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cvalue13

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It will be months before the IRS issues guidance and interpretation on the IRA, including the much-discussed MSRP caps. Until then, nobody (least of all me) knows exactly how the IRS will define these MSRP caps.

Still, I’ve been curious to better anticipate how these MSRP caps may be interpreted, and through some digging have collected a couple of interesting tidbits, which at the end I apply to Ford’s MY2023 MSRP details.

The below TL; DR -> it may be possible for an Extended Range Lightning to slip under the IRA’s $80K MARP cap, if it is possible to have a dealer delete >$975 of standard equipment from from the XLT ER (with a head start already provided by the already “required” deletion of the onboard scales).

But the web to get there takes a sleepless night of dreaming up the IRS guidance to come, as follows:

(1) Prior IRS guidance on “MSRP” points to the laws behind the “Monroney Sticker” requirements

One prior IRS vehicle tax-credit precedent guidance I found concerned the long-ago expired (2010) “qualified alternative fuel motor vehicle” (QAFMV) credit. For the QAFMV, the law based the credit on an MSRP calculation, and so the IRS issued guidance that amongst other things defined/clarified the relevant sense of MSRP (my emphasis in underline, quoted only in relevant part):

“.03 Manufacturer’s Suggested Retail Price. If the manufacturer of a QAFMV or a mixed-fuel vehicle is required under 15 U.S.C. § 1232 to provide a manufacturer’s suggested retail price for the vehicle, then the manufacturer’s suggested retail price for the vehicle is the price provided in accordance with 15 U.S.C. § 1232 for that vehicle….”

The code section referenced above, 15 U.S.C. § 1232, is the underlying substance of the Monroney Sticker.

(2) Unhelpfully, 15 U.S.C. § 1232 does not itself make reference to “manufacturer’s suggested retail price”

Below I post the relevant portions of the code, my emphasis again underlined:

“Every manufacturer of new automobiles distributed in commerce shall, prior to the delivery of any new automobile to any dealer, or at or prior to the introduction date of new models delivered to a dealer prior to such introduction date, securely affix to the windshield, or side window of such automobile a label on which such manufactures shall endorse clearly, distinctly and legibly true and correct entries disclosing the following information concerning such automobile —

(a) the make, model, and serial or identification number or numbers;

(b) the final assembly plant;

(c) the name, and the location of the place of business, of the dealer to whom it is to be delivered;

(d) the name of the city or town at which it is to be delivered to such dealer;

(e) the method of transportation used in making delivery of such auromobile, if driven or towed from final assembly point to place of delivery;

(f) the following information:

(1) the retail price of such automobile suggested by the manufacturer;​

(2) the retail delivered price suggested by the manufacturer for each accessory or item of optional equipment, physically attached to such automobile at the time of its delivery to such dealer, which is not included within the price of such automobile as stated pursuant to paragraph (1);​

(3) the amount charged, if any, to such dealer for the transportation of such auromobile to the location at which it is delivered to such dealer; and​

(4) the total of the amounts specified pursuant to paragraphs (1), (2), and (3);​

(g) if one or more safety ratings for such auromobile …. [omitting remainder]…”

Unhelpfully, nowhere does the statute itself reference the exact term “manufacture’s suggested retail price.” The IRS guidance instead says “the manufacturer’s suggested retail price for the vehicle is the price provided in accordance with 15 U.S.C. § 1232 for that vehicle.For this language, statute item Item (1) appears to be the nearest match, then, as “retail price of such automobile suggested by the manufacturer.”

Noting that item (2) is a requirement to list not the “retail price” of the automobile, but instead the retail “delivered” price, “for each accessory or item of optional equipment, physically attached to such automobile,” I deduce (from my armchair) that item (2) is not included within the IRS’s notion of “manufacturer’s suggested retail price for the vehicle” but instead the “MSRP” for the optional equipment. (And more certainly it’s not the case that item (3), delivery charges, are a “retail price” at all, much less inherent to the price of the vehicle.)

Instead (from my armchair), the IRS’s notion of “MSRP” for the vehicle I take to relate only to item (1) in the statute. (If anyone has on-point rulings from the IRS relarinf to the QAFMV credit definition of MSRP, that might settle it!)

On this view,” “MSRP” appears to mean the price of the base trim level before options or delivery.

(3) The view that “MSRP” mean the price of the base trim level before options and delivery is probably supported by examples of Monroney Stickers

Taking this view of “MSRP,” it has the benefit of seeming to square with the Monroney Sticker themselves:

Ford F-150 Lightning Inflation Reduction Act -- MSRP Cap x F150 Lightning 2023 MSRP Conjecture - Extended Range (ER) under $80K possible? D49F5447-3995-4AC6-849F-71935313BF6E


Note that there is listed an “MSRP” for the vehicle, separately from the “MSRP” for the options, and together - along with D&D - described as “total” MSRP.

Looking at the sticker alone, one might worry if the new EV law’s reference to “MSRP” could be to the “total” number on the sticker; but looking first to the IRS’s prior guidance and the operative code language regarding the MSRP for “the vehicle,” as distinct from MSRP for options/D&D, the sticker instead seems to support the read that the IRS is looking to - in effect - the base trim level MSRP, before options.

(4) What does this mean for MY23 F150L?

From over here at Motor1.com I pulled this helpful little chart, which I assume to be accurate regarding what little is currently known for Ford’s released MY23 pricing:

Ford F-150 Lightning Inflation Reduction Act -- MSRP Cap x F150 Lightning 2023 MSRP Conjecture - Extended Range (ER) under $80K possible? 4C85EDE7-8FC2-4E21-A155-8B00E02C194B



However, since we (I?) believe D&D is excluded from the IRS-relevant notion of MSRP, I’ve further backed the above numbers down to exclude D&D and then stoplight color-coded for what does or doesn't hit the notional IRA cap for pickup MSRPs:


Model2023 Model Year (EXCLUDING $1,795 Destination)
Pro$47,001
XLT$59,474
XLT High$68,474
XLT High Extended Range$80,974
Lariat$74,474
Lariat Extended Range$85,954
Platinum Extended Range$96,724


I’ve placed the XLT ER in yellow, because when I saw the price within spitting distance of the MSRP cap I wondered something fanciful: if chip shortages continue to result in “required deletions” from a trim level, are any applicable to the XLT ER, and if so could the resulting price reduction >$975?

For example, the on board scales are a part of the XLT ER, and are I believe a known “required” deletion for 2023 orders (so far). To what price reduction?

And, I believe that these deleted “standard” items result in Ford issuing a window sticker with a reduced “base” MSRP.


(5) In fact, could a dealer build an XLT ER with a sub-$80K sticker MSRP?

Setting aside chip shortage deletions, and maybe more to the point: could a customer ask their dealer to order an XLT ER that proactively deletes certain “standard” equipment, and receive a price reduction for those equipment deletions?

If so, is there non-critical XLT ER equipment that could result in a >$975 price reduction? (Even better if it is equipment that could later be dealer-installed?)

If a person could up-front confirm with their dealer that the window-sticker would show a sub-$80K base MSRP, it might be possible to build an ER Lightning that comes in under the $80K IRA MSRP cap.

Of course, awaiting the IRA guidance from the IRS should prove out whether the above-described MSRP calculation is correct. And, anyone over the income cap is busted, anyway. Not to mention separately still needing a final understanding of the battery minerals and assembly requirements and where Ford comes out there.

Oh well. Perhaps the next inflection point in this fanciful thought will be seeing a window sticker for someone with an order that deleted the onboard scales, to see how that credit is reflected on the window sticker
 

Sdctcher

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Excellent Research!
I have been working on the same for a week but you have found everything I did and more. I think your reasoning is spot-on. I also think there will be political pressure on the government pencil pushers to interpret the definition of MSRP liberally.

Unfortunately, current 2023 orderers are going to have to gamble. According to the IRS they must get a "binding contract" from their dealer by paying a non-refundable 5% deposit now and many 2023's certainly will not be delivered before Jan. 1, 2023 (in order to go under the old IRS $80,000 MSRP rules). If they order without the IRS requirement then they must factor in an MSRP well below the $80,000 threshold.
 
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Maquis

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Excellent Research!
I have been working on the same for a week but you have found everything I did and more. I think your reasoning is spot-on. I also think there will be political pressure on the government pencil pushers to interpret the definition of MSRP liberally.

Unfortunately, current 2023 orderers are going to have to gamble. According to the IRS they must get a "binding contract" from their dealer by paying a non-refundable 5% deposit now and many 2023's certainly will not be delivered before Jan. 1, 2023 (in order to go under the old IRS $80,000 MSRP rules). If they order without the IRS requirement then they must factor in an MSRP well below the $80,000 threshold.
Just to clarify:
The contract with nonrefundable deposit had to have been in place before August 16th.
This according to the IRS commentary shared in another thread.
 

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Just to clarify:
The contract with nonrefundable deposit had to have been in place before August 16th.
This according to the IRS commentary shared in another thread.
Yup, only way to qualify for old credit is to take delivery by end of 2022. Otherwise 2023 eligibility is a bit of an unknown now, although it certainly seems like the Lightning will at least qualify for some of the credit.
 

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I've only looked at OR and CA state incentives, which impose "MSRP" caps, and from what I saw they determine eligibility on base model pricing. I don't know how or even if they consider options. When I spoke to someone on the phone last week, her explanation was they consider the base "MSRP" (the Pro MSRP) and everything else "optioned" up from there (If I understood her correctly, the Lariat ER is considered a $40K Pro + $40K in options). That is, except for the Platinum, which I can only guess is because the base MSRP doesn't have options--or is option-inclusive depending on how you want to look at it. Wasn't clear why the Platinum would be treated like that but the Lariat was not. In any case, I'd be surprised if other states (and the fed) do it differently.

Here's a window sticker with the smart scale delete:
Ford F-150 Lightning Inflation Reduction Act -- MSRP Cap x F150 Lightning 2023 MSRP Conjecture - Extended Range (ER) under $80K possible? Gn8JiIu


The issue here is that once another ~$1,000 are stripped from an XLT ER to get it to comply with the cap it's hard to justify the $80K price tag. An XLT ER already wasn't worth it without the price hike, income cap, and potential loss of full incentives so this seems to make even less sense.
 

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cvalue13

cvalue13

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XLT ER to get it to comply with the cap it's hard to justify the $80K price tag.
though for some it could be worth the resulting net $72,500?

$7,500 more than the MY22 version, but not as bad as $15,000 more? *sad trombone*
 

sotek2345

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I've only looked at OR and CA state incentives, which impose "MSRP" caps, and from what I saw they determine eligibility on base model pricing. I don't know how or even if they consider options. When I spoke to someone on the phone last week, her explanation was they consider the base "MSRP" (the Pro MSRP) and everything else "optioned" up from there (If I understood her correctly, the Lariat ER is considered a $40K Pro + $40K in options). That is, except for the Platinum, which I can only guess is because the base MSRP doesn't have options--or is option-inclusive depending on how you want to look at it. Wasn't clear why the Platinum would be treated like that but the Lariat was not. In any case, I'd be surprised if other states (and the fed) do it differently.
NY also has an MSRP cutoff, but it is treated by trim level, with ER trims being considered separate from the SR trim.
 

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NY also has an MSRP cutoff, but it is treated by trim level, with ER trims being considered separate from the SR trim.
I think NY also differentiates the XLT and above Standard Range from the PRO for the purposes of the tax credit.. but that is NY playing fast and loose with their own rules.($42k base MSRP gets $2000, above $42k gets $500)

The Ioniq 5 is broken down to 58kw battery($2000) and the 77kw battery($500)

yet..the VW ID4 get the full $2000..all trims...even though and awd Pro Id4 pushes past $50k

Note: the Msrp cap is base MSRP, no options, no destination for NYS rebate.

https://www.nyserda.ny.gov/All-Programs/Drive-Clean-Rebate/How-it-Works/Eligible-Models

As an aside, the NYS rebate is nearly worthless as almost everything relevant is over $42k.... I expected better.
 
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rdr854

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I am curious. Has anyone read the attached and believe those of us who have a reservation already will be able to order mid-September and get 22 pricing ?
Unfortunately, the offer is a bit more restrictive. The article indicates that the offer applies to the following two categories:

a. Reservation holders who placed an affirmative order for a MY2022 Lightning that has not been scheduled for build during MY2022 and
b. Reservation holders who extended their reservations for a chance at a Pro or XLT. For this group, orders must be made by September 30, 2022

Unfortunately, for those reservation holders that have not received an invitation to order, the current offer for price protection does not apply. I knw this is confusing because many reservation holders have treated their reservation as an order when in fact it is merely a reservation to place an order at a future date and time.
 

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RDR, what about the statement within the article that "while a 3rd wave of invitations will follow in Mid-September for all other unconverted reservation holders". Those of us holding reservations shouldn't we be consider "unconverted" ?
 

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Don't get too attached to that private offer. As soon as Ford said it would be offered "point of sale" I predicted it'd be yet another opportunity for dealers to screw customers. Sure enough, this pops up on reddit today:



It also won't lower the MSRP so doesn't help those of us with caps.

Not sure why, but Ford has chosen the absolute worst way to extend "price protection" to its customers (begging the question of who their customers are).
 

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Unfortunately, the offer is a bit more restrictive. The article indicates that the offer applies to the following two categories:

a. Reservation holders who placed an affirmative order for a MY2022 Lightning that has not been scheduled for build during MY2022 and
b. Reservation holders who extended their reservations for a chance at a Pro or XLT. For this group, orders must be made by September 30, 2022

Unfortunately, for those reservation holders that have not received an invitation to order, the current offer for price protection does not apply. I knw this is confusing because many reservation holders have treated their reservation as an order when in fact it is merely a reservation to place an order at a future date and time.

Have we identified anyone eligible under catagory a yet? I *think* Ford is still doing scheduling for MY22..I think their intention is to schedule all MY22 orders as MY22 if possible.
 

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I hear you "excivilian" but I'm working with a dealer who has been extremely reputable and I believe they will honor the private offer
 
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I predicted it'd be yet another opportunity for dealers to screw customers. Sure enough, this pops up on reddit today:
To be fair, what you’ve quoted from Reddit is just another person who shares your prediction, not an actual datum of it coming true.

And, this “incentive” being at the dealer’s discretion is no different than a dealer holdback, or FPA, both of which also show on a Vincent - or a markup over MSRP for that matter. And like these other items that show in Vincent or the invoice, I think the majority of dealers will view this as a red-face test. Anyone can ask a dealer for the Vincent and invoice on their vehicle, and the dealer will have to decide whether to tell that customer “that’s my money, not yours.” I’m sure there’ll be some, but as with ADM’s the truth wasn’t as bad as feared.

Given the laws around MSRP, franchises, Monroney Reporting, etc., I have zero confidence whether Ford even had a choice in this matter to create separate MSRPs for identical vehicles of the same MY - do you have any familiarity?
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