Will Tesla Model 3 Deliveries Be Timed To Maximize EV Tax Credits?
Originally published on EV Obsession.
Tesla CEO Elon Musk recently made a somewhat vague tweet stating that the company would be bearing in mind the expected phase-out of the federal electric vehicle tax credit — following the 200,000th Tesla sale in the US — when deciding on future Model 3 production and delivery schedules.
That’s an important factor to take into consideration, considering that many Model 3 reservation holders are probably banking on the receipt of the tax credit. Especially given the way that it will be phased out, a bit of tweaking to delivery or production timing could make a big difference in how many buyers end up receiving the full credit.
With there now being well over 325,000 Model 3 reservations (over $14 billion in implied sales, if we’re being optimistic about conversion rates) the maximization of tax credit eligibility would likely be prudent — as it would probably notably increase conversion rates.
Our buddies over at Gas 2 provide some more on that:
All this interest in the Model 3 is making people nervous about whether the federal tax credit will still be available when their Model 3 is manufactured. The answer lies buried deep within IRS Code Section 30D. I won’t burden you with the actual language. As usual, it is unintelligible to mere mortals. But here’s the gist of it.
Once Tesla sells its 200,000th car in America, the federal tax credit shifts from a focus on how many cars have been sold to when they are sold. For example, let’s assume Tesla sells it 200,000th car on January 1, 2018. During the rest of that quarter and for the entire quarter following, every car it sells will get the tax credit. If it could build and deliver 200,000 cars during those 2 quarters, every one of them would be eligible for the federal tax credit.
That would represent quite a production increase for the company, as compared to current figures. That said, all signs point towards the Model 3 being a relatively simple car to manufacture, as compared with the Model S and Model X. The vehicle was reportedly designed to be simple to produce (while still making use of the company’s now decade and a half of experience). So maybe 200,000 units produced in only 6 months is a possibility 2 years from now?
Reprinted with permission.
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Well after the November election and Trump as the new President, I am sure the and all the Republicans will be more than happy to extend any subsidies for RE and electric cars, right. 😉
Well maybe in our worst nightmare, just checking if people are paying attention. :))
Actually, Trump probably would want to extend the subsidies. He’s a developer.
Ted Cruz, on the other hand, would not. He’s a religious fanatic.
Build super chargers stations is better than giving incentives
Only TESLA currently supports level 4 charging. So building those would not get other makers into the market.
why not
That is a question none of us can answer. Why doesn’t the brand new GM Bolt offer the same level of charging that has been standard on Teslas for several years?
I think building supercharger infrastructure is better than giving incentives, for example people have ordered hugely Model3 while they know Tesla will will run quickly out of incentive but they just didn’t care because they are more interested in supercharger infrastructure Tesla have.
I wish all the folks who say “can’t be free” would do some math to see if that’s true.
The appeal value of ‘lifetime free charging’ has to be immense.
There are two issues that I see.
1) Cost – do the math.
2) Supercharger crowding – limit locals’ access time to periods outside of the normal high use time for people on long trips.
Example: No local use during lunchtime (11am to 2pm). Locals can charge early in the day before travelers from 200 miles away will arrive. Or later in the day when long distance travelers will have already done their second of the day charging.
So, after the 200,000 car is shipped, the credit essentially goes to zero at the end of the FOLLOWING quarter…
Best case scenario ~6 months of extra time after car 200,000
Worst case ~3 months.
That’s a lot better than I thought it would be. At least it’s not a cold stop after 200,000.
And it doesn’t go to zero at the of the last $7k quarter.
Credit does not go to zero at the end of the following quarter. It drops to 50% for two quarters and then to 25% for two quarters after that.
Ah, even better then. Thanks.
According to the EIA “In 2015, about 24% of the petroleum consumed by the United States was imported from foreign countries, ….” The US spent around $330 billion dollars importing oil the year before.
I wonder how much of the US light vehicle fleet we’d have to convert to EVs and PHEVs to eliminate our need for imported oil?
If we subsidized 10 million electric vehicles per year at $7,000 that would cost us 70 billion. Over ten years it would put 100 million electric cars on US roads. About 40% of all US cars and light trucks. We’d spend just a bit over twice what we spend per year for imported oil and eliminate the need for imported oil. In fact, the amount of imported oil would drop each year giving us an annual growing savings.
If we put out the effort to put Democrats back in control of Congress along with hanging on to the White House then we could probably do smart stuff like this.
And wouldn’t it be nice to tell the oil producing countries that we really don’t need to do business with them any longer?
Yes but we in Canada would be crying if the US will stop buying our oil.
Well at least all the US companies that have a vested interest in selling Canadian oil to the US.
A lot of the people here, at least the ones in the know, would prefer RE, more jobs etc.
You forget to account the billions you spent to protect oil countries which provide that 24% as your soldiers are there right now so the spent will be way over $330billions.
I left that out of the argument for a reason. Conservatives in the US are concerned about a couple of things, taxes/debt and security. (Also some social issues, but they do not bear here.)
I think we could reach some of them with the concept of cutting US purchases of foreign oil by assisting the adoption of EVs. Spend the $330 billion inside the US with US businesses.
I don’t think arguing that we could decrease the size of our military/military spending would work. These are people who fear. They fear change, they fear others, and they fear the unknown. Take away one fear and they push another one to the head of the line. (They’re less afraid of gays now. So they’ve ramped up fear of transgender people.)
If we quit importing oil I suspect the size of our military would shrink over time. We’d have fewer ships and troops stationed around oil country. It would be harder to justify new ships if we had a bunch tied up in port. But I don’t think shrinking our military is a winning argument with the right.
It looks like Ford and Chrysler may be announcing PHEV pickups in the next few months.
When that happens I think it would be useful for those of us concerned about petroleum use to start talking about how much imported oil could be saved and how much money truck drivers could save if they did at least 50% of their driving with electricity.
Look for face to face opportunities and places where it’s reasonable to insert information online. It’s something that I plan to do.
Talking points:
About a quarter of the oil we use is imported. If we did about a quarter of our driving with electricity we could quit importing oil and stop paying foreign countries hundreds of billions of dollars a year for their oil.
If you’re spending $3/gallon for truck fuel it’s costing you (X) cents per mile. But if you were driving a (Ford F150 plug-in) you could do your first (30) miles per day for (X) cents per mile.
Can you supply a link to Ford & Chrysler pu’s ?
I found some stuff when I googled.
Needs a discussion
Great idea, but I don’t see how Democrats can get back control of Congress since most southern and midwest states think their republican representatives are doing a fine job.
Democrats controlled both houses in 2008. We’ve got a good chance at the Senate this year and if Trump heads the Republican ticket there’s a long shot, but a possibility of getting the House back.
It’s a matter of turning out voters. For example, if someone could motivate minority voters in Texas the state would likely flip to blue.
I’m on board
I thought,although haven’t read the code,that the ev credit is cut in half for the first 6 months after 200k units,then half again for the next 6 mos.but my other thought is whether tesla should preferentially sell the units after 200k in states that offer state tax rebates. Or in those states or provinces with carbon taxes.