If you ever find yourself in the mood to buy a shiny new electric Tesla, now I’m telling you, you’re probably making a huge mistake. While I don’t usually dissuade people from switching to an electric car, there’s a good reason you shouldn’t buy a Tesla right now. Definitely not one of the cheaper models, anyway.
It all comes down to the Clean Car Credit, also known as the Federal Tax Credit for Electric Vehicles. It’s worth up to $7,500, and that credit can seriously affect the cost of buying an electric car. Eligibility criteria are also changing, allowing drivers to claim a tax deduction on cars that are not currently eligible — including Tesla.
This means that now is the worst time to buy a Tesla, but the best time to order one is coming very soon.
Tesla buyers can’t claim the electric vehicle tax credit…yet
In August, some changes were made to the federal tax credit for electric vehicles, which was made as part of the Inflation Reduction Act.
One of the most important parts of the change is that the original 200,000 sales cap is now being raised. So not only will cars stop losing their eligibility for being so popular, drivers will be able to claim up to $7,500 off the purchase cost from a car manufacturer that has hit the sales cap in no time. what’s in the past.
But there are some conditions here. The first is that all electric cars must have been permanently assembled in North America, or these cars would not qualify for any tax credits. The second is that cars over $55,000 and trucks or SUVs over $80,000 will not qualify. The last condition to note is that the sales cap is not raised until January 1, 2023.
Tesla does its final assembly in the US, but it hit the 200,000 sales cap several years ago. This means that Teslas will not be eligible for the electric vehicle tax credit until January 1 at the earliest. Tesla’s pricing structure also means that only three of its cars will actually qualify.
Those who qualify are the standard range Tesla Model 3, which starts at $46,990, and both the Tesla Long Range and Performance Model — which starts at $65,990 and $69,990. Since the Model Y is an SUV, that means both models should fall into the $80,000 price cap category — as is the rumored standard range model, which hasn’t been officially confirmed yet, and should be priced around $60. one thousand dollars.
What happens if you order a Tesla now?
Tesla wait times are known to be very severe, but we’ve seen a drop in delivery estimates over the past several weeks. There is now a very real chance that you will be able to pick up one of these three cars before the end of the year.
Tesla currently estimates that the Model 3 will arrive between October and December 2022, while the Performance Model Y may arrive soon – between September and October. Meanwhile, the long-range Model Y could arrive as early as December, or as late as April.
In each case, there is some very good chance that ordering today means your car will arrive before the tax credit restrictions are lifted. That’s up to $7,500 you won’t get back, in other words.
Of course there are still some unknowns, particularly in how the IRS will handle the end of sales cap restrictions. Specifically, whether tax credits will be available to drivers who book a car now (with a refundable deposit) but won’t deliver until next year.
Back in August, when the Inflation Reduction Act was signed into law, the IRS allowed some leniency toward people with newly unqualified car orders. Transfer rule (Opens in a new tab) Is that if someone pays a non-refundable deposit or at least 5% of the final sale price before August 16, they can claim the tax credit under the old rules.
It makes sense that something similar could happen with the sales cap being raised. Provided you don’t lock yourself in a sale, or receive a Tesla before January 1, you may qualify for the credit.
We have to clarify that the IRS has not confirmed any details about the changes that occurred to the electric vehicle tax credit on January 1. If I were you, I’d wait until January to order my Tesla, or at least until after the agency confirms all the finer details about the transition period.
If you’re after a different Tesla, which costs more than the price cap allows, there’s absolutely nothing to lose by ordering as fast as you can. This includes the Tesla Model S, Model X, and Performance Model 3. The Long Range Model 3 will also be ineligible, but Tesla has suspended orders until next year.
It doesn’t matter if these cars arrive tomorrow or next year, you won’t get that tax credit. It may also get you some waiting out of the way. Then again, the way things are, it’s not very important to invest in an electric car right now.
Gas prices are also dropping
The recent record hike in gasoline prices has helped determine how much cheaper electric cars are being run. Although the cost of electricity was rising, it still dwarfed the cost of a gallon of gas in June — the national average exceeding $5 a gallon.
Some decided it was a good time to buy an electric car as a result, contrary to the advice of some money-saving experts. After all, spending tens of thousands of dollars you wouldn’t spend on a brand new car is not a way to save money.
If you are able to purchase and recharge an electric vehicle, we certainly encourage you to do so. But if you are not already planning to replace your car, this is not the time to do so. Especially if you’re worried about the price of gas, as it’s starting to drop to even crazier levels.
according to AAA (Opens in a new tab)The national price for regular gasoline is about $3.70 a gallon. That’s more than it cost a year ago ($3,177), but it’s also less than it was this time last week ($3,764) and last month ($3,959).
In short, the cost of driving is slowly decreasing, which reduces the savings you might earn from buying an electric vehicle — including a Tesla. Which means you can probably wait a little longer before making your purchase.
Are there downsides to waiting?
If you order a Tesla today, the price you’ll pay will be locked. If you wait, and Tesla decides to raise its prices again, you’ll be stuck paying the newer and more expensive price. It’s rare for Tesla to announce price increases early on, and you won’t find out until after that happens. So waiting is, in essence, a gamble.
You have the option of deferring an application until you can claim up to $7,500 from the IRS, or lock everything in now and guarantee the price you pay—and potentially sacrificing the tax credit in the process.
Nobody can make this decision but you, so you have to decide which option you prefer to make. Or more specifically, what would make you less upset if you ended up on the losing side.
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There is absolutely nothing stopping you from buying an electric car now. You just need to be aware of the cars that already exist Eligible for tax credit Before you make your decision – and most importantly why some cars are disqualified.
For many electric cars, it all comes down to the fact that they weren’t assembled in North America, and that’s not likely to change any time soon. For Tesla and General Motors, it all comes down to aspects of the previous tax credit that are temporarily suspended. Fortunately, this warning already has an expiration date of less than four months later.
$7,500 is not a small amount of money, even on cars that cost more than $60,000. So, if you want to maximize your savings by buying a shiny new Tesla, you’ll need to hold off on placing that order a little longer. I hope Elon Musk never pushes the price up again.
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