Sun Tzu & The Art Of The EV Tax Credit: How To Not Get Ripped Off By Dealers (Part 2)

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This is the second part of a two-part article. You can find Part 1 here.

Running The Numbers

I can’t know the exact figures for the ID.4 in my example in Part 1, but I’ll assume $750 for the transport and assume there are no state or local incentives (but be sure to check on that yourself in your state). This means that the dealer’s actual cost would be about $42,785 (invoice minus holdback)+$750 (shipping) -$12,500 (EV tax credit). Thus the whole dealer’s cost in this scenario would be $31,035.

Obviously, they won’t sell it to you for what they paid for it, because they do have to make at least something on the car. So, add $1,000 to the estimated dealer cost and tell them you won’t pay a cent more. In this case, that’s just over $32,000.

They’ll initially tell you no, and you may have to go to several dealers before they sell it to you for only $1,000 over what the thing cost them, but if you stick it out and don’t cave in, you’ll eventually get that price or very close to it.

Some Other Tips To Avoid Getting Ripped Off

There are some other shady things dealers do to get you to pay more. Here are some ways to stay away from that.

First off, never worry about making friends with the people at the dealership. If they don’t hate you a little when you’re driving away with the car, you probably could have gotten a better price.

Second, never talk about what you’re willing to pay per month for a car. They have a lot of room to make sure they get more money than you’re thinking by making the monthly payment look good while they’re ripping you off underneath. All negotiations should happen as if you’re a cash buyer.

It’s a lot easier to do this over the internet than in-person. If you send offers by e-mail, you’re under no obligation to sit there and be bored and worried while the dealer makes you sit there and sweat it out. Send the same offer to every dealer within 200 miles of your house, or even further. Some dealers will know that they’re competing for your business and offer to drop the car off.

If you’re financing, you should show up to the dealer for the final sale with paperwork in hand from your preferred lender with pre-approval information. If you want to give the finance guy a chance to find you a better rate than you found, that’s fine, but don’t let them figure out what your payment should be. The same thing goes for insurance — talk to your own insurance agent (I’m assuming you’re smart and already work with a trustworthy one) about insurance products before you buy any kind of insurance or protection plan from the dealer.

If you need to figure out what a payment would be, there are amortization calculators you can find online to figure out what the monthly payment will be based on the loan you’re pre-approved for and its interest rate as you negotiate a cash price. Don’t go into the dealer without that information, so you can figure out payments on your own phone without asking them.

One big reason to not let them arrange your financing is the “Yo-Yo” scam. Even I’ve fallen for this one, despite having worked at dealers in the past myself. They initially tell you you’re approved, let you go show the car off to your friends and family, and then call you a few days later telling you that they couldn’t get some sort of final approval and that you must sign new papers or accept worse rates. If you already lined up your own financing, you’ll know that it’s utter bovine excrement, and won’t fall for it as easily. At the very least, you’ll have someone other than the crooked dealer to call to ask questions at this point.

Don’t fall for any scams to add anything to the car. Dealers sell things like VIN etching, accessories, window tint, and many other goods/services for ridiculous prices. Buy the car and shop around to find better deals if you want any of that. Factory accessories are also widely available online for cheaper prices than your local dealer in most cases.

Even when everything’s over, check in with your lender and make sure everything matches up with the paperwork you were given at the dealer. It’s not uncommon for them to create a “paperwork mixup” where your lender pays the dealer more and your monthly payment is just a little higher than you thought. If you don’t pay attention to this, they could very well rip you off for thousands of dollars.

The Supreme Art Of War

After reading the last couple sections, you’re probably wondering why anybody would even bother with going to buy an EV at a dealer. Tesla doesn’t have dealers. Rivian, Lucid, Aptera — none of these new EV manufacturers have dealers, either. It’s generally bad for everyone involved to have dealers except for…the dealer.

Dealers only exist because many states don’t allow direct sales. Sure, they’ll claim that they’re better and that customers really want or need their paternal hand to guide the buying process, but the myriad ways in which they rip us off, and the difficulty of avoiding that, prove otherwise. The state’s jurisdiction ends at the state line, and you can go to another state to buy a car directly if that’s your thing, but it can lead to hardships and expenses, especially if you need service (another thing those states want to go through dealers, by law).

Even in states that allow direct sales, if you want an EV from a traditional automaker like Ford, GM, or Stellantis, you’re still going to need to go to a dealer because they have pre-existing contracts with these dealers that preclude direct sales. But not everyone wants to buy a Tesla. Some people want a car like the Volkswagen ID.4, which gives an EV experience that’s very comfortable and familiar for existing VW owners, and other people who want a normal car that just happens to run on electricity instead of gasoline.

But, if you can find a direct-sales car that works for you, WOPR is right. The only truly winning move with dealers is not to play. You can beat them at their game and get a good price, but it’s time consuming and stressful. As Sun Tzu said, “The supreme art of war is to subdue the enemy without fighting.”

Or, as Mirror Man says in Gone in 60 Seconds‘ famous “Volvo” scene, “Hey, time is money.” Wasting a bunch of time to save a little money makes little sense if you can avoid it.

Featured image: A used car lot selling Nissan LEAFs. Photo by Jennifer Sensiba.