I wonder how Tesla 3 Buyers will react to losing tax credit

[EVBob]

This is an optimistic prediction. I believe the cancellations will be massive. Why get an expensive Corolla size car when the gas is cheap?

I don't think that current gas prices are going to play that large of a factor in the Tesla purchases... or even with many electric car buyers.

People are starting to wise up. The whole "but it is cheap right now" argument. This is no longer enough for people because they know gas prices are just going to shoot back up again.

In my area, I am watching it rise every single day. And when it drops the price never drops as low as the last lowest time.

People aren't that dumb. They aren't going to keep getting fooled.

Plus, for most people that I know who own Tesla's, it is more about owning a Tesla, then it is anything else. They want to be a part of what Musk is doing. They want to be on the cutting edge. They want an American car, but they want it to be good. And they want something a little more exclusive.

Even the more expensive price I don't think is going to get most of the people that preordered to back out. I mean people bought the S and the X, and even all the Roasters. There are enough people with money. And more than enough people who want to spend that money on a Tesla.

I was in a Tesla store just the other day, and there was a guy sitting there with a sales rep, desperately trying to figure out how to get a loan so that he could have enough just to lease an S.

The buying decision of these cars is not going to rely on rationality as much as it is the desire for perceived status.

Agree with you on all points, but we probably wont be seeing Gas going up sharply anytime soon...or for that matter Crude not going over $80/barrel for 10 years or more...

Basing that statement on:

World Bank info: https://knoema.com/yxptpab/crude-oil-price-forecast-long-term-2017-to-2030-data-and-charts

When the pricing does start to creep up - the harder to get oil will be attractive again keeping the prices more level. The US is sitting on a reserve that surpasses Russia and Saudi Arabia -- http://www.cnbc.com/2016/07/05/us-oil-reserves-surpass-those-of-saudi-arabia-and-russia.html

Didn't realize this until today - Currently the US is in the top three for oil production: https://en.wikipedia.org/wiki/List_of_countries_by_oil_production

 

[gt1]

Right now Tesla has all the hype, minimal competition and the "halo" products aimed at the enthusiasts and people who want to be seen in a Tesla. Model 3 will come on the market competing with several other cars at the similar price point, and by that time Tesla will not be as cool as it is right now (think PT Cruiser). Extra $7500 on a $40k car will be a tough sell, unless Tesla will figure out something else- like Autopilot no one else will have.

 

[Jeffj]

There's a difference between a tax credit and a tax deduction. Even those who don't pay any Federal income taxes can still get the full amount of the credit back as a refund.

It doesn't work that way. The tax credit is a simply a credit against what you ultimately owe. If you owe less than the credit, you do NOT get a refund for the difference. The only way you get a refund is by having paid in more than you owe. If you don't owe anything, you do not get a refund. And it cannot be carried forward.

 

[spinball]

Model 3 will come on the market competing with several other cars at the similar price point, and by that time Tesla will not be as cool as it is right now (think PT Cruiser). Extra $7500 on a $40k car will be a tough sell, unless Tesla will figure out something else- like Autopilot no one else will have.

Emphasis mine.

They actually already have several things no one else offers, so my guesss is it won't be a tough sell in the least.
Autopilot
Well placed Supercharger network
3x faster charging speed than any other EV
OTA updates with completely new features, not just fixes
Summon
All-glass roof options
Direct ordering skipping third-party dealers

 

[bwilson4web]

Hi,

We'll have to disagree with some of terms here:

. . . Even those who don't pay any Federal income taxes can still get the full amount of the credit back as a refund.

• The tax credit is deducted from the tax liability, the amount that has to be paid either from the Federal withholdings or a check to the IRS.
• If the tax liability is less than the tax credit, it is set to $0. This means all withholdings will be returned to the tax payer and ONLY the withholdings. There is no conversion of unused tax credit to a refund or added to the withholdings.

It is a subtle set of rules but perhaps an example might help:

• Line 47 is the amount of Federal taxes owed.
• Line 56 is the amount of Federal taxes owed AFTER the tax credit. It can only go to $0.
• There is no mechanism for converting unused tax credit into a refund.

I have confidence that most Tesla buyers will have some tax liability. The only way out would be exceptional deductions that brought the tax liability to the $7,500 tax credit (if I remember correctly.)

Bob Wilson

 

[jadnashuanh]

After they hit me up for the AMT, I did not get the whole $7500 credit...although I had paid more than that in. Kind of bummed me out, but it is what it is.

IF it's still around, and they still have credits left, and, they eliminate the AMT, more people might see the whole thing, but that's next year at the earliest.

 

[Schnort]

The tax credit didn't count towards AMT? that reeks.

 

[EVMan]

There's a difference between a tax credit and a tax deduction. Even those who don't pay any Federal income taxes can still get the full amount of the credit back as a refund.

My accountant told me , even if i pay AMT , i will still get the 7500 benefit. he said something like 7500 will be a tax credit and not part of the tax deduction. the tax deductions are nullified by AMT, if u hit AMT.

Can someone confirm this ?

 

[jadnashuanh]

I got audited as a result of trying to use the credit, and ended up not getting the whole amount. Your results may differ. It wasn't worth arguing with the IRS.

 

[BAKUM]

Wow, I havent even heard about this tax credit affair. That's sad guys, hopefully I wasn't the buyer.