The Bright-side of the EV Tax Credits Going Away

[GaRailroader]

Depreciation. I do believe EV depreciation will slow down some with the EV tax credits going away. Scenario 1. Think of the person that doesn't qualify for the tax credit, he/she pays $7500 more than other buyers for the same EV and loses that $7500 as he/she drives off the lot. Scenario 2. Let's say you go out and buy a used Tesla for $27k. A few months later it has depreciated to $25k, wait now it is eligible used EV tax credit and the value is now $21k. Since you aren't the original owner, your particular vehicle isn't eligible for the tax credit so you have to eat the $4k depreciation since so many other vehicles of the same vintage are still with the original owner and they can sell them for $25k where the buyer only pays $21k and Uncle Sam makes up the difference.

Having the Slate eligible for both of the tax credits(new and used), it would depreciate to $13,500k on day 2 of ownership assuming a $25k starting price. We would have been better off pairing up where you buy the vehicle configured the way I want it and I buy the vehicle configured the way you want it. On Day 1 we buy our vehicles for $17.5k, on day 2 we sell our vehicles to each other for $13,500 and Federal government kicks in the other $4k. Now we are both the 2nd owner of our Slates and we paid $13,500 plus tax, tag and delivery.

 

[sodamo]

Depreciation. I do believe EV depreciation will slow down some with the EV tax credits going away. Scenario 1. Think of the person that doesn't qualify for the tax credit, he/she pays $7500 more than other buyers for the same EV and loses that $7500 as he/she drives off the lot. Scenario 2. Let's say you go out and buy a used Tesla for $27k. A few months later it has depreciated to $25k, wait now it is eligible used EV tax credit and the value is now $21k. Since you aren't the original owner, your particular vehicle isn't eligible for the tax credit so you have to eat the $4k depreciation since so many other vehicles of the same vintage are still with the original owner and they can sell them for $25k where the buyer only pays $21k and Uncle Sam makes up the difference.

Having the Slate eligible for both of the tax credits(new and used), it would depreciate to $13,500k on day 2 of ownership assuming a $25k starting price. We would have been better off pairing up where you buy the vehicle configured the way I want it and I buy the vehicle configured the way you want it. On Day 1 we buy our vehicles for $17.5k, on day 2 we sell our vehicles to each other for $13,500 and Federal government kicks in the other $4k. Now we are both the 2nd owner of our Slates and we paid $13,500 plus tax, tag and delivery.

I doubt the “free money” crowd will appreciate your logic. All they care is they lost out.

 

[Duke Slater]

You’re a glass half full type of guy. I like it lol

 

[AZFox]

In this AZFox And The Grapes story the sour grapes are the fact that the rebate is a moral hazard because it saddles future generations with extra federal debt.

 

[Doctors Do Little]

In this AZFox And The Grapes story the sour grapes are the fact that the rebate is a moral hazard because it saddles future generations with extra federal debt.

Future generations? Bleh, we are only interested in the next happiness high! Come on, now. Get on TikTok and get with it. Pleasure now. All the time!

 

[Letas]

Future generations? Bleh, we are only interested in the next happiness high! Come on, now. Get on TikTok and get with it. Pleasure now. All the time!

We've had a surplus for 4 years since 1980. That ship has long sailed!

 

[Letas]

Depreciation. I do believe EV depreciation will slow down some with the EV tax credits going away. Scenario 1. Think of the person that doesn't qualify for the tax credit, he/she pays $7500 more than other buyers for the same EV and loses that $7500 as he/she drives off the lot. Scenario 2. Let's say you go out and buy a used Tesla for $27k. A few months later it has depreciated to $25k, wait now it is eligible used EV tax credit and the value is now $21k. Since you aren't the original owner, your particular vehicle isn't eligible for the tax credit so you have to eat the $4k depreciation since so many other vehicles of the same vintage are still with the original owner and they can sell them for $25k where the buyer only pays $21k and Uncle Sam makes up the difference.

Having the Slate eligible for both of the tax credits(new and used), it would depreciate to $13,500k on day 2 of ownership assuming a $25k starting price. We would have been better off pairing up where you buy the vehicle configured the way I want it and I buy the vehicle configured the way you want it. On Day 1 we buy our vehicles for $17.5k, on day 2 we sell our vehicles to each other for $13,500 and Federal government kicks in the other $4k. Now we are both the 2nd owner of our Slates and we paid $13,500 plus tax, tag and delivery.

The tax credits, especially the used one certainly add a confusing layer to the depreciation schedule. That being said, Slates goal was to make cars more affordable. This type of thinking feels like some mental gymnastics to find a bright side, when it goes against that core value

 

[Doctors Do Little]

We've had a surplus for 4 years since 1980. That ship has long sailed!

Yup. My tongue was firmly in cheek when I typed that. (Unless you live in GA, where we've run a state income SURPLUS for 2 years running and were given $500 surplus bonus refunds this and last year!)

 

[Sparkie]

I doubt the “free money” crowd will appreciate your logic. All they care is they lost out.

Yup.
You just described a close relative of mine.
When buying his first EV, it was based solely on the tax credit and other subsidized incentives.
He was planning on replacing it next year but without those incentives, he's already planning to buy an ICE.
He's not happy but I reminded him those "incentives" were never truly fair. He would always boastfully reply "if the government wants to give me money, I'm going to take it". I would tell him that money comes from taxing everyone else. His smirky "thank you" response would always tick me off. I can't do much because he's family.

My decision to reserve my Blank Slate was not based on incentives -- or even that it was an EV.

 

[Doctors Do Little]

"You're welcome" is lost on folks who don't pay taxes or never have.

As much as I'm loving my newly acquired Lightning, I'm looking forward to minimizing my daily commuter/golf-cart-replacement Slate. The EV incentives don't matter as I'm hoping for a handy ride that won't have much to break.

 

[Letas]

Yup.
You just described a close relative of mine.
When buying his first EV, it was based solely on the tax credit and other subsidized incentives.
He was planning on replacing it next year but without those incentives, he's already planning to buy an ICE.
He's not happy but I reminded him those "incentives" were never truly fair. He would always boastfully reply "if the government wants to give me money, I'm going to take it". I would tell him that money comes from taxing everyone else. His smirky "thank you" response would always tick me off. I can't do much because he's family.

My decision to reserve my Blank Slate was not based on incentives -- or even that it was an EV.

Saying the incentives are paid for by tax payers is a stretch in an imbalanced budget...
I'm in his camp. If I get a benefit, I will use it!

 

[Doctors Do Little]

Saying the incentives are paid for by tax payers is a stretch in an imbalanced budget...
I'm in his camp. If I get a benefit, I will use it!

Don't get me wrong. The tax code is what it is (a 30K pages+ impossibility). I'm not volunteering to ignore benefits as they arise.

At this point, the technology needs to stand on its own as an overall best solution for specific use cases (daily driver, small farm truck, golf cart replacement, this week's toy, etc).

 

[Sparkie]

Saying the incentives are paid for by tax payers is a stretch in an imbalanced budget...
I'm in his camp. If I get a benefit, I will use it!

Don't get me wrong. The tax code is what it is (a 30K pages+ impossibility). I'm not volunteering to ignore benefits as they arise.

At this point, the technology needs to stand on its own as an overall best solution for specific use cases (daily driver, small farm truck, golf cart replacement, this week's toy, etc).

I'm going to ignore the temptation to dive into the politics of federal budgets...
Instead, I'm returning to the theme of the OP. The removal of tax credit returns auto purchases (both new and old) back to fair market game.

 

[Letas]

I'm going to ignore the temptation to dive into the politics of federal budgets...
Instead, I'm returning to the theme of the OP. The removal of tax credit returns auto purchases (both new and old) back to fair market game.

I don’t think “fair market” is how I would define it, maybe “former market”. The markets will never be fair. CAFE, chicken tax, tariffs, bailouts, etc all skew the market. For good or for bad- that’s up to the Individual. Until Vermin Supreme wins an election, we will have unfair markets

 

[AZFox]

It's easy to convince people to buy things with Other People's Money.

Here's another potential moral hazard to consider:

EV ownership skews toward higher-income demographics, so the EV credit is a Tax Cut For The Rich, at least to some extent.