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Federal Tax Incentives Running out? Incentive to buy sooner than later?

Federal Tax Incentives Running out? Incentive to buy sooner than later?

In reading the document attached to Elon's tweet about Tesla Model S being the highest residual value car over a 3-year period - see link - I noticed this important quote about the Federal Tax Incentive:

"The federal credit begins to phase out for vehicles at the beginning of the second calendar quarter after the manufacturer produces 200,000 eligible plug-in electric vehicles (i.e., plug-in hybrids and EVs) as counted from January 1, 2010."

If this is the case, with production ramping up on Model S and over 55,000 already produced, Model X production coming on line in Q3/Q4 2015, plus any Roadsters built between 2010 and the car's production end, aren't we soon approaching reaching this 200,000 vehicle threshold? Won't it be reached in 2016?

Here's a link to the full report:
http://img03.en25.com/Web/NADAUCG/%7B413f55a5-807f-4b2e-8310-48cd4aeb40d...

With Republican majorities in the House and Senate, I don't see them extending the Federal Tax incentives any time soon.

jordanrichard | 24. Juni 2015

This is not specific to Tesla, it applies to all EVs. Also, Tesla is still a ways from producing 200,000 cars. The last I have seen, VIN # wise, they are in the low to mid 80,000s. They only made I think 2500 Roadsters.

Mathew98 | 24. Juni 2015

Only applicable to Tesla SOLD in the US, not world wide figure.

Current running total for all time US sales is about 55,000 +/- a few...

Don't worry about it until after M3 has been on sales for a year or so.

ca-blessed | 24. Juni 2015

@jordanrichard - I'm at VIN 941XX.
Sales are def moving quickly!!

On other threads I've seen as high as 948XX.

inconel | 24. Juni 2015

Only cars sold in the US as mentioned. So I guess the question is from the 948XX what is the percentage sold in US? It seems to be around 50-60%. Next question is how many more years to sell the remaining 150k cars in US? Probably not in the next 2 years? Last question is what does it mean to "begin to phase out", does it just stop or does the credit slowly decrease to zero?

jordanrichard | 24. Juni 2015

ca-blessed, I guess I stand corrected. Damn, 94,000 and change? Is that a reservation VIN or you took delivery already?

ca-blessed | 24. Juni 2015

Mine is a reservation VIN from earlier this month.
I'm so excited to meet my Model S in early July:-)

stevenmaifert | 24. Juni 2015

Yes, only eligible vehicles manufactured for sale in the U.S. count toward that 200,000 figure. Why bring up Republicans? They didn't impose the 200,000 limit.

negarholger | 24. Juni 2015

"does it just stop or does the credit slowly decrease to zero?"

After manufacturer has be declared to reach the limit next two quarter tax rebate goes to 50% and the Q3 and Q4 to 25%. After that it is zero.

GM (Volt, etc ) and Nissan are closer to the limit as it goes by number of cars.

mrbarnes | 24. Juni 2015

Thanks for the clarification on US vs. Global sales; seems to give a bit of a cushion. I know this applies to all EVs, but I think Tesla may be getting close to hitting the mark toward the end of next year, no?

My fear is with Model S production ramping up and Model X deliveries later this year and next, they may hit this goal long before the Model 3 is out. They delivered 10,000+ Model Ss in Q1 2015 (not sure %age of US vs Global).

ca-blessed | 24. Juni 2015

.....A very real possibility this count may be reached prior to the actual release of the Model 3 for delivery.

BUY YOUR MODEL Ss/Xs now!!!!

Red Sage ca us | 24. Juni 2015

Be sure to take note of the word 'eligible' above. Specifics can be found at this link:

IRS -- Qualified Plug-In Electric Drive Motor Vehicles (IRC 30D)

"The credit begins to phase out for a manufacturer’s
vehicles when at least 200,000 qualifying vehicles
manufactured by that manufacturer have been sold for use
in the United States (determined on a cumulative basis
for sales after December 31, 2009). For additional
information see Notice 2009-89."

mrbarnes | 24. Juni 2015

@Red Sage - Excellent, thank you!

Also saw the general explanation of this tax credit:
http://www.irs.gov/Businesses/Plug-In-Electric-Vehicle-Credit-IRC-30-and...

and here:
http://www.irs.gov/irb/2009-48_IRB/ar09.html

johncrab | 24. Juni 2015

I will be honest and admit that the tax credit was a factor in deciding on the first Model S. It helped me justify the cost knowing my tax bill would be a lot lower. On the second one it was kind of a "Yeah, that too" thing. Ronaldo doesn't file a tax return in the US and the car is in both of our names so I am applying that credit to my 2015 taxes and I'm taking Ronaldo to Bora Bora to say thanks.

The IRS does ask for the VIN, (for those who have not been through this process yet) and they can check state registration info to verify.

Looking at this in broad perspective, the credit works. It has put a lot of EVs and plug in hybrids on the road and has helped jump-start a revolution which seems immune to politics and petrol prices. By the time it runs out for Tesla buyers we will be well beyond the point of no return if we are not indeed there already. With other makers vowing to go electric, I think we have crossed the oil rubicon.

jsdowns1 | 24. Juni 2015

I know I am probably worrying about nothing, but I find this strange.
When I go to the California Drive Clean website it does not show $7,500 Federal Tax Credit For 2015 Teslas. It says "TBD" To Be Determined. Other car makes there do show $7,500 for their 2015 models.
Similarly the IRS page for Tesla just shows tax credit up to 2014 models. No mention of 2015. Other car makers 2015 models do show up.
I don't know, law is pretty clear about 200,000 cars. See websites below.

http://driveclean.ca.gov/pev/Costs/Vehicles.php

http://www.irs.gov/Businesses/30D-New-Qualified-Plug-in-Electric-Drive-M...

Red Sage ca us | 24. Juni 2015

mbarnes: You are welcome. I'm just glad the information was readily available. Happy to pass it on to others.

;-)

I believe the Model X will be extremely popular. People who still don't know what a Model S is, mistaking them for a Kia or Jaguar, will come to identify the Model X and its Falcon Wing Doors as the very definition of a Tesla Motors product. I would not be surprised to see 60%-80% of Model X sold to US customers. So, yeah -- by mid-2017 Tesla Motors should make its 200,000th sale overall on these shores.

georgehawley.fl.us | 24. Juni 2015

Then there is another 6 months after the 200,000 point is reached before the incentive drops to $3750.

Maybe early 2018?

Red Sage ca us | 24. Juni 2015

jsdowns1: The IRS likely does not expect anyone who bought a Tesla Model S built after December 31, 2014 to be filing 2015 tax returns just yet... Remember, the only 2015 Model S are those built this year. Other manufacturers began offering '2015' cars as early as mid-2014. So only their eligible purchases appear on 2014 tax returns for the 2015 model year -- or on lists on the IRS website. Likely a similar situation for California tax rebates as well.

jsdowns1 | 24. Juni 2015

Thanks Red Sage. Makes sense.

sameea1 | 04. April 2016

Looks like those who don't qualify for the full federal refund for the Model 3 have a decent chance at a partial refund. If you think of the benefits of EV cars and how many countries are pushing for cleaner emissions and solar (I.e. Germany) hopefully further incentives are available or extended.