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Discussion Starter · #1 · (Edited)
The Federal $7500 tax credit may no longer apply to Solterras
Copied from today's NT Times - Monday August 8, 2022

"The problem is that many new electric cars may not qualify for the $7,500 credits. The Inflation Reduction Act sets standards for how much of a car’s battery must be made in North America with raw materials from trade allies. Several car manufacturers and suppliers have announced plans to build battery factories in the United States, but few have begun producing.

“Right now with our lack of capacity for materials, I don’t think there is any product that will meet that today,” Carla Bailo, president of the Center for Automotive Research in Ann Arbor, Mich., said of the standards. “Tesla is probably close but the rest of the manufacturers, no way.”

The legislation also excludes imported electric vehicles from the tax credit. The provision is designed to protect American jobs, but will undercut the price advantage of Chinese brands that are expected to enter the United States. SAIC’s MG unit sells an electric S.U.V. in Europe for about $31,000 before incentives."
 

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There are multiple threads on this very topic. Looks like the Times analysis is “spot on”… unfortunately.

I‘m wondering if/when anyone in the Congress is going to realize the significance of this part of the Inflation Reduction legislation and address it publicly.

Right now, it’s all “high fives” and pats on the back… let’s see how long it lasts…
 

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The Federal $7500 tax credit may no longer apply to Solterras
Copied from today's NT Times - Monday August 8, 2022

"The problem is that many new electric cars may not qualify for the $7,500 credits. The Inflation Reduction Act sets standards for how much of a car’s battery must be made in North America with raw materials from trade allies. Several car manufacturers and suppliers have announced plans to build battery factories in the United States, but few have begun producing.

“Right now with our lack of capacity for materials, I don’t think there is any product that will meet that today,” Carla Bailo, president of the Center for Automotive Research in Ann Arbor, Mich., said of the standards. “Tesla is probably close but the rest of the manufacturers, no way.”


The new law is complicated. I'm sure manufacturers, and especially dealers, will be lobbying to retain the $7500 credit for vehicles already ordered. I opted out of my reservation (even though my dealer does not go above MSRP) mainly because I am quite happy with my 2020 Outback Limited. The "wheels fall off" recall was a total shock to us all. That problem was solved over 100 years ago . I bought the first iteration the of the Toyota/Subaru cooperation, the BRZ. It was very rough car, but fun. The newer BRZ is fun, but
also a 200% better car. The next iteration of the Solterra will be much more than a compliance car, and with luck, have enough US battery content to qualify for whatever incentives are in place. Meanwhile, I hope the current Solterra is a hit for all you patient buyers.
 

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Discussion Starter · #6 · (Edited)
More details today Tuesday August 9th from the Associated Press.

Most electric vehicles won’t qualify for federal tax credit
"Under the $740 billion economic package, which passed the Senate over the weekend and is nearing approval in the House, the tax credits would take effect next year. For an EV buyer to qualify for the full credit, 40% of the metals used in a vehicle’s battery must come from North America. By 2027, that required threshold would reach 80%.
If the metals requirement isn’t met, the automaker and its buyers would be eligible for half the tax credit, $3,750.

A separate rule would require that half the batteries’ value must be manufactured or assembled in the North America. If not, the rest of the tax credit would be lost. Those requirements also grow stricter each year, eventually reaching 100% in 2029. Still another rule would require that the EV itself be manufactured in North America, thereby excluding from the tax credit any vehicles made overseas.

Automakers generally don’t release where their components come from or how much they cost. But it’s likely that some versions of Tesla’s Model Y SUV and Model 3 car, the Chevrolet Bolt car and SUV and the Ford Mustang Mach E would be eligible for at least part of the credit. All those vehicles are assembled in North America."

LINK to the August 9th AP article
 

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More details today Tuesday August 9th from the Associated Press.

Most electric vehicles won’t qualify for federal tax credit
"Under the $740 billion economic package, which passed the Senate over the weekend and is nearing approval in the House, the tax credits would take effect next year. For an EV buyer to qualify for the full credit, 40% of the metals used in a vehicle’s battery must come from North America. By 2027, that required threshold would reach 80%.
If the metals requirement isn’t met, the automaker and its buyers would be eligible for half the tax credit, $3,750.

A separate rule would require that half the batteries’ value must be manufactured or assembled in the North America. If not, the rest of the tax credit would be lost. Those requirements also grow stricter each year, eventually reaching 100% in 2029. Still another rule would require that the EV itself be manufactured in North America, thereby excluding from the tax credit any vehicles made overseas.

Automakers generally don’t release where their components come from or how much they cost. But it’s likely that some versions of Tesla’s Model Y SUV and Model 3 car, the Chevrolet Bolt car and SUV and the Ford Mustang Mach E would be eligible for at least part of the credit. All those vehicles are assembled in North America."

LINK to the August 9th AP article
This quote from the article hits the nail squarely on the head…

“Stabenow asserted that the bill was written by people who don’t understand that manufacturers can’t simply flip a switch and create a North American supply chain, though they are working on it. Numerous automakers, including General Motors, Ford, Stellantis, Toyota and Hyundai-Kia, have announced plans to build EV battery plants in the United States.”
 

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On the plus side, Subaru dealers will most likely have to stop the excessive markups. I'm sure the dealers thought that since the person buying the Solterra is getting a 7500 tax credit, they too can take most or all of that credit. So with a 5,000 or more markup and no tax credit, it makes the Solterra way too expensive. You might as well just go with a Tesla Model Y. Without the tax credit, the Solterra is out of my price range. The new bill is quite confusing though. Here is what consumer reports says

Most of the proposed rules go into effect for cars put into service after December 31, 2022 and are valid through 2032. However, the requirement that vehicles be made in North America in order to qualify will go into effect as soon as the law is passed, and some other provisions don’t go into effect until after regulations are finalized.
 

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Question:

In the end, isn’t the cost to the consumer roughly the same?

Either the buyer pays the dealership $X,000 more than MSRP and gets roughly the same $X,000 as a tax rebate…or pays MSRP and gets no rebate.

With high demand vehicles, lack of any rebate often has no relationship to excessive dealership markups placed on those vehicles. A clear example of this can be found by looking at how Harley Davidson prices skyrocketed in the early 1990’s due to an explosion in demand. It took several years for supply to catch up and bring prices back into realignment with supply.
 

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Question:

In the end, isn’t the cost to the consumer roughly the same?

Either the buyer pays the dealership $X,000 more than MSRP and gets roughly the same $X,000 as a tax rebate…or pays MSRP and gets no rebate.

With high demand vehicles, lack of any rebate often has no relationship to excessive dealership markups placed on those vehicles. A clear example of this can be found by looking at how Harley Davidson prices skyrocketed in the early 1990’s due to an explosion in demand. It took several years for supply to catch up and bring prices back into realignment with supply.
True. But personally I feel the solterra is already overpriced at msrp due to range and charging. So for me without the tax credit it is unacceptable. There is no way I’m paying $53,000 for my touring order. So with no credit, my dealer would have to offer me a discount to take the car which I’m sure they won’t. So I’ll be looking elsewhere. I put an order on the Blazer EV. That puts me back where I was in January with the Solterra but maybe it’s for the best.
 

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True. But personally I feel the solterra is already overpriced at msrp due to range and charging. So for me without the tax credit it is unacceptable. There is no way I’m paying $53,000 for my touring order. So with no credit, my dealer would have to offer me a discount to take the car which I’m sure they won’t. So I’ll be looking elsewhere. I put an order on the Blazer EV. That puts me back where I was in January with the Solterra but maybe it’s for the best.
I agree with this. At MSRP the Solterra was overpriced particularly. My quote for the Premium with the 5k markup was about 52k. I test drove a ID4 last year and it was nice but I thought I would wait. VW announced that they will start making the ID4 in the US "US-Made 2023 Volkswagen ID.4 Is Better Equipped, Cheaper At $37,495" and it will qualify for the 7500. So you can get an ID4 with better range for about 30k or get the Solterra for about 50k. For me this is an easy decision.
 

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VW announced that they will start making the ID4 in the US "US-Made 2023 Volkswagen ID.4 Is Better Equipped, Cheaper At $37,495" and it will qualify for the 7500. So you can get an ID4 with better range for about 30k or get the Solterra for about 50k. For me this is an easy decision.
But will it (after 12/31/2022)? It's made in North America, but what about the battery requirements?
 

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But will it (after 12/31/2022)? It's made in North America, but what about the battery requirements?
It will qualify for at least 3750 for the US model and may qualify for 7500 depending on where battery components come from and percentages also are looked at. This put the car makers on the spot to say where components come from.
 

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Either the buyer pays the dealership $X,000 more than MSRP and gets roughly the same $X,000 as a tax rebate…or pays MSRP and gets no rebate.
That's not how it's "supposed" to work. There really should be no Market Adjustments...there is already a premium in the price because EVs are more expensive to manufacture at the present time. That's what the tax credit is supposed to help make up for with consumers. Greedy dealers, however, have gotten brazen and have found a way for "them" to benefit from the rebates at the consumer's expense.
 

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I totally agree, but nevertheless, that’s how the world works.

Some dealerships stick with MSRP, and may even discount a small amount, while others never miss a chance to gouge the customer…

Its just unfortunate … but whenever tax credits come into play, it always seems to skew pricing upwards to some degree…
 

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I would think that, once the legislation is signed, the $64,000 question waiting to be answered will be … how will the major loss of federal tax credits across so many models affect those who have been waiting on vehicle availability (not only Solterra/bZ4x, but all brands) in their decision to buy? How many will actually walk away? And, how many will come into the market to pickup the “newly available” models abandoned by those with reservations?

I doubt it will have much negative effect on the Tesla models, and any other manufacturer that had already maxed out their credits, and if they can reclaim any credits at all it more than likely will enhance their sales.

It will be interesting to see…
 
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