Earlier this week, Fisker announced its reservation holders that it found a loophole allowing them to benefit from the full $7,500 tax credit before the Inflation Reduction Act goes into effect.
According to Fisker, the bill's "Transition Rule" could work in favor of current reservation holders if they enter into a binding contract before the Inflation Reduction Act goes into law. Essentially, a taxpayer who has entered into a new vehicle contract before the new law is passed could be treated as a customer ordering a vehicle while the previous bill was still in place.
As it turns out, other EV makers are now doing the same, offering binding purchase agreements to reservation holders in order to secure existing federal tax credits before the Inflation Reduction Act becomes legislation—which could happen as early as next week if the House of Representatives passes the bill and the President signs it.
Rivian Automotive and Lucid Group have informed their reservation holders that they can enter into binding contracts to make sure they qualify for the full $7,500 tax credit before the new bill comes into force.
Rivian has emailed a link for existing reservation holders to review and sign a binding agreement to purchase an R1T or R1S. In a section on its website dedicated to the Inflation Reduction Act, Rivian notes that new customers need to first place a reservation in order to sign one of these binding agreements.
Lucid Group has taken a similar approach and emailed all customers with reservations to inform them about the option to place an order for the Lucid Air—i.e., a binding agreement.
It's worth noting that the language used by Rivian and Lucid makes it clear that they cannot guarantee that customers will be eligible for the tax credit if they sign the binding agreements. Furthermore, Lucid notes that the customers' reservation fees will become non-refundable order deposits if they enter into a contract.
Needless to say, if you are a Rivian or Lucid reservation holder and want to benefit from the existing federal tax credit you should hurry up and sign the binding agreement as the House of Representatives could pass the Inflation Reduction Act as early as August 12, 2022; the Senate has already passed it on August 7.
If President Joe Biden signs it—it should be a formality—all Lucid Air vehicles and almost all Rivian R1T and R1S vehicles currently on sale (the quad-motor ones) become ineligible for any federal tax credit, despite the fact that they are built in the United States.
That's because the new bill establishes a $55,000 threshold for sedans and $80,000 limit for SUVs and pickup trucks. The Lucid Air starts at $87,500 in base Pure configuration while the quad-motor Rivian R1T and R1S start at $79,500 and $84,500, respectively.
Here are Rivian and Lucid's instructions for reservation holders in full.
How will the Inflation Reduction Act impact my eligibility for the electric vehicle (EV) federal tax credit?
We've received quite a few inquiries from the Rivian community asking how the Inflation Reduction Act may impact their eligibility to obtain the $7,500 IRC 30D federal EV tax credit when they purchase an R1T or R1S. Here's what we know and how we plan to support our customers' efforts to maintain eligibility for the federal EV tax credit.
Once signed into law, the Inflation Reduction Act will add new restrictions to US buyers' eligibility to receive the $7,500 IRC 30D federal EV tax credit. Under these new restrictions, an electric pick-up truck or SUV must be priced below $80,000 and the buyer must fall below certain income thresholds to qualify.
However, buyers who have a "written binding contract" to purchase a qualified EV before the Inflation Reduction Act becomes law will be able to apply under the current IRC 30D tax credit requirements.
Only preorder and reservation holders can sign these binding contracts. For existing customers, we've emailed a link to review and sign a binding agreement to purchase your Rivian. For new customers who'd like to sign one of these binding agreements, you must first place a reservation for an R1T or R1S.
From there, new reservation holders will receive an email with instructions on how to review and sign your binding agreement.
- Customers are under no obligation to sign the binding order agreement
- Rivian does not guarantee eligibility for federal EV tax credits
- Signing a binding order agreement does not "lock" your configuration
- Signing a binding order agreement does not guarantee vehicle pricing
- For customers with reinstated orders or pending deposits, we'll be contacting you soon.
- For customers with multiple deposits, we'll share a binding order agreement that, when signed, applies to all vehicles orders for which you've placed a deposit. If you only wish to apply the non-refundable deposit to certain orders, please contact the Customer Engagement Center.
This past weekend, the Senate passed the Inflation Reduction Act, which eliminates the $7,500 tax credit for sedans with an MSRP over $55,000. This means that if the bill is enacted, Lucid Air will no longer qualify for this tax credit. The House is expected to vote on the bill this Friday, August 12.
Many of you have asked what we can do to help you maintain your eligibility for this tax credit.*
The current text of the bill includes a "transition rule," which may maintain eligibility for Lucid customers who enter into a contract to purchase their Lucid Air before the bill is signed. We've decided to help reservation holders take advantage of the transition rule by opening a window to place an order for their Lucid Air. This window is now open, and will remain so until 12 a.m. the morning the bill is passed, which could be as soon as this Friday.
To be completely clear, you don't have to place an order now and your reservation will remain in place — we're doing this to help those who want to do everything possible to maintain eligibility for the federal tax credit. If you don't wish to place an order now, you'll still have the opportunity to do so closer to your vehicle's production date. Please note that placing an order now will not alter the expected delivery timelines for Touring and Pure.
However, if you decide to place an order now, please understand you'll be entering into a contract, and your deposit will become non-refundable.
To place your order, log into your Lucid account, go to your "Designs and Orders" tab, identify the relevant reservation and click the "Order" button. A pop-up window will appear where you can again click "Confirm this order" to complete the process.
Source: Rivian, Lucid via Lucid Insider