Possibility of $7500 Gov't hand out going away . . . thoughts ? ?

[Pittsburgher]

Got a news feed on my Fidelity acct - noting the "rumblings" of new administration ending the $7500 tax credit . . . as follows:

01:28 PM EST, 11/14/2024 (MT Newswires) -- Rivian Automotive (RIVN) and Lucid Group (LCID) shares fell 11.6% and 2.7% in recent Thursday trading, respectively, after Reuters reported that US President-elect Donald Trump's transition team plans to end the $7,500 consumer tax credit for purchases of electric vehicles.

In my wee little brain, it seems that they should actually bump on that news . . . given most of their offerings (All - in the case of Lucid, currently) do not meet the requirements for the tax credit, due to purchase price thresholds of $55K for cars and $80K for SUVs (+ light trucks) And I thought Tesla buyers also do not benefit because Tesla has hit the units sold threshold(s). Not certain about that one.

So the current beneficiaries of these subsidies are cars, SUV's and pickups - made in the US, CA, or MX - ie Ford (Mustang, F150), Nissan (leaf) and I suppose some of the Caddilac & Chevy products coming into the marketplace. Those would be the guys who are losing a big price break for their prospective customers . . .no ? ? And Hyundai, Genesis, Lucid, Rivian, BMW, Mercedes, Audi and the other luxury brands will really not be affected, other than their cars will now be slightly more competitive to the aforementioned. Lucid would not be impacted until possibly late 2025 and that would be for people buying barebones base model (which is $1 below the price cap).

The good news is it looks like Hyundai, BMW and other foreign manufacturers have already, or are in the process of, building capacity in the US . . . so the current law has incentivized them to produce in the US - and it would be unlikely that they will offshore that capacity once they have spent the Capex to tool up. At least not immediately.

Am I missing something ?

 

[Tâm]

... I thought Tesla buyers also do not benefit because Tesla has hit the units sold threshold(s).

That was the old law that limits the first 200,000 EV for each car company.

New law has no limits of eligible EVs. It's a buffet!

So the current beneficiaries of these subsidies are cars, SUV's and pickups - made in the US, CA, or MX - ie Ford (Mustang, F150), Nissan (leaf) and I suppose some of the Caddilac & Chevy products coming into the marketplace. Those would be the guys who are losing a big price break for their prospective customers . . .no ?

Yes. No subsidies mean higher prices.

? And Hyundai, Genesis, Lucid,

True, they don't qualify for subsidies.

Rivian,

Rivian does get a $3,750 tax rebate on the spot.

BMW, Mercedes,

BMW, Mercedes don't qualify for subsidies.

Audi

Audi PHEV does get a $3,750 tax rebate on the spot.

and the other luxury brands will really not be affected, other than their cars will now be slightly more competitive to the aforementioned.

That's the theory

Lucid would not be impacted until possibly late 2025 and that would be for people buying barebones base model (which is $1 below the price cap).

That's the theory.

The good news is it looks like Hyundai, BMW and other foreign manufacturers have already, or are in the process of, building capacity in the US . . . so the current law has incentivized them to produce in the US - and it would be unlikely that they will offshore that capacity once they have spent the Capex to tool up. At least not immediately.

That is true, but there's no need to build in the US when the incentives are taken away.

 

[illopp00]

That was the old law that limits the first 200,000 EV for each car company.

New law has no limits of eligible EVs. It's a buffet!



Yes. No subsidies mean higher prices.

True, they don't qualify for subsidies.

Rivian does get a $3,750 tax rebate on the spot.

BMW, Mercedes don't qualify for subsidies.

Audi PHEV does get a $3,750 tax rebate on the spot.

That's the theory

That's the theory.

That is true, but there's no need to build in the US when the incentives are taken away.

Except they are still planning tariffs on imports so its entirely dependent on the OEM and whether they can price competitively in a local market or its cheaper to produce elsewhere and import. I believe most of Lucid's Mid-Size will be Saudi Imports...

 

[tonybot]

Leases on Lucid qualify through a lease loophole. In fact, pretty much all EVs qualify on leases. Try the air lease calculator online and you will see it. Base on the last Rivian earnings call, 40% of their sales were leases. Yes, this will impact the likes of Rivian and Lucid.

 

[Pragmatic]

Those credits are available on leased cars $7500 (including Lucid)

 

[Tâm]

Except they are still planning tariffs on imports so its entirely dependent on the OEM and whether they can price competitively in a local market or its cheaper to produce elsewhere and import. I believe most of Lucid's Mid-Size will be Saudi Imports...

True. If imported EVs get tariffs, then building EVs in the US makes sense.

If the goal of the next administration is to depress EVs to promote burning fossils, and if imported EV components (computers, screen displays, batteries, nuts and bolts...) get tariffs, building EVs in the US will still be expensive.

 

[momo3605]

Leases on Lucid qualify through a lease loophole. In fact, pretty much all EVs qualify on leases. Try the air lease calculator online and you will see it. Base on the last Rivian earnings call, 40% of their sales were leases. Yes, this will impact the likes of Rivian and Lucid.

That's not a big deal. If rebates go away, residuals will go up, so leases should remain the same.

 

[tonybot]

That's not a big deal. If rebates go away, residuals will go up, so leases should remain the same.

In my case it reduced my cap costs and tax burden in Texas and gives me a good shot at buy out at lease close. It was a win for me.

 

[Pragmatic]

There is also a rebate on used EVs ($4000 for dealer purchased vehicles costing less than $25k).

 

[JGard18]

Isn't there also an income limit for receiving these? Most folks buying cars that are $80k+ hopefully already don't qualify because they make more than that limit (which, iirc, is $300k joint or $150k single). So it may not be a huge deal for the likes of Lucid or Rivian

 

[chris]

Doesn't bother me or affect me so let it go away is my viewpoint.

 

[Pragmatic]

No income limits on lease credits. There are income limits on purchases as well as used EV credits.

I'm single, earn under the income limits but purchased the car out right so no credit (car was priced too high) for my purchase.

 

[Leftlane]

Should be bad for Tesla and Rivian, good for Lucid. Lucid cars will be $7500 more attractive compared to Tesla, who will really feel the sting. That’s why Elon’s support of Trump is so dumb.

 

[Pragmatic]

Most in the industry (we'll see if they are correct), feel loosing the credit will help Tesla since they have cut costs to the extent that they will make money without the credit while legacy and new OEM loss money (or more money) without the credit. From the trade press -

Musk a Key Trump Ally in Supporting EV Rollbacks

Despite being in the EV business, Tesla Motors CEO Elon Musk, a key advisor to and influencer with Donald Trump, has reasons to want the federal mandates and price supports for electric vehicles and hydrogen-powered semi-trucks rolled back.

www.wardsauto.com

 

[charleyscott]

Eliminating the EV tax credit would dissuade some consumers who would otherwise have leased a Lucid. It would also dissuade some consumers who would otherwise have bought a lower-trim Gravity outright. Both of these effects would be bad for Lucid.

And I doubt that bad effect would be mitigated by making higher-trim Lucids relatively more competitive with other EVs: if you are unwilling to pay $85k for a Lucid Air Touring, that unwillingness should not be affected by having the price of a Model X AWD increase from $66k to $73k.

Finally, for those saying that you don't care about this policy change because you don't qualify for the tax credit, consider how you will get your Lucid serviced if the company goes out of business.

 

[Batteryman]

Eliminating the EV tax credit would dissuade some consumers who would otherwise have leased a Lucid. It would also dissuade some consumers who would otherwise have bought a lower-trim Gravity outright. Both of these effects would be bad for Lucid.

And I doubt that bad effect would be mitigated by making higher-trim Lucids relatively more competitive with other EVs: if you are unwilling to pay $85k for a Lucid Air Touring, that unwillingness should not be affected by having the price of a Model X AWD increase from $66k to $73k.

Finally, for those saying that you don't care about this policy change because you don't qualify for the tax credit, consider how you will get your Lucid serviced if the company goes out of business.

Disagree with you, majority of Lucid buyers pay for options, base model wouldn’t sell that much. And Lucid buyers are mostly above income cap. Leasing will be affected, but actual sales will grow. Only reason leases were up to 40% was because if the tax credit. Model X? That’s an ancient design, past its date. MAGA car sales will drop as well. I would rather buy an ICE car than a MAGA Tesla and half the country feel that way.

Great plan by Musk to give away the Ex-USA auto industry to the Chinese! Now Detroit will only sell gas guzzlers to Americans, while China dominates the rest of the world. Changing policy like this every 4 years is pathetic way to run a country. Funny, seeing Tesla cult praise this while they got stabbed in the back by Ego Muck

 

[sdlucid]

I am more worried about how this affects the charging infra rather than tax credits on leases/purchases. Infra is possibly a big reason for the seemingly saturated EV market at present in the US. I suppose the IRA had some good funding towards charging infra. I am not sure if flow of those funds can be interrupted as the infra work is expected to be ramped up in 2025 onwards. Anyways, it is very likely that it will go away if there is a way. That will put a serious pressure on companies in making more EVs. Traditional companies can go back to making hybrids. Or, they can fund the infra projects and work towards an accelerated transition. It's their call.

 

[Pragmatic]

Disagree with you, majority of Lucid buyers pay for options, base model wouldn’t sell that much. And Lucid buyers are mostly above income cap. Leasing will be affected, but actual sales will grow. Only reason leases were up to 40% was because if the tax credit.

Two things. If you were here when the original tax credits were sunset, you would remember that lots of deposit holders were scrambling to get their cars before December 31, 2022. Likewise there was a fury of cancelations when the credit disappeared. I thought it was rather silly.
Second leasing is high not solely due to the tax credit, but because of the large depreciation, the rapid techinolical changes in the EV market and the OEM's offering inflated residuals. Upper end OEM's would much rather subsidize sales through high residuals than to cheapen their image by lowering the sale price.

 

[Tâm]

I am more worried about how this affects the charging infra rather than tax credits on leases/purchases. Infra is possibly a big reason for the seemingly saturated EV market at present in the US. I suppose the IRA had some good funding towards charging infra. I am not sure if flow of those funds can be interrupted as the infra work is expected to be ramped up in 2025 onwards. Anyways, it is very likely that it will go away if there is a way. That will put a serious pressure on companies in making more EVs. Traditional companies can go back to making hybrids. Or, they can fund the infra projects and work towards an accelerated transition. It's their call.

The program NEVI has awarded $2.5 out of 5 billion for the goal of 500,000 chargers. Trump can take the remaining $2.5 billion away but not the other one that was already spent.

 

[Zinee]

One would think auto and battery companies that put major capex into EV, relying on those subsidies, might have something to say to their congresspeople.