A concern for those counting on the $7500 tax credit. And potentially some good news.

[Shumdit]

This may have been discussed before so forgive me if so. There is wording in the current proposed Biden’s Build Back Better program that may make a lot of this irrelevant soon but as it stands the current EV credit may not be there for many of us building that into our decisions to purchase. That credit is cumulative so you have to look at any Fords sold since the EV credit was implemented many years back. It appears people think it starts over every year or for each new model. Ford appears they could run out in the 2nd or 3rd quarter of 2022 Under the current program and be offered for only a few months behind that. At which point it will phase out for 6 months offering $3750 back, then $1875 for six months. Based on the current # of reservations only very early buyers of the Lightning will qualify for the full $7500. Now the good news: today’s proposed changes move the cap to $80000 MSRP on trucks from the previous $74000 and the $12500 credit would be available for quite a few years without a # of cars sold cap like the current one. The only negative change is that the new proposal limits the full EV tax credit for individual taxpayers reporting adjusted gross incomes of $250,000 or $500,000 for joint filers, down from $400,000 for individual filers and $800,000 for joint filers.

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[astricklin]

When they hit 200k sales then there is the remainder of that quarter plus two additional quarters at the full amount. I would imagine Ford will time it properly so they can get as many vehicles as possible to receive the full tax credit.
The other thing you should be concerned about is what is your actual tax liability. If it is less than $7500 then you will only qualify for the amount up to your tax liability as the credit is non refundable. If you are unsure, ask a tax professional.

However this will not apply if there are any changes to the tax credit.

 

[Blainestang]

When they hit 200k sales then there is the remainder of that quarter plus two additional quarters at the full amount. I would imagine Ford will time it properly so they can get as many vehicles as possible to receive the full tax credit.

They would be crazy not to, and they clearly have the logistics down for piling up trucks that are awaiting completion/delivery.

 

[Erik]

The $7,500 is available only one full quarter after the quarter when Ford reaches 200k US sales to people claiming the credit. So if Ford reaches 200k in August 2022, then the credit is reduced to $3,750 on Jan 1, 2023.

Tesla held back deliveries in June 2018 so that they could exceed 200k in July 2018.

141,834 EV credits were claimed for Ford EVs sold through June 2021, so that leaves 58,166 from July 2021. 15,193 EV credits were claimed for Ford EVs in the first two quarters of 2021. At that rate the credit will run out in Q4 2022, but EV sales are accelerating. Ford will probably reach 200k in Q2 or Q3 of 2022. Better make sure you get the delivery by Oct 2022.

https://www.irs.gov/businesses/irc-30d-plug-in-electric-drive-motor-vehicle-credit-quarterly-sales

 

[Sgt Beavis]

Did I miss something? Wasn't the 200K limit was removed. I just did a scan and I don't see where it was put back in.

https://rules.house.gov/sites/democrats.rules.house.gov/files/BILLS-117HR5376RH-RCP117-18.pdf
It starts on page 1480

 

[greenne]

Did I miss something? Wasn't the 200K limit was removed. I just did a scan and I don't see where it was put back in.

https://rules.house.gov/sites/democrats.rules.house.gov/files/BILLS-117HR5376RH-RCP117-18.pdf
It starts on page 1480

Beavis...Erik is talking about the current(old) credit. The new credit being floated in Congress gets rid of the 200k threshold(allows GM and Tesla bsck into play).

The credit I believe runs thru 2031 with no restriction on numbers.

(The other debated version ran until 50% of vehicle sales were EVs,)

 

[astricklin]

Did I miss something? Wasn't the 200K limit was removed. I just did a scan and I don't see where it was put back in.

https://rules.house.gov/sites/democrats.rules.house.gov/files/BILLS-117HR5376RH-RCP117-18.pdf
It starts on page 1480

This is not yet law.

 

[rdr854]

This is not yet law.

Unfortunately, I do not think that the tax credit will survive in its current form due to apparent violations of the trade agreements with Mexico and Canada as well as other international trade agreements. The build in America and union provisions have the international community unanimously up in arms, with 25 ambassadors signing onto a protest letter.

Even if the bill passes and is signed into law, I think there is a possibility that the WTO could force a change. Interesting times ahead.

 

[Smokewagun]

So, tax liability means nothing in relation to the amount withheld from our checks, correct? So, if you are taxed $15,000 by Uncle Sam, but are getting no refund and owe nothing because your withholdings cover your taxes, you WOULD get $7,500 as a “refund” due to the tax credit… correct?

 

[sotek2345]

So, tax liability means nothing in relation to the amount withheld from our checks, correct? So, if you are taxed $15,000 by Uncle Sam, but are getting no refund and owe nothing because your withholdings cover your taxes, you WOULD get $7,500 as a “refund” due to the tax credit… correct?

Yes, that is correct

 

[Kiggulak]

Unfortunately, I do not think that the tax credit will survive in its current form due to apparent violations of the trade agreements with Mexico and Canada as well as other international trade agreements. The build in America and union provisions have the international community unanimously up in arms, with 25 ambassadors signing onto a protest letter.

Even if the bill passes and is signed into law, I think there is a possibility that the WTO could force a change. Interesting times ahead.

What does the WTO have to do with my taxes and taxable liability. I can choose a product that qualifies or does not qualify. Is the WTO regulating the state rebates and credits as well? Makes sense for countries to stimulate internal growth over foreign growth. What about Norway, UK, France, Germany EV incentives is the WTO regulating them too?

I know China has all kinds of internal ownership and manufacturing requirements just to make/sell in China, WTO isn't claiming foul there its on the business to choose to give up their IP to access the Chinese market. No reason we should handicap the US EV market which is already years behind in development and deployment.

 

[rdr854]

What does the WTO have to do with my taxes and taxable liability. I can choose a product that qualifies or does not qualify. Is the WTO regulating the state rebates and credits as well? Makes sense for countries to stimulate internal growth over foreign growth. What about Norway, UK, France, Germany EV incentives is the WTO regulating them too?

I know China has all kinds of internal ownership and manufacturing requirements just to make/sell in China, WTO isn't claiming foul there its on the business to choose to give up their IP to access the Chinese market. No reason we should handicap the US EV market which is already years behind in development and deployment.

I raised the WTO only because the US has made certain commitments to the WTO, which allegedly the tax credit would violate based upon its current proposed structure. I am not saying anything about the merits of such a claim, just pointing out the possibility.

 

[Shumdit]

What does the WTO have to do with my taxes and taxable liability. I can choose a product that qualifies or does not qualify. Is the WTO regulating the state rebates and credits as well? Makes sense for countries to stimulate internal growth over foreign growth. What about Norway, UK, France, Germany EV incentives is the WTO regulating them too?

I know China has all kinds of internal ownership and manufacturing requirements just to make/sell in China, WTO isn't claiming foul there its on the business to choose to give up their IP to access the Chinese market. No reason we should handicap the US EV market which is already years behind in development and deployment.

Because the additional $4500 being proposed is only for US made EV’s (and only those built by union workers, which is why pretty much all automakers besides Ford, GM and Stellantis would be screwed by that limitation). Also the $500 battery credit addition would be for US built batteries which could upset a lot of other countries. That being said, it’s a tax credit US TAXPAYERS are paying so I think requiring US built is perfectly acceptable. Just maybe take the Union required part out.

 

[HBergeron]

To be clear, the WTO currently has no enforcement power due to the U.S. blocking the appointment of judges to their appeals body - without that body being fully constituted no WTO decision can be final. The upshot? Even if our allies object, at least the first several years of the new credit will be in place and paid out before any possible changes. I guess in an ideal world the 12.5k credit would be in place long enough for all 1st gen purchasers, and then it rolls back to 7.5k, protecting the resale vs new car costs

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