesla passing on savings to consumers, at least to a parity level with ICE and PHEV, possibly later even lower.
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