IRC 30D phase-out

Yep, the bargain PP sales are now over. With a smallish $1500 rebate now and soon to be reduced tax credit or later no tax credit, I predict the PP sales will be lower this year, even if the chip shortage is over and production can pick up.

Too bad this phase-out is happening just when Toyota is releasing its very first BEV, bZ4X. That's why I put a reservation for a 2023 Subaru Solterra. I know Subie has plenty of room for the quota. I can get an AWD version of the bZ4X twin sister for $7500 less if I am lucky.

 

I think you misread. There is one fiscal quarter delay, caused by the speed of bureaucracy. If the cap is reached during Q1, then the phase-out doesn't begin until the start of Q3, i.e. July 1.

That is how the Tesla and GM phaseouts worked. The IRS needs to receive the final official end-of-quarter sales figures, then issue the proper advance legal notice that the phaseout begins at some future date. Bureaucracy simply cannot do this overnight.

 

I hadn't looked at that particular page. But here are some other relevant IRS pages that have been posted to previous threads --

Eligible vehicles and their credits:
IRC 30D New Qualified Plug-In Electric Drive Motor Vehicle Credit | Internal Revenue Service

Tesla phase-out notice:
First plug-in electric vehicle manufacturer crosses 200,000 sold threshold;Tax credit for eligible consumers begins phase down on Jan. 1 | Internal Revenue Service

GM phase-out notice:
Plug-in electric vehicle manufacturer crosses 200,000 sold threshold; tax credit for eligible consumers begins phase down on April 1 | Internal Revenue Service

Tesla hit the cap during Q3 of 2018, phase-out began January 1, 2019. GM hit the cap during Q4 2018, phase-out began April 1, 2019.

 

It was actually right in the paragraph you quoted.

"...beginning with the second calendar quarter after the calendar quarter in which at least 200,000..."

I think the BBB cut out the Prius Prime because its battery was too small, before the gas tank limit was added.

 

The price has not been announced yet. Toyota's bZ4X base model (non-AWD) is estimated to be starting around $40K, but the Subaru trim I reserved is more like $45K MSRP or higher. If the sale price is higher than MSRP, I will not buy. It's that simple. If that happens, then I will just get a LEAF (provided Nissan still qualifies for the full credit). Yeah, it probably will not be as lucrative as buying a PP $10-12K off MSRP, but $7500 off MSRP on a $30K BEV is a good enough deal. I am sure I can keep the car for a few years and sell it for not too much loss. No, I am not expecting any capital gain like on a PP.

 

After reading the last dozen or so posts, I’m very happy I live in Quebec. EVERYONE gets the full rebate (13,000$ for BEV, 6500$ for PHEV) deducted at point of sale. No arcane calculations or need to worry about tax liabilities, etc. Easy peasy.

There are a few rules about price range, but the effect of those is to diminish the subsidizing of luxury vehicle purchases by people who don’t need a subsidy.

 

... and if prices don't plunge?

 

^ A year ago, we thought the supply chain problems would be over by now.

But they aren't. And inflation is spiking. It is quite possible that instead of prices ever falling, inflation could push the standard prices up to what people are paying now.

My crystal ball is always very cloudy, so I'm not betting for or against any particular economic path. Be ready for multiple scenarios.

 

When I first bought the 2015 Prius Two, my first-ever daily driver purchased new, I never thought of trading in that car after a few years to finance my next new car purchase. A long-held belief of owning a car was that a new car value always depreciates with time mostly in the first few years. That was the reason, I have almost always purchased a used car and leased a new car, prior to 2015. And if purchased, I tried to hold onto the car as long as I can until the wheels fell off. Unfortunately, in our climate, that does not take a long time. In our region, with road salt eating up the vital parts of the car, a life span of a car is about 10 years on average, 15 years top, no matter how expensive or cheap the car initially was. Any car after 7 years old is subject to rust-related repair expenses that will bring the operation cost higher toward the end of the car's lifespan.

So, I have set the financial goals for my daily driver. The goals are that the total cost of acquiring the car to be around $20K max and the final true cost of ownership of the car to be less than $300/mo when the car is decommissioned (either sold or demolished). ~$20K budget to purchase a car is easy to stick with, but finding a car at that price to end up less than $300/mo true operating cost turned out to be rather difficult. This $300/mo includes not only amortized cost of the car purchased (or leased if that is the case), but also includes everything else spent for the car, including but not limited to fuel cost, maintenance and repair, insurance, ongoing tax and fees, and any accessories or car care goods purchased.

The first car I started this cost analysis was the 2008 HCH purchased used (3 years old) and driven for ~7 years till totaled, although the predecessor to HCH, 1998 Civic gasser also purchased used (3 years old) may already have achieved the goals. I did not keep track of the detailed cost of ownership for my cars prior to HCH. After HCH, I switched my car 4 times. Here is the comparison of all 5 including HCH for the cost analyses. For the current 2021 PP Ltd, I used the number if I sold the car right now. I also included our current midsize SUV Nissan Pathfinder Hybrid purchased used 5 years old, with an assumption if it is sold now.

As you can see, the shorter I keep the car, the better financially. That is certainly the case for all PPs for this time span. I don't think this trend will continue forever for my future daily drivers, but at least for now, I feel comfortable selling my car in a very short term as long as incentives and tax credit on a new car purchase continue to offset the depreciation.

 

Well, it is generally believed that Toyota cars hold value over other makes of cars. But just comparing the actual price I got on my Prius and PP's, it is clear that they too depreciate, sometimes a lot.

2015 Prius Two MSRP was $25,250... after only 30mo, it traded in at $10,000. ~60% depreciation.
2017 PP Premium MSRP was $30,133... after only 31mo, it traded in at $16,500. ~45% depreciation
2020 PP LE MSRP was $28,814... after only 10mo, it was sold at $22,415. ~22% depreciation.
The only exception is for 2021 PP Ltd with an MSRP of $35,254... in this crazy seller's market, it got an offer of $32,000 or only ~9% depreciation in 7mo.

Yes, I expect any BEV to depreciate quicker than PP or any other current Toyota car. That is the nature of rapidly developing technology. No one would pay close to the full initial price for old technology. A 3-year-old laptop, even though it was once cutting edge and still is a perfectly capable machine, will only sell at a fraction of the initial price. I think the same thing is going to happen to BEVs as the EV becomes more and more technologically advanced and rapidly improving year after year. That's fine. If the Subaru BEV which is purchased at $45K - $9.5K (I am including my state incentive) lose $10K in value for the first year. I can still sell it for $35K... making it possible for me, an ordinally true middle-income not rich nor privileged with a $20K budget for a car to enjoy the newest technology in the automobile industry for a mere $500/year. Your prediction of depreciation of $25K value in the first year (that's more than 50% depreciation in 12mo) is unlikely. Even the worst depreciation car which happens to be LEAF takes 5 years to depreciate 65% of its value. Although, I am not sure what it depreciate in the first year.

BTW, Subaru Solterra, Ford Mach-E, Kia EV6 are my "Dream Cars" all priced at ~$45K or higher (~$35K purchase price after incentives and tax credit) which I think is a way too expensive daily drive for me, and honestly a luxury. If any mark-up or other factor makes them even more expensive, then I will likely go with a LEAF SV with 150 miles EV range. This will likely cost about $20K to purchase and have just good enough features I want. In addition, I know for sure that switching to a BEV from PP is not going to save me any money in terms of operational cost and the overall true cost of ownership. The PP is by far the most economical daily drive I have ever owned and no matter how efficient BEVs are, it will not be cheaper than PP to own and operate.

So, you may ask, why switch? If I go forward with purchasing a BEV, I am not doing it to save money. I just want a new affordable BEV to experiment with. PP has served my daily driving tasks perfectly, but honestly, I am getting bored with it.

https://www.wane.com/news/the-best-and-worst-cars-for-depreciation/

 

Subsidies play a part in depreciation. New, the Leaf was already around $10k less than MSRP because of them. Then Nissan was regularly discounting on top of that. So what people were paying for a new car was already substantially reduced.

as for the i3, I see there are three ICE BMWs on that list. It starts off with high depreciation from the brand.

 

Yep, that's exactly the point of the discussion. As I said, as long as full tax credit and incentives are available to purchase a new BEV, I feel comfortable selling my car in the very short term to recoup most of the depreciation even if not gaining a profit as I did with a PP.