7500 EV tax credit update with new bill

[Babyrocko1908]

Politicians will say the law is to encourage manufacturers to make/sell EV's that meet the politicians' specifications and thereby increase the adoption of EV's. However, based on the criteria being extremely difficult to meet and the ambiguity of the language, our elected officials are actually making it MORE difficult for those of us who had already ordered cars and those who were on the fence.

I read somewhere that at the time they passed the into law, there were a grand total of ZERO vehicles being offered by manufacturers that met all of the criteria for the full $7,500 tax credit. Not a single one. They all had some part of their components from an unapproved source outside of NA or were assembled somewhere else or were too expensive etc...

While I recognize and appreciate the intent of the law, the application leaves a whole lot of room for improvement since they are currently discouraging immediate adoption of EV technology in favor of potential eventual adoption once manufacturers can finally meet the stringent criteria. They really should have phased in the law better so that they didn't block immediate adoption and still encouraged manufacturers to move towards their goals. IMHO of course

This is what Joe Manchin wanted. He's a coal guy, like literally a multi-millionaire from coal. They had to do it to get him to vote for it. This changes in next year when they go to fix it. His vote won't be necessary for the changes. Senator Warnock already has language ready to go.

 

[Pavlova]

I've been reading... since my pure won't make it to me by eoy... Now I'm seeing some saying that 2022 eoy delivery is not necessary for the $7,500 tax credit?
Does anyone have an update on this? I mean... I'm planning to get the car regardless of the tax credit, but it would be nice.

 

[noobzilla]

I've been reading... since my pure won't make it to me by eoy... Now I'm seeing some saying that 2022 eoy delivery is not necessary for the $7,500 tax credit?
Does anyone have an update on this? I mean... I'm planning to get the car regardless of the tax credit, but it would be nice.

Nope no update. If there is, you'd likely hear right away. Just check here once in a while.

 

[ScottM]

I thought this article in Electrek was well written. It will not answer all the questions many of us have, but it may be worth a read.

https://electrek.co/2022/12/13/which-electric-vehicles-still-qualify-for-us-federal-tax-credit/

 

[Draco_Malfoy]

I understand we're still waiting for guidance from the Treasury Department, but my understanding is there is no way a Lucid will qualify for the tax credit if the purchase occurs after 12/31/2022 because the price is over the cap. Maybe I misunderstood though.

 

[noobzilla]

I understand we're still waiting for guidance from the Treasury Department, but my understanding is there is no way a Lucid will qualify for the tax credit if the purchase occurs after 12/31/2022 because the price is over the cap. Maybe I misunderstood though.

New orders starting 2023 will for sure not qualify. Whats still up in the air are the orders confirmed prior to the passing of the bill.

 

[Babyrocko1908]

I understand we're still waiting for guidance from the Treasury Department, but my understanding is there is no way a Lucid will qualify for the tax credit if the purchase occurs after 12/31/2022 because the price is over the cap. Maybe I misunderstood though.

No, you didn't misunderstand. 2023 orders for Air will not qualify because of the cost of the car and battery sourcing.

What's up in the air is our orders before the passage of the IRA and not delivered by December 31, 2022 and orders placed between August 16, 2022 and December 31, 2022 that aren't delivered.

 

[yiling1990]

What are people's opinions on the tax credit eligibility if you signed purchase agreement by 12/31, but don't physically take delivery until January? Does the day the PA is signed count?

 

[emoylv]

Reality is none of our opinions count unless our initials are I. R. S.

 

[Babyrocko1908]

What are people's opinions on the tax credit eligibility if you signed purchase agreement by 12/31, but don't physically take delivery until January? Does the day the PA is signed count?

The Transition rule has dates -- contracts signed prior to the passage of the IRA which would be contracts prior to August 16, 2022 and contracts signed between August 16, 2022 and December 31, 2022. When did you sign your contract?

 

[yiling1990]

The Transition rule has dates -- contracts signed prior to the passage of the IRA which would be contracts prior to August 16, 2022 and contracts signed between August 16, 2022 and December 31, 2022. When did you sign your contract?

I confirmed my order on Aug. 10th when Lucid asked everyone to make the deposits non-refundable but I was wondering if having a fully signed purchase agreement before the end of the year would make the case stronger than just the deposit. In any case, looks like it specifically states "Purchased and Delivered" before Jan 1, which pretty much answers that question.

 

[Babyrocko1908]

I confirmed my order on Aug. 10th when Lucid asked everyone to make the deposits non-refundable but I was wondering if having a fully signed purchase agreement before the end of the year would make the case stronger than just the deposit. In any case, looks like it specifically states "Purchased and Delivered" before Jan 1, which pretty much answers that question.

It doesn't necessarily answer the question, look at the language in the actual bill on earlier pages of this thread. My reading is that under the transition rule, our contacts do not fall under the rules of the IRA since we signed them prior to the passage of the IRA. We fall under the actual language of the transition rule that is spelled out in the language of the bill.

 

[gunick06]

That's an excellent point. I put my deposit down with the expectation I'd get the tax credit, and at a time when the manufacturers have already priced that in. Getting rid of the credit with so little notice echoes of promissory estoppel (I think? Corrections welcome as I'm not a lawyer).

Against the government? That would have to be under the takings clause. Good luck with that one.

Against Lucid? They made it clear it was not a guarantee. They dropped the ball on not asking for 5% but there’s nothing you can do now.

 

[digiboxer]

It doesn't necessarily answer the question, look at the language in the actual bill on earlier pages of this thread. My reading is that under the transition rule, our contacts do not fall under the rules of the IRA since we signed them prior to the passage of the IRA. We fall under the actual language of the transition rule that is spelled out in the language of the bill.

If you signed a "binding contract" before passage of the Bill (Aug 16th), you might qualify for the credit, even if you take delivery after 12/31/22.

The problem is the IRS has issued guidance, in other contexts, that "binding" means having at risk earnest money of at least 5% of the purchase price. Most of us amended or contracts to make only the original $1,000 deposit at risk, and thus the assumption is we won't qualify.

The remaining "Hail Mary" is the IRS asked for public comment on the transition rules applicable to this issue (and others). Some people here are hopeful they will relax the 5% test---I'm not holding my breath.

 

[changinator]

The Transition rule has dates -- contracts signed prior to the passage of the IRA which would be contracts prior to August 16, 2022 and contracts signed between August 16, 2022 and December 31, 2022. When did you sign your contract?

The rules for contracts prior to Aug 16 and between Aug 16-Dec 31 essentially doesn't matter to potential lucid owners, because the Lucid is made in America, and that is the only difference between before Aug 16 and in between Aug 16-Dec 31 (all qualified vehicles must be made in America.)

I confirmed my order on Aug. 10th when Lucid asked everyone to make the deposits non-refundable but I was wondering if having a fully signed purchase agreement before the end of the year would make the case stronger than just the deposit. In any case, looks like it specifically states "Purchased and Delivered" before Jan 1, which pretty much answers that question.

If you have the option to fully sign a purchase agreement and made the full payment for the vehicle before Jan 1, but actually receive the vehicle after, you are very likely to receive the tax credit.

The problem is the IRS has issued guidance, in other contexts, that "binding" means having at risk earnest money of at least 5% of the purchase price. Most of us amended or contracts to make only the original $1,000 deposit at risk, and thus the assumption is we won't qualify.

The IRS technically issued an example guidance of what qualifies as a written binding agreement, but not limited to the example of at least 5%. Specifically, IRS issued guidance that a written binding contract is "enforceable under State law and does not limit damages to a specified amount." Although I'd try to ask Lucid if I could increase my deposit to 5% just in case, because we technically have until Dec 31.

 

[digiboxer]

The rules for contracts prior to Aug 16 and between Aug 16-Dec 31 essentially doesn't matter to potential lucid owners, because the Lucid is made in America, and that is the only difference between before Aug 16 and in between Aug 16-Dec 31 (all qualified vehicles must be made in America.)


If you have the option to fully sign a purchase agreement and made the full payment for the vehicle before Jan 1, but actually receive the vehicle after, you are very likely to receive the tax credit.


The IRS technically issued an example guidance of what qualifies as a written binding agreement, but not limited to the example of at least 5%. Specifically, IRS issued guidance that a written binding contract is "enforceable under State law and does not limit damages to a specified amount." Although I'd try to ask Lucid if I could increase my deposit to 5% just in case, because we technically have until Dec 31.

I think increasing the deposit would have to have been done pre-Aug 16

 

[Tim-in-CA]

If you have the option to fully sign a purchase agreement and made the full payment for the vehicle before Jan 1, but actually receive the vehicle after, you are very likely to receive the tax credit.

the closer it gets to the 31st, that’s my plan. If the vehicle isn’t here by the 26th, I’ll just pay for it in full

 

[yiling1990]

the closer it gets to the 31st, that’s my plan. If the vehicle isn’t here by the 26th, I’ll just pay for it in full

I'll probably end up doing the same thing, except more so to keep my lower loan rate which expires on 12/24...

 

[changinator]

I'll probably end up doing the same thing, except more so to keep my lower loan rate which expires on 12/24...

idk if they'll let you sign a PA and pay for the car if you haven't received a VIN and/or the vehicle finished production tho

 

[yiling1990]

idk if they'll let you sign a PA and pay for the car if you haven't received a VIN and/or the vehicle finished production tho

I have a VIN already and my dashboard has shown "In Production" since last week, so I'm inclined to think the car will be completed soon. Main issue is I'm located in WA and it definitely seems like delivery logistics are resulting in more delays than production at this point.