[voxel]

IRS has updated their guidelines after the IRA signing:

Credits for New Clean Vehicles Purchased in 2023 or After | Internal Revenue Service

You may qualify for a clean vehicle tax credit up to $7,500 if you buy a new, qualified plug-in electric vehicle or fuel cell electric vehicle.

www.irs.gov

Interesting bit about binding contracts.

Transition Rule for Vehicles Purchased before August 16, 2022
If you entered into a written binding contract to purchase a new qualifying electric vehicle before August 16, 2022, but do not take possession of the vehicle until on or after August 16, 2022 (for example, because the vehicle has not been delivered), you may claim the EV credit based on the rules that were in effect before August 16, 2022. The final assembly requirement does not apply before August 16, 2022.

What Is a Written Binding Contract?
In general, a written contract is binding if it is enforceable under State law and does not limit damages to a specified amount (for example, by use of a liquidated damages provision or the forfeiture of a deposit). While the enforceability of a contract under State law is a facts-and-circumstances determination to be made under relevant State law, if a customer has made a significant non-refundable deposit or down payment, it is an indication of a binding contract. For tax purposes in general, a contract provision that limits damages to an amount equal to at least 5 percent of the total contract price is not treated as limiting damages to a specified amount. For example, if a customer has made a non-refundable deposit or down payment of 5 percent of the total contract price, it is an indication of a binding contract. A contract is binding even if subject to a condition, as long as the condition is not within the control of either party. A contract will continue to be binding if the parties make insubstantial changes in its terms and conditions.

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Some of us (me) have put $2K+ deposits to the the dealer as that was required to submit the factory order that listed the trim and OTD price (using local tax rates + fees). That probably is close to a binding contract as anything.

 

[StevenH]

Some of us (me) have put $2K+ deposits to the the dealer as that was required to submit the factory order that listed the trim and OTD price (using local tax rates + fees). That probably is close to a binding contract as anything.

Sounds to me like the magic number for the non-refundable deposit is "at least 5% of the total contract price."

 

[N2fw]

It will be interesting to watch what comes from this part of that guidance


Future Guidance

To reduce carbon emissions and invest in the energy security of the United States, the Inflation Reduction Act of 2022 significantly changes the eligibility rules for tax credits available for clean vehicles beginning in 2023. The Internal Revenue Service and the Department of the Treasury will post information and request comments from the public on various existing and new tax credit incentives in the coming weeks and months. Please look for updates on IRS.gov and other announcements from the Administration

 

[useracy]

So just to be 100% clear, unless you’ve already signed a contract with the dealer, all Solterras will be ineligible even if it gets delivered before Jan 1, 2023?

I’m assuming most of you didn’t have your dealer draft a contract up since most of you don’t have a confirmed VIN yet.

EDIT:
Just saw this from the IRS website. Basically you just want a binding contract with the dealership before 12/31/2022 or take possession of the vehicle before that date.

Vehicles Purchased and Delivered between August 16, 2022 and December 31, 2022
If you purchase and take possession of a qualifying electric vehicle after August 16, 2022 and before January 1, 2023, aside from the final assembly requirement, the rules in effect before the enactment of the Inflation Reduction Act for the EV credit apply (including those involving the manufacturing caps on vehicles sold). If you entered into a written binding contract to purchase a new qualifying vehicle before August 16, 2022, see the rule above.

 

[potato]

So just to be 100% clear, unless you’ve already signed a contract with the dealer, all Solterras will be ineligible even if it gets delivered before Jan 1, 2023?

This is correct. Your edit is not correct, because the Solterra isn't assembled in North America, and the binding contract needed to be in place before August 16.

 

[FelineFreddie]

Agreed with @potato. Binding contract (however that’s finically defined by the IRS) for a Solterra/bZ4x had to be signed before the act was signed by the POTUS.

 

[JayEM]

So just to be 100% clear, unless you’ve already signed a contract with the dealer, all Solterras will be ineligible even if it gets delivered before Jan 1, 2023?

I’m assuming most of you didn’t have your dealer draft a contract up since most of you don’t have a confirmed VIN yet.

EDIT:
Just saw this from the IRS website. Basically you just want a binding contract with the dealership before 12/31/2022 or take possession of the vehicle before that date.

Vehicles Purchased and Delivered between August 16, 2022 and December 31, 2022
If you purchase and take possession of a qualifying electric vehicle after August 16, 2022 and before January 1, 2023, aside from the final assembly requirement, the rules in effect before the enactment of the Inflation Reduction Act for the EV credit apply (including those involving the manufacturing caps on vehicles sold). If you entered into a written binding contract to purchase a new qualifying vehicle before August 16, 2022, see the rule above.

Having a contract signed after 8/15/2022 is of no value for tax credit purposes - for the Solterra - because of this wording: "aside from the final assembly requirement"

 

[useracy]

Having a contract signed after 8/15/2022 is of no value for tax credit purposes - for the Solterra - because of this wording: "aside from the final assembly requirement"

Yeah I saw that wording and understood that as not being a requirement. So we’re basically saying all Solterras are ineligible for the EV credit going forward. Ironic that my local Hyundai dealer just got an Ioniq5 VIN order open up and I placed a $500 deposit on it. Guess that car wont qualify either since it’s manufactured in Korea.

 

[JayEM]

Yeah I saw that wording and understood that as not being a requirement. So we’re basically saying all Solterras are ineligible for the EV credit going forward. Ironic that my local Hyundai dealer just got an Ioniq5 VIN order open up and I placed a $500 deposit on it. Guess that car wont qualify either since it’s manufactured in Korea.

Nope... without the prior written binding contract and (possible) 5% non-refundable deposit.

Maybe this will put the brakes on Hyundai and Kia dealerships tacking $5,000 onto the asking price for Ioniq 5 and EV6???? Or maybe there will still be enough uniformed people to keep paying ADM?

 

[FelineFreddie]

I suspect the changes caused by the legislation won’t immediately be reflected in the EV market, but will take some time to filter down into it.

The folks that are all excited about getting an EV may decide to go ahead without the credit, but my thought is that we will see a dip in sales at some point down the road until more vehicles meet the new requirements (made in NA, materials sourced in NA, etc.).

At some point, it’s bound to have an impact.

 

[useracy]

Nope... without the prior written binding contract and (possible) 5% non-refundable deposit.

Maybe this will put the brakes on Hyundai and Kia dealerships tacking $5,000 onto the asking price for Ioniq 5 and EV6???? Or maybe there will still be enough uniformed people to keep paying ADM?

I guess I don't see why the IRS created this transition period clarification. If North American assembled manufacturing was a requirement, why don't they just say this bill goes into affect August 16, 2022. There's no need for a "transition period". The new incentive can be claimed starting August 16, 2022 per the first paragraph. The point of transition period is to provide some flexibility to the consumer.

 

[StevenH]

I suspect the changes caused by the legislation won’t immediately be reflected in the EV market, but will take some time to filter down into it.

The folks that are all excited about getting an EV may decide to go ahead without the credit, but my thought is that we will see a dip in sales at some point down the road until more vehicles meet the new requirements (made in NA, materials sourced in NA, etc.).

At some point, it’s bound to have an impact.

In a twist, it could lower demand and increase availability, replacing a dealer/manufacturer markup with a Federal Government markup via stolen tax credits.

 

[JayEM]

I guess I don't see why the IRS created this transition period clarification. If North American assembled manufacturing was a requirement, why don't they just say this bill goes into affect August 16, 2022. There's no need for a "transition period". The new incentive can be claimed starting August 16, 2022 per the first paragraph.

It's not the IRS, the transition period was written into the law (so, blame Congress). The IRS is simply trying to interpret the law.

 

[JayEM]

I suspect the changes caused by the legislation won’t immediately be reflected in the EV market, but will take some time to filter down into it.

The folks that are all excited about getting an EV may decide to go ahead without the credit, but my thought is that we will see a dip in sales at some point down the road until more vehicles meet the new requirements (made in NA, materials sourced in NA, etc.).

At some point, it’s bound to have an impact.

I doubt there will be a drop in sales (the number of vehicles sold won't change), but there will likely be a drop in what people are willing to pay for each one. But... some mfrs (Hyundai, Kia, Toyota) may decide to ship more cars to EU countries instead of the US.

 

[StevenH]

[

I guess I don't see why the IRS created this transition period clarification. If North American assembled manufacturing was a requirement, why don't they just say this bill goes into affect August 16, 2022.

Because only the Final Assembly provision goes into effect on August 16. The other (battery components/minerals) requirements don't kick in until January 1. Until then, other than the NA assembly requirement, the rest of the old legislation governs.

[

There's no need for a "transition period". The new incentive can be claimed starting August 16, 2022 per the first paragraph. The point of transition period is to provide some flexibility to the consumer.

Even if the car is assembled outside of North America, the consumer still has the option of choosing the old legislation for purposes of the tax credit if they have a binding contract to purchase in place prior to August 16.

 

[useracy]

It's not the IRS, the transition period was written into the law (so, blame Congress). The IRS is simply trying to interpret the law.

Take a look at this site. The wording is a bit more clear than the IRS'.

Federal Tax Credits for All-Electric and Plug-in Hybrid Vehicles (fueleconomy.gov)

If you purchase and take possession of a qualifying electric vehicle after August 16, 2022 and before January 1, 2023, final assembly of the vehicle had to be completed in the United States, otherwise the same rules in effect prior to the enactment of the Inflation Reduction Act apply (including those involving the manufacturing caps on vehicles sold).

My interpretation is that because the Solterra and Ioniq are assembled aren't assembled in the US, then the old EV bill would still apply. This would be good until Dec 31, 2022.

EDIT:

Nevermind, I think I'm starting to see the requirement.

 

[N2fw]

Yeah I saw that wording and understood that as not being a requirement. So we’re basically saying all Solterras are ineligible for the EV credit going forward. Ironic that my local Hyundai dealer just got an Ioniq5 VIN order open up and I placed a $500 deposit on it. Guess that car wont qualify either since it’s manufactured in Korea.

Nope... without the prior written binding contract and (possible) 5% non-refundable deposit.

Maybe this will put the brakes on Hyundai and Kia dealerships tacking $5,000 onto the asking price for Ioniq 5 and EV6???? Or maybe there will still be enough uniformed people to keep paying ADM?

I may be reading this wrong, but the terms will be up for interpretation based on the laws in certain states about what constitutes binding. I don't think we should be focusing so much on the 5% number as much as the fact that both parties (buyer & dealer) entered into any agreement for purchase beyond say the initial reservation through SOA. The most relevant part of that section seems to me to be: A contract is binding even if subject to a condition, as long as the condition is not within the control of either party. A contract will continue to be binding if the parties make insubstantial changes in its terms and conditions. Depending on state - a buyer's/purchase order may meet the conditions if a deposit was made directly to the dealer

I'm in IL and have a deal number, order sheet and and retail/buyer's order - the only thing missing from these docs is the final VIN

 

[FelineFreddie]

That’s a good point. In some states, a deposit on a vehicle may legally be required to be returned by state law if the sale falls through, where in other states, a deposit/down payment may be forfeited if the buyer fails to complete the sale.

Its all clear as mud at this point… everything is just speculation…

 

[md.]

In a twist, it could lower demand and increase availability, replacing a dealer/manufacturer markup with a Federal Government markup via stolen tax credits.

I would think that in areas where there is a large markup, those markups will go start trending downward. In our area, there are a pretty good number of dealers who don't do the markups, so our prices just went up $7,500 here.

I feel bad for the un-knowing shoppers who purchase an EV or PHEV in the next couple of months thinking they'll get the $7,500 credit. I'm guessing there is a pretty sizable percentage of salespeople out there who either (1) don't know there's no longer a credit available on the cars that they sell or (2) won't be forthcoming with that information to buyers.

 

[Imaketacosmike]

I still wonder if the slightest possibility exists that Subaru could have bought the cars they wanted to have the credit. Much like how they offered the $7500 straight off the lease. That would have been Subaru monetizing the credit....

THE OLD INFO - If you’re leasing a new EV, the tax credit will go to the manufacturer offering you the lease. They may choose to apply that credit to help lower your monthly payments. But they aren’t required to do so. It’s a point you can bring up in negotiations.

Thats the last tiny thing I'm waiting to see. I ALSO May be a dumbass. So take it easy