EV Tax Credit Expansion Deal Reached by Senate

[DJBull]

Pity the poor guy who orders his 2023 Lightning Lariat in August with options at $80,001.00, the Government decides that figure is the established MSRP at a date after he cannot change his order. If his truck comes before New Years he can take $7,500 off his taxes. If it comes New Year's Day he gets Nothing. So, all Christmas Week he is stressed out because his truck is in route via Slow Rail and he is counting on that $7,500.00 back from the dealer to drive his family on vacation to Wally World. The Lightning shows up on New Year's Day.

Now, he does not just not get his rebate, or have the money to take Moma and the Kiddies to Wally World, he does not have the money to hire a Lawyer to fight the government and prove that he really did have a binding contract with his dealer prior to December 31st.

If you're buying an $80k truck and don't have any money left over, you've got bigger problems than whether or not you'll receive the tax credit.

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[ExCivilian]

I believe denying the credit that existed when the purchase was made would constitute an ex post facto law (i.e. Congress can't do it)

Congress can't pass an ex post facto *punishment* but they are relatively free to pass laws that are retroactive if there is a legitimate government reason. When it comes to tax law, the Supreme Court has already held that a "modest" period of retroactivity is allowable and a year or two retroactivity does not tend to raise concerns.

 

[DH0]

It is important to understand what the "Transition Rule" (Page 387 of the proposed law) actually says. It will not apply to anyone who has actually ordered a 2022 Lightning. We all will go under the old law, which gives us up to a $7,500 Tax Credit (Not Rebate) based on Taxes owed for 2022 and with No Limitation on MSRP.

The Key is "Enactment Date" of the proposed new law which is December 31, 2022. Those that had a "Binding Contract" (meaning a Two Party Signed Contract with Money Exchanged) signed on or before the Enactment Date AND the Truck is put into service AFTER the Enactment Date would be affected and therefore allowed the Option of going under EITHER the New or Old law. Not many dealers would complete the sale of your truck prior to being able to hand it over to you, nor not many buyers would pay ahead of time for a promised truck. I certainly would not do it!

Thank you for explaining – I really hope you're right! We have two EVs that are scheduled to be delivered in August (Lightning XLT + something else...). We are over the income limit, so every time I hear some news about the 'Inflation Reduction Act' moving forward my blood pressure shoots up...Ford better deliver this thing soon so I'm not out $15k!

 

[fitek]

if the $7500 is that big a deal to you and you stress over it that much and it causes that much angst, you shouldn't be buying an $80K truck.

It's not necessarily that. The extra $7500 takes it from splurge expense to totally stupid expense. I might still bite for a Pro-- but I'd be better off getting a Lariat Maverick TBH for that money. As has been discussed elsewhere here, that $7500 is not really for the consumer, but for the manufacturer... they price the cars higher knowing folks will get that credit.

For most folks, this situation is probably a better deal.

 

[bryan995]

The vehicle cost limits are horrible .. but I also find it quite surprising that more of the >$80k truck buyers here are not complaining about the $300k household income cap.

That is going to exclude many many current EV buyers.

Basically all homeowners in coastal CA
are close to that edge. I thought the point was to incentivize a broad move to EVs? Not pick and choose winners and losers or only subsidize certain EVs. Do we not want more EV hummers over ICE hummers?

I’m sure it will certainly makes the 13mpg g-wagon look $7500 more attractive for some.

 

[Yellow Buddy]

The vehicle cost limits are horrible .. but I also find it quite surprising that more of the >$80k truck buyers here are not complaining about the $300k household income cap.

Just for calculation sake, a $80,000 truck would be $1,270 at 4.5% for 72 mo (avg loan terms).

For financial planning purposes the general recommendation is spending 15% of your income on an auto loan. That would imply a yearly income of $101,600 to afford the car. Thus making the car “affordable” and might explain why there’s not as many complaints.

The recent rise of the 6, 7, 8 year car loans have made high priced cars “affordable” on a monthly payment basis to folks who don’t necessarily have the incomes to match - although you could do a 4 year term here and still be under the single limit while following general budget recommendations.

 

[Gerrard155]

I dont understand why folks are so wrapped around the axle about the income limit. $300K houshold income means you make more than 96% of Americans. This tax credit covers nearly everyone in the country. Additionally-saying that capping it excludes current ev buyers-again, not a valid point. The whole point is to get more people buying EV’s, not the same people buying new ones.

 

[bryan995]

Just for calculation sake, a $80,000 truck would be $1,270 at 4.5% for 72 mo (avg loan terms).

For financial planning purposes the general recommendation is spending 15% of your income on an auto loan. That would imply a yearly income of $101,600 to afford the car. Thus making the car “affordable” and might explain why there’s not as many complaints.

The recent rise of the 6, 7, 8 year car loans have made high priced cars “affordable” on a monthly payment basis to folks who don’t necessarily have the incomes to match - although you could do a 4 year term here and still be under the single limit while following general budget recommendations.

100k income is really not what it use to be.
https://stayingfrugal.com/the-100000-budget/

Thats $1270/mo of a $5500/mo take home. A 4 year car loan would be closer to $1800/mo.

Given the recent inflation, rent is what, $1900/mo? Average all-in mortgage is, 3000/mo? Doesn’t leave much for basically everything else.

But I get it - personal finance is just that, personal.

 

[LUXMAN]

I dont understand why folks are so wrapped around the axle about the income limit. $300K houshold income means you make more than 96% of Americans. This tax credit covers nearly everyone in the country. Additionally-saying that capping it excludes current ev buyers-again, not a valid point. The whole point is to get more people buying EV’s, not the same people buying new ones.

Well, the same people buying new ones are the ones make the "used" ones available.
Those folks didn't get where they are by giving money away either.
Over 300k you are paying 24% income tax on the first 40k and 32% above that!
So, why should they always get screwed with higher taxes and then no tax credit?
Now, when that bill gets to the house, it is a strong possibility that the income limits go away because all those house members are gonna get hammered by their donors and we all know how honest congress people are and how they can't be bought

 

[RidetheLightning]

a valid point. The whole point is to get more people buying EV’s, not the same people buying new ones.

If you get the same people driving new EVs, you also get more people driving EVs, because they either trade it in, sell it (there's your $4k credit for used EV purchases) or give it to a family member. I guess a few will just add a vehicle to their household, but hopefully that displaces another car that someone else will use like an older ICE or PHEV.

 

[LUXMAN]

I dont understand why folks are so wrapped around the axle about the income limit. $300K houshold income means you make more than 96% of Americans. This tax credit covers nearly everyone in the country. Additionally-saying that capping it excludes current ev buyers-again, not a valid point. The whole point is to get more people buying EV’s, not the same people buying new ones.

Well, those people didn't get where they are by giving money away, so of course they want their fair share.
They are the ones making the used EVs available by buying new ones.
Plus these folks that make of $300k are paying 24% on the 1st $40k over 300 and 32% or more on the rest above $340k.
So why should they pay more than others for taxes AND get screwed outta the tax credit that others get?
That said, I think the income limits will go away once the bill gets to the HOUSE. THe donors are gonna be hammering their paid politions and if you think they are viturous idealoges who actually believe the stuff they spew, I have a Lightning Lariat I will sell you at cost.

 

[RidetheLightning]

The vehicle cost limits are horrible .. but I also find it quite surprising that more of the >$80k truck buyers here are not complaining about the $300k household income cap.

That is going to exclude many many current EV buyers.

Basically all homeowners in coastal CA
are close to that edge. I thought the point was to incentivize a broad move to EVs? Not pick and

I definitely agree with 99% of what you're saying, but (raises hand) I'm a homeowner in coastal CA and our household income after business expenses/deductions is nowhere near $300k. Even before those deductions it's nowhere near $300k. I'm not a SFH homeowner though, I live in the smaller part of a duplex so house hacking is one way for those who don't make $300k+ in household income here to own a home.

 

[RidetheLightning]

If you're buying an $80k truck and don't have any money left over, you've got bigger problems than whether or not you'll receive the tax credit.

I definitely agree with staying within a household budget, but it's not *really* the same as other $80k trucks. First of all, there's not a lot of competition for EV trucks yet, so that drives up prices/desirability, it has the potential to be flipped/not lose much value down the road, and if you simply don't want to buy an ICE truck (there are no PHEVs) you're kind of stuck. Second of all, it's not like a $80k ICE truck over 200k miles, it's more like a $50k ICE truck after fuel costs. (quick and dirty math: assuming $5/gal gas, $.11/kWh electricity where I am, and not counting oil changes and engine filter changes, so adjust however you like) Up front cost is higher, cost to operate is lower.

 

[sotek2345]

100k income is really not what it use to be.
https://stayingfrugal.com/the-100000-budget/

Thats $1270/mo of a $5500/mo take home. A 4 year car loan would be closer to 1800/mo.

Given the recent inflation, rent is what, $1900/mo? Average all-in mortgage is, 3000/mo? Doesn’t leave much for basically everything else.

But I get it - personal finance is just that, personal.

Yup - our $1,200(ish) all in mortgage payment goes a long way towards freeing up funds for more fun purchases like the Lightning.

Cheap housing is out there, just not where more people look. Saw a 5br / 3 bath on the market about a year ago for $60k!

 

[lancersrock]

i Pay $1000 all in for my mortgage so that frees up plenty for me and wife to have the cars we want. I was at about 50% LTV last year and could've sold and used the $100k and moved to a bigger and more expensive house but we like our cars and our house meets our needs (minus not having a garage). So thats why ill be looking at an $80k truck on $100k income. Of course if ford would just let me order a pro ER with 9.6kw for under $55 thats the route i would go.

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