UPDATE: Tesla Has Officially Confirmed Passing 200k, Credit Safe until December

JUL 12 2018 BY WADE MALONE 190

Our finalized Tesla estimates are now posted in the Plug-In Sales Scorecard.

***UPDATE: As anticipated, Tesla surpassed 200k U.S. deliveries. The automaker updated its Support page for Electric Vehicle incentives. According to the automaker’s website, the full $7,500 credit will be available to those who take delivery on or before December 31, 2018.

It seems it took Tesla and the IRS a few weeks to iron out exactly how the situation would play out. Sadly, we’ll probably never know for sure what date the automaker delivered its 200,000th vehicle in the States. We’ve been in touch with Tesla via phone and email over the course of the last several weeks as we tried to provide the information to the public. However, we still haven’t received a statement directly. Electrek claims to have official confirmation from Tesla that the threshold was crossed this month, although at this point, with the update to the automaker’s website, the date is irrelevant.

When most of us think of a vehicle being “sold” or “delivered” in our industry, it typically means the paperwork is signed, down-payment is made and the buyer has taken the vehicle home. This is how automakers refer to deliveries in their monthly or quarterly numbers. This is how we report these sales/deliveries every month in our monthly Plug-In Sales Scorecard.

The below quotes from government websites are generally what one would find in an article related to the federal electric vehicle tax credit.

IRS:

The credit begins to phase out for a manufacturer’s vehicles when at least 200,000 qualifying vehicles have been sold for use in the United States (determined on a cumulative basis for sales after December 31, 2009). For additional information see Notice 2009-89.

Department of Energy:

This tax credit will be available until 200,000 qualified EVs have been sold in the United States by each manufacturer, at which point the credit begins to phase out for that manufacturer.

However, some sharp readers in the InsideEVs comment section alerted us to the fact that the IRS might not think of ‘sold’ or ‘delivered’ in the same way we do. The IRS is very particular about whether or not the buyer actually has the title of the vehicle in their possession. Simply taking the car home does not mean you have it in your possession for the purposes of the tax credit.

The vehicles must be acquired for use or lease and not for resale. Additionally, the original use of the vehicle must commence with the taxpayer and the vehicle must be used predominantly in the United States. For purposes of the 30D credit, a vehicle is not considered acquired prior to the time when title to the vehicle passes to the taxpayer under state law.

It was also pointed out to us, title transfers can take time and different states have different requirements on the time frame for completing the transfer. I have absolutely no experience in this area. Luckily, I had an inside source that deals with new vehicle title transfers every day: my wonderful wife. I relayed the situation to her and asked her about how long it takes to complete a title transfer here in Texas. “It depends on a lot of factors,” she said. “But for new vehicle title transfers from a dealership or Tesla it generally takes 2.5-3 weeks for the complete process. Sometimes a bit longer.”

This may complicate things once the phase-out officially starts, however. The same language of “acquired” is also used when deciding how much of the credit a vehicle is eligible for.

Qualifying vehicles manufactured by that manufacturer are eligible for 50 percent of the credit if acquired in the first two quarters of the phase-out period and 25 percent of the credit if acquired in the third or fourth quarter of the phase-out period

Hypothetically, it might be possible for someone to purchase a new vehicle during the final month of the 100% credit phase-out period but not get the full credit. If the title transfer is not completed by the end of the month, the vehicle might only be eligible for the 50% credit. During the phase-out period, this may lead to lower deliveries at the end of every other quarter.

This is not the only interpretation of the IRS language

The IRS also seems to provide a distinction between “sold” and “acquired” and to what each term is relevant. Sold appears in sections specifically referring to the 200,000 units sold. Acquired appears in sections specifically referring to whether or not a buyer’s vehicle will be eligible for the credit and what level it would be eligible for during the phase-out period. From the IRS regarding sales:

The new qualified plug-in electric drive motor vehicle credit phases out for a manufacturer’s vehicles over the one-year period beginning with the second calendar quarter after the calendar quarter in which at least 200,000 qualifying vehicles manufactured by that manufacturer have been sold for use in the United States (determined on a cumulative basis for sales after December 31, 2009) (“phase-out period”).

A manufacturer (or, in the case of a foreign vehicle manufacturer, its domestic distributor) that has received an acknowledgment of its certification from the Service must submit to the Service, in accordance with section 6 of this notice, a report of the number of qualified plug-in electric drive motor vehicles sold by the manufacturer (or, in the case of a foreign vehicle manufacturer, its domestic distributor) to consumers or retail dealers during the calendar quarter.

The number of qualified vehicles sold by the reporting entity to consumers or retail dealers during the calendar quarter.

From the IRS regarding credit eligibility:

Qualifying vehicles manufactured by that manufacturer are eligible for 50 percent of the credit if acquired in the first two quarters of the phase-out period and 25 percent of the credit if acquired in the third or fourth quarter of the phase-out period. Vehicles manufactured by that manufacturer are not eligible for a credit if acquired after the phase-out period.

This notice also amplifies Notice 2009-54 and Notice 2009-58, I.R.B. 2009-30 163 (relating to the plug-in electric vehicle credit under § 30) to provide that a vehicle is considered “acquired” when title to that vehicle passes under state law.

The IRS also doesn’t seem interested in any funny business:

In either event, or in the event that the manufacturer (or, in the case of a foreign vehicle manufacturer, its domestic distributor) makes an erroneous quarterly report, the manufacturer’s (or, in the case of a foreign vehicle manufacturer, its domestic distributor’s) right to provide a certification to future purchasers of the new qualified plug-in electric drive motor vehicles will be withdrawn, and purchasers who acquire a vehicle after the date on which the Service publishes an announcement of the withdrawal may not rely on the certification.

Manufacturers (or, in the case of foreign vehicle manufacturers, their domestic distributors) are reminded that an erroneous certification or an erroneous quarterly report may result in the imposition of penalties, including, but not limited to, the penalties:
(a) Under § 7206 for fraud and making false statements; and
(b) Under § 6701 for aiding and abetting an understatement of tax liabilityin the amount of $1,000 ($10,000 in the case of understatements by corporations) per return on which a credit is claimed in reliance on the certification.

Our tentative determination:

Steven and I still aren’t 100% convinced that Tesla would knowingly cross this threshold for a mere 5,000 units sold. So we chose to hold off on publishing the numbers in our sales chart and reached out to Tesla for comment. Despite getting in touch with Tesla more than once, we never received a confirmation. But we also were not given a denial or correction as would usually happen.

We are not certain what interpretation is the most correct. We at InsideEVs are not tax specialists, lawyers or government bureaucrats. However, it was brought to our attention in our article on Monday that Ford’s numbers (as reported by the IRS) did not match up with our sales reports. This is unusual since we receive our monthly numbers directly from the Ford rep. There is no reason for our numbers to not match. In researching other automakers that directly report through the IRS, we’ve found that the automakers’ total number of electric vehicle sales to date is much higher than what is showing on the IRS website. However, if the numbers are in fact based upon the title acquisition both for the “sale” and for the “acquisition” then this would perfectly explain the discrepancy.

If this interpretation is correct, then it is possible Tesla passed 200k sales in June. Yet, if the IRS does not consider the vehicle to be legally ‘sold’ or ‘acquired’ until the title transfer is complete, it could mean Tesla did NOT trigger the rebate phase-out period.*

If this interpretation is not correct, keep in mind that historical estimates going back 7+ years will not be 100% accurate. And based on other automakers numbers reported to the IRS, there is clearly a difference or delay between delivery numbers and those recorded by the IRS.

So even though our quarterly numbers seem to have panned out as we expected them to, Tesla might not have crossed 200,000 trigger as far as the IRS is concerned.

Thank you to InsideEVs commenters who stepped up to the plate and did what our comment section does best: get a bunch of passionate, intelligent people talking. Multiple hat tips to:

Nix and MoMac who initially got us looking into discrepancies with the IRS reports versus official sales numbers and the possibility of title transfers or registrations being a factor

Jean-Pierre White, PeteP, ScottH who pointed out the IRS had a specific definition for “acquired” and that the sale/delivery date itself might not be relevant

Also, check out this Reddit post by bariaga regarding our sales data and the IRS language:

It’s really within the error margin at this point. There are too many unknown variables to say with any certainty. The article mentioned some of them (historical error for U.S./Global breakdown estimates, unknown number of Canadian deliveries in Q2), but there’s also the fact that what counts for Tesla as a “Q2 delivery” won’t exactly match what the government counts as a Q2 “acquisition”.

From the IRS tax code:

“This notice also amplifies Notice 2009-54 and Notice 2009-58, 2009-30 I.R.B. 163 (relating to the plug-in electric vehicle credit under § 30) to provide that a vehicle is considered “acquired” when title to that vehicle passes under state law.”
Vehicle title transfer date may lag the delivery date, and that lag may vary from state to state.

Given that it’s so close, I’d like to think that Tesla would have recognized this and not shot themselves in the foot by narrowly crossing 200k in Q2.

EDIT: Upon closer examination of https://www.irs.gov/pub/irs-drop/n-09-89.pdf , I’m no longer sure that the “state-dependent title transfer lag” is a factor for determining which quarter triggers the 200k phase-out period. All of the language referring to “acquiring” seems to be oriented around the buyer in determining which quarter their own personal purchase counts for tax credit eligibility purposes. But for the manufacturer and the vehicle accounting for determining phase-out period, they only talk about “vehicles sold”. In other words, the IRS seems to be relying on the manufacturer’s filings directly (not the states) for determining which quarter to begin the phase-out period, but will use state title transfer dates when determining an individual person’s eligibility for the credit?

Tesla has until July 31st to file their quarterly report to the IRS. So we may be stuck in the dark for another month.

*Keep in mind, regardless of this analysis, we cannot guarantee anything until Tesla or the IRS makes an official announcement. Even at the time of this writing, others that originally supported this same type of explanation are second-guessing it and sharing on Reddit and other related forums, as shown above. This is still due to the IRS language not being abundantly clear with regards to the words “sale” and “acquisition,” as well as whether these words apply to Tesla, the buyer, or both.

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190 Comments on "UPDATE: Tesla Has Officially Confirmed Passing 200k, Credit Safe until December"

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Benz

I think that the IRS will inform Tesla when their 200,000 Milestone will have been crossed.

And Tesla then has the duty to update their website to inform their future customers.

This has not happened yet, so the 200,000 Milestone has not been crossed yet.

Does this make any sense?

It could take a month or more for that info to happen. So, Tesla isn’t responsible for updating the site. Also, people still get the full credit for at least 30 days, but likely much longer, especially with the acquisition/registration nonsense, so it will be a long time before Tesla has to “warn” anyone. At which point it can change two words and just say “up to,” until there’s actually a for sure point that no one else can possibly get the full amount.

Heisenberght 3.0

If it makes sense it certainly has no relation to any bureaucracy stuff 😉

Loboc

Any statement made by any company on their web site has a silent expiration date that is understood by anyone using the Internet beyond a reasonable learning curve. There are usually asterisks and double asterisks that qualify any statements. Especially about credits and grants that are beyond the company’s control. Does it not say ‘consult your tax expert’?

Until Tesla receives an official memo from the IRS via snail mail, their web site is correct. I, for one, would not use a sales-oriented web site as my source for expecting a tax credit or grant (or even a final price!). It’s like using a newspaper from last week. Or a lawyer’s TV ad for expectation of hundreds-of-thousands of dollars pay out. Until my specific case is in writing, it didn’t happen.

In either time frame, June or July, there are a couple of months at least where the full credit would be good. But, don’t take my anonymous word for it.

Tl

Your logic is flawed…

EaglesPDX

Nope. Per the IRS rules, Tesla has to inform the IRS not the other way around.

Pushmi-Pullyu

Did you actually read the article?

It’s up to the IRS to determine when the tax credit gets reduced, and that is according to their own rules, which apparently are rather murky. The fact that the IRS depends on auto makers (including Tesla) giving the IRS their sales numbers doesn’t alter the fact that it’s up to the IRS to make the official determination.

It would be at the least highly inappropriate for Tesla to announce any change to the tax credit before the IRS rules on that. It might even open Tesla up to legal liability if they announce a change which turns out not to be true.

Marshal G

Unfortunately this administration is filled with political appointees whose sole purpose is to undo all “green” “lib” laws. Whether it’s an attempted bailout of the coal industry, or getting rid of the words “climate change” from government websites, etc. Their only purpose is to wage conservative holy war against the government. If it is up to a Trump appointee, it’s a done deal.

David Cary

Surprised by the 2 thumb downs. Certainly true. You can be a pro-EV conservative and agree with that post. And I can’t see what any liberal, moderate, or otherwise undeclared would disagree with that either.

Gasbag

Dave, Dan, and Pupu can now graciously admit they are wrong.

Pushmi-Pullyu

I’ll certainly admit that I was wrong about the $7500 tax credit dropping to half on or about Oct. 1; that won’t happen until on or about Jan. 1, 2019.

But I certainly was correct to say that Tesla did pass the milestone of 200,000 U.S. deliveries/sales last quarter, unless IEVs’ count was several thousand off… which I think extremely unlikely. It now looks like the IRS isn’t counting sales as reported by the manufacturer, as we thought, but rather registrations as reported by the States (and territories) of the U.S. Or at least, that seems the most likely explanation for why Tesla reportedly went several thousand past the 200,000 U.S. sales milestone last quarter (during June), yet the trigger for halving the income tax credit didn’t happen until this quarter (during July).

This is a rare case where both sides of what was formerly an intense debate turned out to be right. Why try to score points now? We were both right… and if you look closer, we were both wrong.

Murrysville EV

Still glad I cancelled the Model 3.

I’d bet a lot of entry-level Model 3 prospects will bail once they realize their car is 25% more expensive than they expected.

Mark.ca

Math and logic are being tortured today…

Zachary Hafen

I’d rather get a $35,000 Tesla with no tax credit than a Bolt or a Leaf with $7,500 back in taxes the following year. To each his own, I guess…

David Green

Actually if you buy an EV you start recovering the $7500 immediately as you adjust your paycheck withholding so your very next paycheck will start to pay you back.

Robert Weekley

That would be the smart way. Not all people capiche.

Will

I like the 3 buts too low to the ground

Pluto

I, too, like the 3 when it flies

Robert Weekley

“Seats are Too Low”, was wifes comment, as well. 7 years of driving 2010 Kia Soul and 3 years before that, in a 2008 Dodge Dakota Pickup, and she does not remember the 2 years we drove an 2004 Prius from 2012 to 2014, or the earlieryears of the 2005 Chevy Optra Wagon. So…might move to a plan for the Model Y, and a used EV between then & now, or November, when I would have moved forward on the 3.

Ziv

That is one of the things I like less about my Gen I Volt. Getting in is ok, but getting out it I usually end up elbowing my B Pillar to push me up and out. I wish it sat 3″ or so higher. I understand it would blow my hwy AER out the window but 98% of my driving is under 45 mph.

Dan F.

proofreading???

Loboc

It’s not gonna matter to Tesla. They got about two years of backlog to work through. Not including new prospects signing up. I seriously doubt that this credit will matter much to people that really want a Tesla.

Nobody that wants an entry-level Model 3 will get a full credit anyway. There aren’t any.

Viking79

Elon has been incredibly clear since the beginning: The base Model 3 will be $35,000 without incentives. He never mentioned post incentive price on that, and I believe he did so on purpose. Although I think people who reserved early will get half or so of the credit.

Pushmi-Pullyu

Indeed. It’s very clear that Tesla never planned on the full $7500 tax credit benefiting those waiting for the lowest trim level TM3 to go into production.

Even if the arcane IRS rules wind up benefiting some of the (almost certainly small number of) $35k TM3 buyers, it won’t be because of any brilliant master plan on Tesla’s part. If it happens, that will be just the way things turned out.

MDEV

Yep go back to your Scion

Pushmi-Pullyu

“Still glad I cancelled the Model 3.”

It’s amazing how many serial Tesla bashers claim to have seriously considered buying a Model 3 after posting FUD about it for years.

It’s almost like we can’t believe what they say… 🙄

pjwood1

I think he bought a Volt, to replace the idea of waiting. The Model 3 is some things, and not others. If folks want to gloat about not having missed a 27.5k car, after fed incentives, I wouldn’t call it “bashing”, PP.

Pushmi-Pullyu

Yeah, okay… I Googled previous comments from Murrysville EV, and he’s not at all the serial Tesla basher I thought I remembered him being.

My apologies to Murrysville EV. 😳

(⌐■_■) Trollnonymous

My purchase timing was jacked up anyway. Can’t buy till 2020. Wasn’t expecting a rebate.
Need to pay off first EV and that won’t be till Sept 2019. I don’t Lease.

David Green

In 2020 I think you will have many options… Of course Model 3 included.

Clive

And your cars will own you for a long time

(⌐■_■) Trollnonymous

And if I had and ICE car then OPEC would own me forever.
WTF is your point? Is being owned by OPEC better?

David Green

Thats a rather dramatic statement. Maybe just a slight exaggeration?

(⌐■_■) Trollnonymous

Well technically, the ICE I had that was fully paid off for maybe 5years, I still had to send my money to OPEC to be able to use it.

As opposed to now with an EV, the money I would’ve spent on OPEC juice (I drove a crew cab pickup) is now being used to pay for my EV and my EV charging is free (free being relative where I paid for parking for at least 15 years then they added EVSE’s and don’t charge to use them) at work.

David Green

I pay a lot of money to Chevron every month, but a whole heck of a lot more to employees, but do not consider myself owned by either. Actually I pay the most to Uncle scam, but do not feel owned by him either. Its all just a cost of doing business.

pjwood1

Well, the pollution is free. Something to celebrate?

I’m having a hard time being impressed by Pruitt’s resignation, today, because the devil we knew was too busy being vein to have any effect.

CCIE

It’s unlikley that any of the oil used to make the gas in your car come from an OPEC country. The US supplies most of its own oil needs.

pjwood1

The US imports close to half its oil. We’re paragons of refining. It’s why the Kochs are upset about tariffs.

We could be energy independent if we relied on natural gas, and even pay our way into the future, if we use renewables.

MoMac

“The US imports close to half its oil.”

That depends on whether you are include noncrude petroleum liquids and refined petroleum products. It also depends on whether you are referring to net imports or just imports (excluding USA oil exports).

If you include noncrude petroleum liquids and refined products and are not referring to net imports than your statement is correct.

If you are referring to net imports, then it is only 19% of US total consumption of oil.

But of the imported oil, Canada accounts for 40% of oil imports in the US.

Oil imports from OPEC nations only account for about 15% to 16% of USA total oil consumption.

Scott G

Even if true, it is way too much.

CCIE

Exactly. An OPEC oil embargo today would not have nearly the impact it did in the 70s. Prices would go up, but there would not be lines to get gas.

Nix

It doesn’t matter where OPEC delivers their oil. The global oil trade is global. If they cut deliveries to Europe, then tankers headed to the US will go to Europe instead. The US will still see the same net impact.

An oil embargo that cuts supplies anywhere in the world will cause oil prices everywhere to go up.

CCIE

I agree to a point. But, since governments tend to interfere in free markets, the US would restrict oil exports and force domestic supplies to be used to satisfy local demand. Since we do have the capacity to supply 80-90% of our own demand, the impact of an OPEC embargo would not be 70s-style gas station lines.

Ziv

CCIE, I hear you, but we still get 13% of our oil from the Persian Gulf, 6% from Venezuela and a decent amount from Ecuador, so OPEC does supply a lot of our oil. More importantly, to a large extent oil is a fungible good, so our demand for oil here in the states drives up the prices that Putin and the House of Saud get for their oil sales elsewhere.

CCIE

I agree that buying oil helps prop up the overall market and supports many of our enemies. I just get tired of reading that every drop comes from OPEC.

In reality we’re mostly hurting US/Canadian workers & companies with every gas car that we take off the road. Don’t get me wrong, we need to get to an EV future, hopefully fueled by solar/wind/nuclear/natgas. But, we should be mindful of the reasons that we’re being opposed, if only to effectively counter that opposition.

MoMac

I wonder what country you live in. In the USA, only 15% to 16% of oil utilized comes from OPEC countries.

Pushmi-Pullyu

I think even less than that, now that fracking has caused an oil boom in the USA.

Unfortunately, it seems Big Oil’s prices are still controlled by the OPEC’s pricing, even if very little of what is refined in the USA comes from the Mideast these days. The petroleum market is both international and fungible, which means oil prices from the Mideast have nearly as great an impact here as there.

We haven’t stopped or slowed using the U.S. military to support those despotic oil-rich regimes in the Mideast that we buy oil from, either, despite the shift toward more domestic oil production. That’s probably because Big Oil realizes the fracking boom is strictly temporary, and in a few years we’ll be back to being just as dependent as ever on our oil supply lines from overseas.

Scott G

Exactly, which is why we need to reduce oil consumption any way we can.

Robert Weekley

Model Y should be a known factor by then, as compared better to the I-Pace, for one.

Texas Leaf

I’m estimating that Tesla is over the 200,000 sales mark by almost 7,000. There’s going to have to be a lot of pencil whipping to get all those cars to show up in the July column instead of June column. Any hint of impropriety and there is going to be half a dozen auto manufacturers lining up to sue Tesla and government.

Michael

What standing would they have to sue?

Texas Leaf

Documentation manipulated or falsified to achieve competitive advantage.

Pushmi-Pullyu

Are you suggesting that Tesla has falsified documents? Seriously? FUD much, dude?

The remaining question, the question explored in this article, is over the IRS’s arcane rules and how those will be applied, not whether Tesla has actually passed the 200,000 milestone of U.S. sales. That is now a settled point, and anyone who disputes that is simply in denial.

No auto maker has standing to sue Tesla over how the IRS chooses to apply its rules. They may be able to sue the IRS, successfully or not, but they can’t sue Tesla over this.

Will

Tried to test drive a Model S here Cleveland Ohio cause my partner wants a new car and likes the S and wants to trade his vehicle but there wasn’t a car available when there was alot of Model Ss on the lot so we left and he’s going to test drive another Explorer he wants. Why couldn’t they just let him drive one and get it over with instead of losing potential sale. Yes I understand the process but mainstream don’t know these things even at a bmw dealers we can test drive on the spot. And yes we had confirmation dating back to June but they lost it and hes are not going back since it’s 1hr 30 from home. I Might go back to test the 3. Looks to small and very close to the ground for me. Need to drive one tho

Michael

Which store are you talking about?

Will

Lyndhurst Ohio Cleveland store

Clive

You can set a test drive appointment and drive one no problem.

Will

I did do the appointment but they lost it plus you go to any dealer and they just let you test drive

Willy

Because ICE dealers have hundreds of unsold cars sitting on their lots, sure they will give you a test drive because they can make a sale today. Test drive at Tesla and you can’t buy for another year or so.

Will

They a couple Cars on their lots or CPO cars that could have let us test drive

Senna

*Rude, homophobic comment removed by author.*

Don’t be a jerk. Have respect. Steven is not afraid to ban you.

Will

Yes I’m gay but no one cared about it till you mentioned your homophonic remarks. I been on this site for the last several yrs 2to be exact and it bother no one when I mention my partner

Nix

+1

Scott G

Color me confused. Last time I was at a Tesla store, I was able to sign a paper with a copy of my drivers license and drive one of the ones on premise in about 10 min. I didn’t even have an appointment. What’s changed?

Will

I don’t know. He was making excuses that there was one fleet Model S for test drives and was getting ready for another test drive but I’m looking on the lot with other CPO I can drive

BroncoBet

Thanks for the work trying to untie this Gordian Knot,if the 200K was delayed, and everybody getting their vehicles before the end of the year, there is a problem on the other ends you pointed out, where you’d want your car to be registered and titled and count but that it might not qualify by bleeding into the next period. C’mon IRS and Tesla,get this sorted so buyers and investors have plenty of clarity, and the next car maker won’t have the ambiguity.

Yes. Some transparency would be nice.

Pushmi-Pullyu

And how!

Nix

Tesla can’t publicly tell everyone they will get the credit until the IRS confirms it, and the IRS works at a pace that makes the DMV look like speed demons. I wouldn’t get too much hopes up for transparency any time soon.

If Tesla were to start handing out incorrect data before they and the IRS are in agreement, people would be even more angry than the silence. Better for Tesla to stay silent than to hand out incorrect information. If Tesla’s lawyers are worth their wages, they have put a gag order on anyone in the company talking until the IRS and Tesla have worked out all the details.

Meanwhile the way the IRS looks at it, this is a problem they don’t need to address until the end of July at the very earliest, and more like October 1st. So they are in no hurry. In fact, they could really care less until Jan 2019, when they have to start processing 2018 tax returns….

Dan123

They crossed it in Q2. So I guess they will have very strong U.S. sales in September, when everyone will try to be trying to buy a Tesla to get the full credit. That should give them that positive cash flow that Musk promised.

GreenMD

I’m still hoping they make some changes to the current phase-out rules. It is going to penalize Tesla and GM for being technology leaders and reward late-adopters. BMW has stated that they are delaying their full line of BEVs until the battery cost comes down. By that same reasoning, their cars don’t need to be benefiting from the rebate. I hope they keep it longer for everyone, but if the phase-out starts, it should be across the board to keep the playing field level. As long as it’s my tax dollars, I’d rather it reward American companies for leading the way than hurt them on the back end and reward foreign companies for stalling.

Will

Nope. It’s the rules.

Pushmi-Pullyu

Yes, it would be wonderful if the U.S. Congress changed the law so that the leaders of the EV revolution are not punished while the laggards are rewarded.

Unfortunately, the only attempt to change things was the GOP’s attempt to eliminate the tax credit altogether, in the last budget bill. If the Democrats hadn’t negotiated that away, the tax credit would have been abruptly ended.

Sadly, asking for Congress to come up with a reasonable bipartisan change to the tax credit is asking the near-impossible in this era of extreme political tribalism. And it won’t happen without bipartisan support, because the hard-liners among the GOP are adamantly opposed to any tax credit for “green” tech.

Will

Exactly there’s no conservative Democrats or liberal republicans like Nelson Rockefeller. Crap Clinton was voted in as centrist Democrat. He had conservatives from both parties and some moderates republicans helping him

Will

Pruitt is out but won’t make a difference. Dictator Trump is still holds the card

Pushmi-Pullyu

He’s still only a wannabe dictator, thank goodness. (And thank the Founding Fathers for a strong Constitution!)

Will

But he could discard the constitution with his 5th justice as like all other rocky republics and declare emergency powers

Scott G

Seriously, please be real. We all know nothing like that is going to happen so why spew such crap.

CCIE

No one, including ultra conservative republicans, would tolerate that. A cornerstone of why the US government is different than almost every other government is the seamless transfer of power between presidents. We may hate the next guy, but we’re not going to tolerate the current guy trying to stay in power past 8 years.

jelloslug

Here is one data point on receiving a title from Tesla: when I bought my Model S in ’16, it was ~6 weeks before the paperwork arrived for me to file with my state for me to register it. By the wording shown in the article, I would not have taken possession of the car until then if that is the way that it actually works.

Some Guy
Has anyone considered the following case? Tesla registeres a Tesla themselves for use as a loaner or demo vehicle for test rides in the store, or as one of the service vehicles of late. Does Tesla get the EV-tax credit for that? Logically, I’d say not, because they have not sold the vehicle. It has been produced, though, because it is there, and is inventory. If they then sell the inventory car at a later point, the vehicle is no longer new, even if it just has a few miles on it, and the EV-tax does not apply for used vehicles, am I correct? This would be my explanation. German manufacturers do this all the time to inflate registration numbers, otherwise VW would not register one in five cars produced themselves, and apparently 13% of all new cars in Germany are registered for less than a month, before being deregistered forever.(“still gelegt”) BTW, given the multitude of negative comments on Tesla in virtually all car forums world wide that have surged to new hights since just last week, not only from the usually easy to spot downright lying commenters, Tesla bashers, or copy&paste commenters who have been trying to bring… Read more »

Interesting for sure. Another unanswered question.

Will

There’s have been homophobic remarks towards me. Haven’t been nasty can we please moderates on these aspects

David Green

That is a great thought I had not thought of…. Does Tesla title their loaner cars? Easy to see, do they have a permanent license plate?

Pushmi-Pullyu

“If they then sell the inventory car at a later point, the vehicle is no longer new, even if it just has a few miles on it, and the EV-tax does not apply for used vehicles, am I correct?”

Actually, no. “Slightly used” demo models and service loaners still qualify under law as being “new” cars when sold, altho Tesla sells them at a slight discount. I’m neither a lawyer nor an IRS agent, but common sense says that even if Tesla registers a service loaner, it still does not get reported to the IRS as a “sale”. Only cars which are actually sold retail — that is, to a customer — would count toward the 200,000 milestone of U.S. sales. Cars used internally by Tesla have not been sold on the retail market, and presumably the IRS would not count those even if registered.

Nix

Pushi is 100% correct. US laws are different than Germany. For better or worse, dealerships retain the MSO (Manufacturer Statement of Origin) and use dealer plates until a demo or loaner car is sold to a third party. Only then is the car registered for the first time. For the purposes of paying income taxes, the IRS doesn’t count it as income until the dealership actually gets paid by a third party.

To make it even more confusing, a car dealership can actually purchase a car for themselves and license it. At that point it isn’t considered a demo car or a loaner car, it is a used car owned by the company just like any other asset they could buy and own.

I’m not going to dive into what the IRS would do regarding the IRC 30D sunset, because that seems to be completely different than how the IRS would count the sale for income tax purposes.

CCIE

That would be unusual in the US. Dealer plates are used instead. If they titled/registered demo and loaner vehicles they would have to pay state sales tax on the purchase price in most states. And, most states won’t accept anything below bluebook vale as a valid sale price. So, $1 sales don’t work for sales tax purposes.

Alfred

Well Mr. Big Brother IRS man… take my pound of flesh and sleep well…

Alfred

In memoriam Joe Stack

Terawatt

Very thorough, great work guys! It will be interesting to know the answer to this one, but it is very understandable you can’t provide it yet with any reliability, and explaining it all is a great service to us readers, far far better than simply stating a speculative conclusion without much substantiation. 🙂

Thanks so much, Terawatt.

Bob

If a person buys a car and picks it up at the end of the year, don’t they claim the tax credit for that year regardless of DMV title transfer?

Pushmi-Pullyu

They claim the tax credit for the year in which the sale occurred, yes. But according to questions raised in this article, it’s possible the IRS may not grant the tax credit if the title transfer didn’t happen in the year the credit was claimed.

Very confusing!

Nix

Pushy is again correct. Anyone can claim anything they want in their taxes. It all comes down to what the IRS does to either accept or reject the credit. Now it happens to be that the IRS uses this form 8936 for the EV tax credit: https://www.irs.gov/pub/irs-pdf/f8936.pdf

That form only asks “Enter date vehicle was placed in service (MM/DD/YYY)”. No mention of when you actually got the title.

So now is where it gets crazy. The IRS, like every federal agency, decides for itself how to EXECUTE (executive branch) the laws passed by Congress. The IRS goes through rule making and then publishes the rules, and they can interpret the law. Some of those rules are made public in the form of instructions: https://www.irs.gov/pub/irs-pdf/i8936.pdf Other rules are published only in internal Tax Auditor guidelines. So even if the law doesn’t EXACTLY match the IRS rules, the IRS rules are what matters, unless/until the IRS is sued and their rule is overturned by a court.

Nix

So now is where it gets even crazier. The IRS will let you off the hook, even if the car maker and the IRS screw everything up. From the instructions I posted above:

“If you purchased a vehicle and its certification was
withdrawn on or after the date of purchase, you can rely
on such certification even if you had not placed the vehicle
in service or claimed the credit by the date the withdrawal
announcement was published by the IRS. The IRS will not
attempt to collect any understatement of tax liability
attributable to reliance on the certification as long as you
purchased the vehicle on or before the date the IRS
published the withdrawal announcement”

Pushmi-Pullyu

My head hurts. :-/

But actually, if I read that right (which is questionable), then the IRS is trying to do the right thing here*. It seems to be a regulation which allows granting the tax exemption even after it has technically expired, if the taxpayer had a reasonable belief that he or she did qualify for the exemption at the time of the sale.

*That is probably the first and last time I will say that in my entire life. 😉

Nix
Yes, you read that right! Actually, there is an underlying principle in US tax law that says that if you relied in good faith on IRS rules/regulations when you made a major financial decision, and through no fault of your own there is a change, you can’t be penalized by the IRS. You are allowed to argue that you should be able to file under the old rules/regs even though they have changed by the time you file your taxes. But let’s go crazy on this. The reg says date of purchase is when they let you off the hook. Would the IRS consider the day you signed Tesla’s “Motor Vehicle Purchase Agreement” as the date of purchase? Is it possible that JUST FINALIZING THE CONFIGURATION and agreeing to the Purchase Agreement may get you through this loophole and allow you to collect the incentive… I’m not saying this is how it would work. But the wording is very interesting and could be a potential argument. To use this you would have to finalize an order now before Tesla or the IRS says anything public, and then take delivery in Oct or Jan or later (depending on the timeline).
Nix

Now that we have a firm date, it is a good time to circle back to this clause.

IF you have already signed a Purchase Order for a Tesla prior to today, and you relied upon the existing certification for full credit, things get interesting. Would the Purchase Order alone trigger this clause if for some reason you didn’t take delivery and put the car in service until 2019?

I haven’t actually heard the IRS officially withdraw Tesla’s certification for the full $7,500 tax credit. So far only Tesla has said anything. Does this clause continue to apply until the “date the withdrawal
announcement was published by the IRS”?

Even with getting the answer to when Tesla’s full incentive will start to sunset to half incentive, there are still oddball loopholes out there unanswered.

2xTesla

Seems awfully strange that Tesla hasn’t stated that they have not crossed the mark in Q2 even though so many are asking.

Pushmi-Pullyu

But Tesla has crossed the mark. That’s now quite clear.

What’s not clear is how the IRS will rule on the matter, due to issues raised in this article. If Tesla’s legal department has come to the same conclusion — that the matter is unclear and it’s up to the IRS to clarify the situation — then no wonder Tesla is keeping quiet on the question!

Of course we can’t be sure that’s why Tesla hasn’t made an official comment, but that’s certainly a reasonable conclusion from the evidence presented to us.

2xTesla

You’re contradicting yourself there. It’s not clear. A reasonable conclusion is not a clear answer. Tesla has not crossed 200,000 if the IRS rules it has not, which is what we are waiting for.

Pushmi-Pullyu

Nope. Whether or not Tesla has crossed the milestone of 200,000 cars sold is a matter of simple mathematics. It’s a matter of fact, not IRS agency regulation or legal opinion. Unless InsideEVs’ count is wildly off, which I think extremely unlikely, then there is no reasonable question that the 200,000 milestone has been passed.

Contrariwise, the date when the U.S. Federal tax credit will be lowered from a maximum of $7500 to a maximum of $3750 is not a matter of simple math; it’s a question of how the IRS interprets and applies its own regulations. At least, that’s what this article claims, and I see no reason to doubt that’s true.

Nix

They need to get their ducks in a row with the IRS first. It would be crazy to give out information that might end up being 100% false.

Can you imagine the backlash if Tesla said today that people could get the credit through the end of the year, and then some time in August have the IRS say Tesla was wrong, and that the IRS was not going to allow buyers to get full tax credits?

2xTesla

Wouldn’t it make sense to tell people that at this point the IRS need to confirm the numbers but that they did their best to stay below the threshold?

Pushmi-Pullyu

You are assuming Tesla actually “did their best” to stay below the threshold. I don’t see any evidence for that at all.

In fact, nearly all the evidence I see points in the opposite direction. The evidence indicates rather strongly that Tesla tried as hard as it could to maximize the number of Model 3 cars made and sold in the U.S. during the quarter. Even building a temporary, partial new Model 3 assembly line in a tent!

Nix

No, the last thing you want to do is prejudice an IRS ruling before the IRS has made it. It is like poking a mother bear in her den with her cubs.

EaglesPDX

“…submit to the Service, in accordance with section 6 of this notice, a report of the number of qualified plug-in electric drive motor vehicles sold by the manufacturer (or, in the case of a foreign vehicle manufacturer, its domestic distributor) to consumers or retail dealers during the calendar quarter.”

Seems clear enough.

xcat

It’s my understanding that at the very minimum the full credit is available if taking delivery by Sept 30 (end of Q3). This assumes the worse case scenario of the 200k delivery by Q2.

So, for saps like me who have a Sep-Nov delivery estimate, I am praying for Sept to play it safe.

Scott G

My estimated delivery as well… Sep-Nov. Oh, the pressure 🙂

God/Bacardi

What did Toyota do when they hit the cap?

john1701a

The first round of tax-credits only went 9 months for Toyota, since their were far fewer (60k instead of 200k) and the purpose was to increase market penetration rather than introduce new tech.

This second round is quite different for players involved, but there’s more money and Toyota is still focusing on affordability.

CCIE

You mean focused on hydrogen fool cells?

Pushmi-Pullyu

They didn’t. Nobody has hit it yet. Tesla is or will be the first, followed by GM.

Remember, only U.S. “new” car retail sales count. For example, all those overseas sales of the Leaf don’t count.

CCIE

I think he meant the cap for the old HEV credit.

Pushmi-Pullyu

Thank you. Apologies for my ill-informed comment. 😳

Pushmi-Pullyu

LOL! 🙂 This is beginning to feel like a soap opera. Tune in tomorrow for the latest episode in “Death and Taxes are Sure, but an IRS Ruling Ain’t!”

Anyway, this may be a rare case where both sides in an impassioned debate turned out to be right. Perhaps Tesla did pass the 200,000 milestone in June, yet the IRS may rule that the full tax credit will remain in effect until the end of the year!

Will

I wish they can hold the 200k but if they pass oh well we will still get a Tesla 3 no matter how

Benz

The IRS have some kind of a system that is designed to collect all the concerning data in a certain logical way in order to enable them to keep an administration of all the concerning facts.

This system will provide the decisive information that will make it possible for the IRS to say when exactly (June/July) the 200,000 Milestone for Tesla had been reached.

That’s when the IRS will decide what actions they will have to take, and then they will communicate that accordingly.

This could take some time, by the way.

That’s just the way it is.

Let’s be patient, and just leave it there.

2xTesla

I think that you may be giving the IRS too much credit in creating a system. It would not seem consistent with the IRS in doing such a thing, especially given that they have
#1 a federal budget for ALL of their expenditures, and this would cost money
#2 the EV rebate program has been a fairly simple program where they didn’t anticipate at the beginning that any company would reach 200,000 for a very long time (kick the problem down the road).
#3 There are a very limited number of manufacturers that would realistically reach this number within 15 years.

The IRS operates by requiring reporting and with threats of fines and audits.

More likely the IRS would ask Tesla to provide all serial number within a given parameter. What that parameter is, goes back to what is asked in the article.

Nix

“they didn’t anticipate at the beginning that any company would reach 200,000 for a very long time”

Actually it was the exact opposite. We were supposed to cross the 1 million EV mark WAY earlier. The sunset is based on quarters instead of calendar years, because the 200K limit was going to be hit SO QUICKLY that it would be an unfair advantage to large car makers if they waited any longer than 2 quarters to start sun-setting out their cars. Smaller makers would have an advantage for such a short amount of time it would only help level the playing field so more EV’s from more car makers would have a chance to succeed.

The economy and housing prices were supposed to continue booming forever. Multiple 10X battery improvements were supposed to slash battery prices any day. Oil prices would keep skyrocketing past $100 a barrel making EV’s highly competitive even with higher price tags. EV’s were going to be the answer for all these booming households with growing wages high enough to qualify for the full $7,500 tax credit.

None of any of this came true.

Nix

+1 Benz. Anything other than patience is just going to lead to even more frustration than already exists.

Unfortunately, we the general public aren’t even allowed to know all the IRS’s internal rule making for auditors. We won’t know until we do know. And even then we will only know what they decide to tell us.

They do that throughout the tax code specifically to keep people from trying to game the system.

bro1999

Whoever drafted the credit language obviously never intended for it to last until someone actually hit the 200k limit.
Overhaul sorely needed.

2xTesla

An intern wrote it and someone signed off on it. Both long gone perhaps.

Nix

It was written primarily by US car makers and their lobbyists.

Jim Whitehead

Thanks for pointing out that title transfer has to occur, by statute. My title in Virginia, on a used Prius bought this year, took a month to transfer due to a paperwork delay by the DMV. So Tesla is probably comfortably under the 200,000 mark by at least 2K cars, just due to title delays alone. The other factor is resale. Over 100 people flipped their Model 3s and by the language above, they don’t count.

MoMac

Regarding the IRS IRC 30D Plug-In electric sales number only showing 3 different manufacturers: an old autoblog article (from 2014) mentions that they reached out to both GM and Tesla to try to understand why the IRS doesn’t show these companies’ qualified plug-in sales numbers. They both told Autoblog that they report quarterly EV sales numbers to the IRS.

From the autoblog article:

“”Kevin Kelly, manager of electrification technology communications for General Motors, tells AutoblogGreen, “GM has been providing our sales numbers to the IRS since launch of our products.” Tesla spokesperson Liz Jarvis-Shean informs AutoblogGreen, “We’re compliant with reporting our quarterly US sales to the IRS and submit this information to the IRS shortly after each quarter’s close.””

Autoblog also reached out to the IRS, and the only interesting point in the IRS response was “To be listed on IRS.gov, the manufacturer must also provide the IRS with a disclosure waiver.”

I assume that the reason that only 3 manufactures qualifying sales are on the IRS plug-in sales tracking webpage, is that only those companies signed the disclosure waiver.

Interesting. Good find!

Nix

*facepalm* I can’t believe I didn’t think of that!! In retrospect is seems so obvious. Every shred of tax info everyone and every company hands the IRS for compliance is considered private and the IRS can’t release an ounce of it publicly without a disclosure waiver or a court order. Now it makes complete sense.

Nice find!

Benz

@ Nix

“Now it makes complete sense.”

Then please enlighten us.

What is your conclusion?

Explain it to us all please.

Nix

The reason why there are only 3 car maker’s sales totals on the IRS official website for the IRC 30D is now what makes perfect sense:

https://www.irs.gov/businesses/irc-30d-plug-in-electric-drive-motor-vehicle-credit-quarterly-sales

I had been burning brain cells trying to figure out why the IRS would list only these 3 companies. Now it is completely clear that the reason was that all information from taxpayers is private by default, and only companies approving the release to the public with a privacy waiver will show up on that page.

The entire rest of this doesn’t fully make sense to me. Just that one part. There are still way too many unanswered questions in my mind.

Loren McDonald

Yes, I reached out to the IRS last week and discivered the waiver issue, wrote about it on CleanTechnica yesterday – https://cleantechnica.com/2018/07/12/tesla-passed-200000-us-electric-car-deliveries-in-july-gm-will-pass-this-year-exclusive/

Andrei

I think this was a mistake from Tesla, with a little bit of planning they would have help more then 50k of their clients. This is big!

Jack

So they passed last month and now playin with the numbers to make it look like it was this mont. This will not have a happy ending

Brian

…. For short sellers.

Nix

No. you clearly haven’t read the article, especially the second half. Even cars sold in the last half of last month likely were not counted for the 200K limit until the titles were issued by state agencies this month.

Bolt driver

If that is the case, how is the irs going to treat delivery for the credit? Will it be when you get the car or when you get the title? Could make for some unhappy people at the end of the year.

Wouldn’t it be nice if everything was clear and transparent? We’ve been working for weeks to get it sorted, but no one is willing to give us any information. Now we’re getting flack for trying to figure it out and speculating and providing people with the language. Who knows for sure?

Benz

“According to the automaker’s website, the full $7,500 credit will be available to those who take delivery on or before December 31, 2018.”

That’s great news.

We assume that both the IRS and Tesla are on the same page on this matter.

Vexar

And they just played the game harder in Ontario, Canada before the anti-EV incentive government there took over this month and eliminated it. Heck of a smart move. Upset about how this portrays conservatism.

ffbj

Just as expected and predicted.

PHEVfan

Except by the deniers, who were numerous here on IEVs. 😉

(⌐■_■) Trollnonymous

I wonder if they gave the 200,000th customer anything?
Maybe a free dual charger and HPWC?
😛

that would’ve been a good PR stunt.

Loren McDonald

The IRS cannot reveal publicly the number of EVs sold without the manufacturer signing the waiver of rule 6103 … only BMW, Ford and Mercedes-Benz have signed the waiver.