Would I still qualify for current federal rebate?

[FlasherZ]

what congress should realize is that there are tens of thousands of EVs that are ALREADY ORDERED, and customers have NO CONTROL over delivery dates - so, those folks should be able to span the gap and use WHICHEVER of the bills that works best for them.

Since it's a tax credit, it gets aligned with the IRS, and the IRS only cares about in-service date because that's when the accounting and tax stuff all starts, and so it naturally gets aligned with what they're familiar with.

I got burned by this with the very first version of the guidance for the 30D credit which allowed Neighborhood Electric Vehicles to receive a tax credit at nearly the entire price of the vehicle. Long story short, IRS changed the rules in October 2009, effective January 2010, to reduce that credit substantially. My NEV ordered in summer 2009 didn't deliver until March, 2010. I filed for the credit anyway based on the order date, was audited, went to tax court, and stipulated dismissal when many others in same condition were losing case after case. I paid the extra 2009 tax, and filed an amended 2010 return to get at least a portion of it back.

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[FlasherZ]

When does the income cap take effect?

To be just a little clearer, the “enactment date” is the date it is signed by the President, not the “after 12/31/22” effective date of the broader bill.

from the bill (copied from sotek's post (which is about as clear as we're going to get, I think)):

k) EFFECTIVE DATES—(1) IN GENERAL—Except as provided in paragraphs (2), (3), (4), and (5), the amendments made by this section shall apply to vehicles placed in serv ice after December 31, 2022.

(2), (3), (4), and (5) do not pertain to the income cap and so it goes into effect for vehicles placed in service after Dec 31, 2022.

 

[metroshot]

I am confused as I read in many sources that:

"Inflation Reduction Act of 2022, ..... would require batteries to have at least 40 percent of materials sourced from North America or a US trading partner by 2024 in order to be eligible for a $7,500 tax break"

Aren't Ford batteries sourced from SK (Korea) ?

So isn't this discussion a moot point ?

Or is this in need of more interpretation ?

 

[FlasherZ]

By the way, if you want to see what the new law will look like instead of the posted wacky "change the word 'the' to the word 'an' in subsection 3, paragraph A, line 15" bill language, someone on Twitter created a side-by-side view of the text:

https://www.diffchecker.com/KDS4AuHk#

Click "use web version instead" at the bottom of the first box you get, then you'll have a side-by-side view of the old law's text vs. the new on the right. It makes it easier to read the final flow of the law.

 

[FlasherZ]

I am confused as I read in many sources that:

"Inflation Reduction Act of 2022, ..... would require batteries to have at least 40 percent of materials sourced from North America or a US trading partner by 2024 in order to be eligible for a $7,500 tax break"

Aren't Ford batteries sourced from SK (Korea) ?

SK Innovation assembles the packs in US, I believe, using materials from SK IE Technology, which has primary plants in China, Korea, and Poland. We don't know the definition of "a US trading partner" above, nor do we know if Ford and SK entered an agreement by which one particular location is providing the components.

The DOT is tasked with producing the detailed guidance for that rule by December 31, so we don't know the very detailed specifics until we see that.

 

[greenne]

But what could theoretically effect the F150L buyer is the old tax credit’s 200K cap, but only if Ford reaches its cap before the last day of September, 2022. The reason the September date is relevant is this: the 200k cap allows credits for any car purchased within the calendar quarter a manufacturer hits the 200k sale; accordingly, if Ford doesn’t reach its 200k sale until October 1 (the beginning of Q4), then Ford will be eligible for the old tax treatment through the end of 2022 and the effective date of the new bill on Jan 1, 2023.
If instead Ford reaches its cap before the last day of September then: (1) people who took delivery before the last day of September will still get the full credit, and (2) people who take delivery from Oct. 1 through end of Q4 will not receive the full $7,500 but instead take the reduced roll-off credit amount (~$4k?).

This is not entirely correct, the full credit(under the old system) is valid for the quarter an automaker reaches 200k as well as the quarter after the automaker reaches 200k.

Even if Ford were to pass 200k in Q3, buyers under the old system, would still be entitled to the full $7500 in Q4. Under the old system the 200k phasedown would begin in Q1 2023 at the earliest.

200k limit by itself should not effect anyone with a delivery in 2022.

 

[metroshot]

SK Innovation assembles the packs in US, I believe, using materials from SK IE Technology, which has primary plants in China, Korea, and Poland. We don't know the definition of "a US trading partner" above, nor do we know if Ford and SK entered an agreement by which one particular location is providing the components.

The DOT is tasked with producing the detailed guidance for that rule by December 31, so we don't know the very detailed specifics until we see that.

That helps - thanks.

Trading partner - NAFTA or ASEAN or ???

So all this discussion about the proposed tax credit may not even become reality if the battery sourcing elements / components does not comply with the language ?

 

[FlasherZ]

That helps - thanks.

Trading partner - NAFTA or ASEAN or ???

So all this discussion about the proposed tax credit may not even become reality if the battery sourcing elements / components does not comply with the language ?

Correct, or the rebate will only be $3,750 because it'll meet only one of the two criteria for assembly vs. materials.

The manufacturers' lobby has said that only 30% of today's EV's would meet the criteria for any sort of rebate at all, and very few would be eligible for the entire rebate. Speculation is that we'll end up with a rider somewhere else where Congress defers the requirement (or the DOT will write the thing with a bunch of holes so that as much qualifies as possible).

 

[cvalue13]

This is not entirely correct, the full credit(under the old system) is valid for the quarter an automaker reaches 200k as well as the quarter after the automaker reaches 200k.

Even if Ford were to pass 200k in Q3, buyers under the old system, would still be entitled to the full $7500 in Q4. Under the old system the phasedown would begin in Q1 2023.

Thanks for that correction - I was going off (poor) memory of thequarterly roll off details

which means if correct, assuming this new bill passes, the 200k cap under the old bill is irrelevant to Ford (even if it hits the cap today, the full credits would apply both this and next quarter, taking us to the effective date of the new bill)

 

[cvalue13]

I am confused as I read in many sources that:

"Inflation Reduction Act of 2022, ..... would require batteries to have at least 40 percent of materials sourced from North America or a US trading partner by 2024 in order to be eligible for a $7,500 tax break"

Aren't Ford batteries sourced from SK (Korea) ?

So isn't this discussion a moot point ?

Or is this in need of more interpretation ?

“by 2024”

the battery materials component of the bill does not apply until 2024.

so, 2023 is a go for Ford, but in 2024 the tax credits could be effected negatively for Ford vehicles if Ford has not sorted out its battery materials supply chain by 2024 (likely for deliveries made in 2024) - but as mentioned above the details of this wil not be clear until the rule-making and interpretation processes are completed for these portions of the bill (months to come!

EDIT: corrected below, as the material requirement of 40% kicks in for 2023 afterall

 

[hturnerfamily]

and Ford is building not only the BLUE OVAL facility for EV and Battery manufacturing in Tennessee, but also two battery plants in Kentucky, as a joint venture with SK(Korea)...

 

[FlasherZ]

“by 2024”

the battery materials component of the bill does not apply until 2024.

so, 2023 is a go for Ford, but in 2024 the tax credits could be effected negatively for Ford vehicles if Ford has not sorted out its battery materials supply chain by 2024 (likely for deliveries made in 2024) - but as mentioned above the details of this wil not be clear until the rule-making and interpretation processes are completed for these portions of the bill (months to come!

Incorrect.

Here's the law as proposed:

(1)Critical minerals requirement
In the case of a new qualified plug-in electric drive motor vehicle sold during the phaseout period, only the applicable percentage of the credit otherwise allowable under subsection (a) shall be allowed.
(A)In general
The requirement described in this subparagraph with respect to a vehicle is that, with respect to the battery from which the electric motor of such vehicle draws electricity, the percentage of the value of the applicable critical minerals (as defined in section 45X(c)(6)) contained in such battery that were—
(i)extracted or processed—
(I)in the United States, or
(II)in any country with which the United States has a free trade agreement in effect, or
(ii)recycled in North America, is equal to or greater than the applicable percentage (as certified by the qualified manufacturer, in such form or manner as prescribed by the Secretary).
(B)Applicable percentage
For purposes of subparagraph (A), the applicable percentage shall be—
(i)in the case of a vehicle placed in service after the date on which the proposed guidance described in paragraph (3)(B) is issued by the Secretary and before January 1, 2024, 40 percent,
(ii)in the case of a vehicle placed in service during calendar year 2024, 50 percent,
(iii)in the case of a vehicle placed in service during calendar year 2025, 60 percent,
(iv)in the case of a vehicle placed in service during calendar year 2026, 70 percent, and
(v)in the case of a vehicle placed in service after December 31, 2026, 80 percent.

Section (i) describes the time period between the issuance of the guidance by DOT and December 31, 2023.

40% during 2023, 50% during 2024, 60% during 2025, 70% during 2026, and 80% during 2027.

The assembly requirement is 10% more in general too:

(2)Battery components
For purposes of this subsection, the phaseout period is the period beginning with the second calendar quarter following the calendar quarter which includes the first date on which the number of new qualified plug-in electric drive motor vehicles manufactured by the manufacturer of the vehicle referred to in paragraph (1) sold for use in the United States after December 31, 2009, is at least 200,000.
(A)In general
The requirement described in this subparagraph with respect to a vehicle is that, with respect to the battery from which the electric motor of such vehicle draws electricity, the percentage of the value of the components contained in such battery that were manufactured or assembled in North America is equal to or greater than the applicable percentage (as certified by the qualified manufacturer, in such form or manner as prescribed by the Secretary).
(B)Applicable percentage
For purposes of subparagraph (A), the applicable percentage shall be—
(i)in the case of a vehicle placed in service after the date on which the proposed guidance described in paragraph (3)(B) is issued by the Secretary and before January 1, 2024, 50 percent,
(ii)in the case of a vehicle placed in service during calendar year 2024 or 2025, 60 percent,
(iii)in the case of a vehicle placed in service during calendar year 2026, 70 percent,
(iv)in the case of a vehicle placed in service during calendar year 2027, 80 percent,
(v)in the case of a vehicle placed in service during calendar year 2028, 90 percent,
(vi)in the case of a vehicle placed in service after December 31, 2028, 100 percent.

So 50% in 2023, then increasing by 10% per year until 2029 requires 100% of the battery manufacturing or assembly to take place in the US (as governed by guidance from DOT).

 

[cvalue13]

Incorrect

thanks for the correction. That’s what I get for believing someone else’s analysis

like this one here from E&E “If signed into law, the bill would require EVs by 2024 to have batteries made with at least 40 percent minerals extracted or processed by a nation that is party to a U.S. free trade agreement”

Or this one here from Reason “Starting in 2024, an EV that qualifies for the full rebate amount must source at least 40 percent of its battery's components—including minerals such as lithium, cobalt, manganese, and graphite—from either the U.S. or a country with which the U.S. has a trade agreement.”

Oh well!

Appears possibly to be a confusion with the separate issue of the “countries of critical concern” exclusions, where manufacturing prohibitions roll on Dec 31 2023 and mineral component prohibitions roll on Dec 31 2024

 

[FlasherZ]

thanks for the correction. That’s what I get for believing someone else’s analysis

No worries - upthread I posted the link to the work that someone from Twitter did to apply the bill text to the existing law text to create what the final law would look like as signed.

It makes it far more readable -- check it out:
https://www.diffchecker.com/KDS4AuHk#

(Click on "use the web version instead" or whatever at the bottom of the first box you'll get)

 

[Drayday55]

People. I reached out to my dealer to get a sales agreement in case there was a time limit to the new law. Here is thier response.


Hello Andre, this is ____________ at El Cajon Ford. I read your email and wanted to respond to you. We do not do any purchase contracts on any vehicles until they are actually here on our dealership lot. Many of the forums are putting misleading information about the new tax credit law.
The new tax credit that was just signed by President Biden pertains to vehicles purchased after December 31, 2022.
Here is a copy of the legal jargon: "Transition provision for EVs with written sales orders dated in 2022 prior to the date of President signing the bill but delivered in 2023 allows purchaser to claim the “old” credit in 2023.".
Let me know if you need anything else.
Regards

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