Featured Toyota President Says 'Silent Majority' Not Convinced on EV-Only Future

MSRP $26500 (includes $995 destination fee) minus $7500 = $19000. I can get lower with a state and local rebate and maybe Uber rebate to make it close to $10k.

2023 Chevrolet Bolt EV May Be The Best Electric Car Deal Yet, By Far

 

So if I owed $2,101 for last year's taxes and will likely owe about the same this year then does that mean I would not get the whole $7,500 tax incentive, but rather the Bolt would be $26,500-$2,100=$24,400?

 

The credit has an income limit and was made refundable as far as I know.
This should allow anyone to get the full federal limit.

 

While I am not a tax expert, my understanding is that with the new Clean Vehicle Credit under The Inflation Reduction Act of 2022 (Public Law 117-169) signed into law on 8/16/2022, the potential tax credit up to a max of $7500 remains to be non-refundable. I think there was a talk about making this credit non-refundable in the original BBB bill that did not pass, but what became law did not change the tax status of IRS code 30D as a non-refundable tax credit and the rule on the remaining unused portion which does not carry over to future tax years.

The $7,500 electric vehicle tax credit’s full value may be hard to get

The clean vehicle credit is worth up to $7,500. It’s nonrefundable, meaning buyers need to have a federal tax liability to get full or partial benefits.​

So, as with many other tax codes, this one favors higher-income people with enough tax liability. If your projected income tax liability is less than the full amount of $7500 credit allowed, then you will not benefit fully. There are some tax maneuvers one can take to increase the tax liability for the year planning to purchase an EV. For myself, in preparation for buying a BEV, I change my retirement contributions this year from pre-tax to Roth to increase my tax liability so that I can take full benefit of the tax credit. Unfortunately, the delay in the production of the Solterra I reserved made the car not eligible for the credit, so I had to ditch that plan and switched to the purchase of a Ford Escape PHEV with a $6843 credit.

What is more unclear is how the new Clean Vehicle Credit under IRA be treated after 2024. According to what I have read, there will be a mechanism implemented to pay the tax credit to the dealer as a point-of-a-sale discount beginning in 2024. But, if the credit remains to be non-refundable, then if the full credit of $7500 is applied at the time of purchase, then any overpaid credit at the end of the year when the actual tax liability is determined must be paid back to IRS. That is going to make a huge mess if someone who has no ability to pay back the credit gets the full credit up-front.

 

Let's just hope I don't need a new car any time soon because I'd still seriously consider a Bolt. I don't think I have much of any way to increase my tax liability as I don't have any retirement contributions yet. The only thing I could do is make more money.

Even without any tax credit, the Bolt, Prius Prime and Corolla hybrid seem like they'd all have the same total cost of ownership for me. However, the tax credit could make the Bolt lose value more quickly than the others, since I'd be paying $24,000 or so for a new Bolt, but everyone else would be paying $19,000 for the exact same car.

The good news for me is that if used car prices get back to normaly, then in a few more years my Avalon will be over 200,000 miles and I may need a new car. Maybe by then there'll be some cheap used Bolts. But as it stands today, if my Avalon were totaled, I don't see any used cars worth their cost.

 

Yes, looking into a good used EV of 2 or more years old would be very reasonable. Starting in 2023, used BEV priced below $25000 will be eligible for up to $4000 tax credit. I am not sure if the used EV will have the same manufacturing requirements as the new vehicles, as to the final assembly requirements and battery components source. But if it qualifies, then those who can not get full advantage of the tax credit due to lower tax liability may benefit more by looking for lower-priced used EVs.

I just sold our PP and Pathfinder Hybrid to get into a new 2022 Escape PHEV. After I receive the tax credit for 2022 income tax filing, the cost to me would be ~$8K gain. Yes, I actually make money on this trade. If we really need two cars in our household, I can use that money to buy a brand-new Bolt in the first quarter of 2023 while it enjoys a full $7500 tax credit without examining the battery components requirements. If other incentives can be applied, I should be able to buy a brand new Bolt for ~$10K+ tax and fees. That would be ~$3000 out of my pocket after the tax credit comes back in 2024.

Then again, we may not need another vehicle in our household. If that is the case, I will use the money to install heat pumps or solar panels next year both of which also enjoy huge discounts or tax credits under IRA stipulations. I will have to do some number crunching to decide what is most economical and ecological for our household.

 

Not up to going through the law at the moment, but it sounded like the credit transferred to the dealer. The buyer gets the value as a rebate, and the dealership gets a credit for their taxes.

In regards to those looking to get a deal on a Bolt, it's a moot point. Odds are the minerals requirement will be in effect before 2024, and GM won't have friendly nation sources in place by then. Leaving the Bolt credit at $3750.

If you aren't swapping you car out every 3 to 5 years, the value loss is less important.

The IRA does include a credit ($2000, IIRC) for used EVs. The sale has to be done at a dealer, and the car more on the newer side, but that will counter some of depreciation from the credit on new EVs.

 

Perhaps not a good idea right away as this recent recall:
GM recalls 140,000 Chevrolet Bolt EVs over fire risks | Reuters

December 21, 2022.

Bob Wilson

 

If you are correct, then it would be a huge benefit for anyone considering purchasing EVs to wait a year until 2024. Especially for those who are in the lower tax bracket. No need to qualify for the max amount the vehicle is entitled to under the law even if no tax liability for the purchaser.

I might be wrong, but I thought the used EV has to be 2 years or older in order to qualify for the max $4000 tax credit.

I would not worry about it. It is not a battery-related fire risk they had previously. The fact it is already recalled now means any new Bolt sold in 2023 will have the fix applied.

 

Here is what I found on the used EV tax credit. According to the article, the credit is 30% of the value of the used EV (must be priced below $25000) with a $4K cap. And yes, it has to be purchased from a dealer and the car has to be at least two model years old not newer.

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

1. Tax credit of 30% of value of used EV with $4,000 cap (Page 387, line 23).
2. Used vehicle must be at least two model years old at time of sale. (Page 389, line 7).
3. The original use of the vehicle must have occurred with an individual other than the one claiming the used tax credit. (Page 389, line 10).
4. Used vehicle must be purchased from a dealer. (Page 390, line 3).
5. Used vehicle price must be $25k or less. (Page 390, line 5).
6. Used vehicle qualifies for tax credit only once in its lifetime. (Page 390, line 7)
7. Purchaser must be an individual (no businesses) to qualify for used credit. (Page 390, line 14).
8. Purchaser may only claim one used vehicle credit per three years. (Page 390, line 20).
9. Modified gross income cap of $75k for individuals, $112,500 for head of household and $150k for joint returns. (Page 388).
10. Credit may be applied at time of sale by dealer. (Page 391, line 15).
11. Credit terminates on December 31, 2032. (Page 391, line 12).
12. Credit only applies to the first transfer of the used vehicle.

 

Sounds like something that could effect any type of car.

I took the intent of involving the dealer as a way to not disenfranchise those with lower tax liability. Those with the liability have the means to plan ahead for the credit.

I knew two years was involved to prevent use in flipping, but remembered there being a device in the law to keep it being applied to cars too old or too low in value. Guess that is the 30% value limit. $13,333.33 is the floor price for the full $4000.

 

I saw that article too...decided not to post it, but shows what I thought, that Toyota thinks hybrids good eco thing, and I do too,

A couple things though- our U.S. energy system automatically gives big electricity discounts to business users in most states. So unlike fossil fuels where we all pay the same basic price, I might see why businesses/schools/gov't etc. might find EV attractive for that reason.

 

Hybrids are a good thing, but the delaying from the 'powers that be' has lead us to a crisis situation. A hybrid option for nearly every vehicle should have been the case a decade ago. Now, they should be the option for uses and regions where plug ins won't work.

Toyota is calling delays because they backed the wrong technology, and aren't prepared to compete with plug ins. If things had gone differently for hydrogen FCEVs, they wouldn't be invoking a silent majority now.

 

I've made my position clear, in that I believe that promoting BEVs is just a way to move the source of green house gases without actually eliminating them. We need to eliminate the need for the energy by changing our way of life. A single passenger who travels 20 - 50 miles in a 2.5 ton BEV is worse for the environment than a guy who works locally and drives himself and a neighbor in a 10 year old ICE sedan 3 miles each way.

Why do I say that a BEV just hides the problem? Read on.
The Energy Information Administration (EIA) is the statistical agency of the Department of Energy. From their website ( Where greenhouse gases come from - U.S. Energy Information Administration (EIA) ) we get this relationship of total US CO2 to Natural gas used by the power industry.

The energy connection

Fossil fuels consist mainly of carbon and hydrogen. When fossil fuels are combusted (burned), oxygen combines with carbon to form CO2 and with hydrogen to form water (H2O). These reactions release heat, which we use for energy. The amount of CO2 produced (emitted) depends on the carbon content of the fuel, and the amount of heat produced depends on the carbon and hydrogen content. Because natural gas, which is mostly CH4, has a high hydrogen content, combustion of natural gas produces less CO2 for the same amount of heat produced from burning other fossil fuels. For example, for the same amount of energy produced, burning natural gas produces about half of the amount of CO2 produced by burning coal.

About half of U.S. energy-related CO2 emissions were from petroleum use in 2021

In 2021, petroleum accounted for about 36% of U.S. energy consumption but petroleum was the source of 46% of total annual U.S. energy-related CO2 emissions. Natural gas also provided about 32% U.S. energy and accounted for 34% of total annual energy-related CO2 emissions. Coal was the source of about 12% of U.S. energy use and of about 21% of total annual energy-related CO2 emissions.

My feeling is that if Coal is REALLY, REALLY bad, and NG is 50% cleaner, that just means that power from NG is still REALLY bad.

A long time ago it was quite widely known in conservationist circles that it's much better for the environment to conserve 1000 watts than it was to create an energy source to make 1000 watts. We seem to have forgotten that lesson, and, as a society, we are finding reasons to excuse drilling for oil and NG to turn the turbines that discreetly power our electric and gas powered cars.

We need to change our way of life so that we don't need to travel long distances just to work. Job matching to keep people local should be implemented. Telecommuting should be universally available. And when we do need to travel long distances there should be efficient public transport available for the trip. That would reduce or eliminate our need for 2-1/2 ton automobiles that have a 250 mile range. It would allow us to cut the battery packs down to 1/10th the size of the wasteful battery packs in today's "most popular BEV". The small battery used in today's PHEV will do well enough for daily local driving.

 

I don't quite get your point. I agree that if it were not for patents, every car model should be available in a hybrid model. But it takes a while for patents to expire, and then you have to figure out how to implement it without stepping on others patents. Toyota has done all the hard work to get various hybrid designs into virtually all of their models.

But I don't see where they "have backed the wrong technology". They have done an excellent job of creating PHEVs that are efficient and very easy to drive. They've engineered their PHEV technology so that it can be implemented as a super ultra low emissions package that saves the environment or it can be configured as a very good, fast power-plant that still gets better than average mileage and range. They are doing this while a lot of their competitors are still trying to figure out how to do regenerative braking in a smooth and effective way.

 

Just an anecdote about wasteful commuting:

In 1976, I worked for a very large company that was under a consent decree (Court ordered program) which required it to provide "equal opportunity" by promoting women and minorities into traditionally higher paying jobs that were traditionally held by white males. Men were only promoted as a last resort, and that last resort included providing training to people who had no background, aptitude or skills in the field to which they were promoted.

It took 3 years to get a promotion to an entry level tech job in an office 25 miles away. In training classes I met Sabrina, who lived a mile or so from the office I was going to. She had just been given the same position in MY town, a couple miles from my home.

We both cross commuted for several years, often waving as we passed each other on the road. I figure that the stupid rules cost me more than 2,100 gallons of gas over the course of 2 years. I only got 12 MPG.

 

Or a 10 year old hybrid. Still, one guy's ceiling is another guy's floor: walk down to the train or bus. Telecommute occassionally. Lots of room for improvement.

Rant on:

Oh and hey: instead of sitting looking at your cell phone as you inch forwards in the Starbucks drive-thru (in an F150...), get a percolator fur chrisakes.

 

Of course it is better to conserve, and there are policies in place to support it. I haven't noticed any incandescent bulbs on the shelves of the local stores. There are incentives for using public transit and insulating your house and getting more efficient appliances.

Plug ins do conserve. 46% of our energy related CO2 emissions is from petroleum. A BEV uses maybe an iota compared to a car with an ICE. 0.9% of the US grid is fed by petroleum and other sources. I think it is used in some parts of Florida, Hawaii, and Alaska. 39% of the US grid is carbon free. That's a little bit more than the share of natural gas, which is much better than coal for more reasons than carbon.
Electricity generation, capacity, and sales in the United States - U.S. Energy Information Administration (EIA)

The car poolers going 3 miles in an ICE will do even better in an EV.

Policies aren't excluding hydrogen or PHEVs. BEVs are just easier to bring to market. The PHEV may have a smaller battery, but it has an engine. Which comes with compromising to get both in a car, and the pollution control and regulation requirements.

Toyota did it at a pace to net the most profit. Not faulting them for that. The fault is in now pointing to hybrids as a distraction from other solutions. They were happy in taking their time rolling out hybrid technology, but only really started pushing it as a solution when they are in danger of being overshadowed by another technology.

They aren't wholly to blame. Fuel efficiency targets should have been increasing faster than they were, with public support of R&D. There were hybrid concepts over a decade before the Prius. Hell, Briggs & Stratton had one.

You've probably seen a Mirai where you are at. The results of Japan's LEV program had convinced their auto industry that BEVs would only work as short range city cars. Which is probably true when most of your test cars are using lead-acid. They turned to fuel cells and hydrogen for farther ranges. Toyota was still showing a power point slide EVs only being for short ranges, even after the iQ EV flop and RAV4 EV success.

So Toyota and Honda invested into FCEVs. Thinking BEVs would only work as small, short range cars, they limited investment there. Which is why with the market shifting to EVs that Honda needs to use GM EVs, and Toyota talks up hybrids, as that lack of investment has put them in a poor position. Oh, the only reason Nissan has better on the EV front is because of Renault.

The power-split hybrid lends itself to being a full EV. People were doing PHEV and BEV conversions with the Prius for almost as long as the car has been available. Demand was high enough to support two or three PHEV conversion companies. That demand is why Toyota did the PiP. Without people asking for a factory PHEV, they wouldn't have done it. While they overestimated the PiP demand, they ignored the huge success of the Outlander PHEV, and did not secure the battery supply for the Rav4 Prime.

What? Are you referring to Tesla's decision with one pedal braking?

Meaningful change has to come from the top. The common individual can't change company policies, replan cities, adjust financial regulations, etc. Meaningful change comes when the powers that be support it, but they wanted short term gains.

 

That's one. I've only driven a couple EVs and read about many of the others. It's my opinion that they're fudging to cover up a design defect when a car designer needs to add multiple ways to do a single critical function. Don't the engineers know what setting is best and safest for the car that they designed?

I dislike the designs where braking behavior can change dramatically depending on which driver set the regen mode most recently. I'm not real happy with the designs that change the acceleration drastically either. I want the car to proceed through traffic in a totally predictable way and rate of speed.