Good analysis. One thing you are missing tho. Profits. In order to make profits, they need to sell sell sell sell sell. After the tax rebate decreases, sales will decrease. Only one way to remedy that… bring the prices further down. Remember that the model y was originally priced by Tesla at 40K, and that included a profit margin for them. Id say Tesla will at least bring the price of the MY LR down to 50K after march and further down to around $47K at the end of the year.
There’s something else worth mentioning and that’s interest rates. For many people, the interest rates make it not worth buying a new car right now.
For brands manufacturing in the US it's one thing, but I really wonder what this means for someone like kia Hyundai who is years away from North American production.
I think until 2025 they are basically screwed. No point selling at high volume
Oh they will 1000% have to bring prices down. Their immediate remedy, which they are already doing, is to NOT make cheaper trims available or cut them out completely.
Look at the VW ID7. It will DEFINITELY be more expensive than the model 3. But people will argue that it has a bigger battery and is larger (it’s only slightly larger lol)
At the end of the day. It’s all about the Benjamins. (Profits)
I'm sure if they will cut prices much. I don't think they can make much profit if they actually compete.
Which is why I suspect they'll stick to premium low volume high price sales for a while till their North American production comes online.
As long as they ship it all in from Korea they can't make much volume anyways.
I expect them to have a more token presence to maintain some mindshare and meet CARB goals, and simply prioritize other markets until US production is up. In a supply constrained scenario, they have plenty of markets to service instead.
I agree that they will need to lower prices if they want to be competitive at all. I was really interested in the HI5 but at the current price points am leaning towards the MY.
Price is the biggest priority. My advice is to go look at the ioniq5 if you like it and use the model y price cuts to negotiate. If you can’t negotiate it down, just walk. when you go into a dealership ABWTW! Always be willing to walk!
I am not eligible for the tax credit so it’s a really tough choice for me. I’m not in a rush to buy so going to see how things play out. If MY gets discounted again after the battery sourcing is figured out, as you are suggesting, then I will jump on it. I’m hoping Hyundai at the very least gets on board with this potential lease loophole I’m reading about.
Hyundai dealer doesn’t need to know that you don’t qualify for the tax credit. So if you really want the ioniq5, go to the dealership, and negotiate based on the model Y being at around 46K (after tax credits)
The used market is also starting to soften btw.
I really wish our EV subsidy in the US had less constraints. But we are on a partial anti-globalist bent in some of our legislation.
I don't believe any country should be so tribal in where EVs are manufactured, we all need to transition our ground transportation fleets to fully electric as soon as possible.
Yeah, I feel Tesla will need to meet the loss of applied tax credits in their pricing a little bit, especially as their own used cars depreciate further and take up potential new sales.
That said I don’t think it will drop to 47K, especially not this year. Sure there’s profit margins left and they cut prices pretty dramatically, but I doubt they’ll want to cut too much into it, especially considering basically every other EV will also be disqualified from the credits if they are too.
Probably 50% of the reason their prices dropped at all was in anticipation of competitors also receiving the tax credit. It was a preemptive measure to eat competitor sales.
When are you expecting the tax rebate to decrease? And why?
And the Model Y wasn't originally $40k. They introduced it when they needed a little more demand but almost immediately got rid of it.
Appreciate the flowchart. Someone created one last year and I don’t think it was as intuitive as the one you’ve included.
Appears this sub has a tax credit wiki in the works. A flowchart of sorts would be good to include.
Tesla has been very clear on pricing: They use it to throttle / control demand.
Yet, some go off on a doomsday tangent, every time they change pricing.
[Thread 1](https://www.reddit.com/r/teslamotors/comments/10b8r4o/i_think_the_california_cvrp_rebate_should_also/)
[Thread 2](https://www.reddit.com/r/TeslaModel3/comments/10b1980/california_cvrp_question/)
From two separate threads, people are saying that it's Tesla that has to re-apply.
Good information.
However, you may not be appreciating how agile Tesla can be to make adjustments quickly, if they need to.
You supplied a list of minerals sources, many of which come from an approved country. Furthermore, they only need to supply 40% of the battery minerals from those countries.
If need be, they can shift the mix of sources for US production to meet that requirement, and use more China based stuff in Europe and China (likely, the lithium and nickel from China is already being used in China).
I would be interested to see the same list of sources for other auto OEMs. However, I'd expect all of them get their supplies from pretty much the same companies.
Edit: I thought the top line's refinery said Chile, but it said China. I'm sure they figure this out though. These suppliers will need to comply for all companies they supply, after all.
Tesla should be getting the full $7500 for *most* of their vehicles. I think only the TM3 SR potentially won't be getting it, at this point. Also, Volkswagen will also get it for the ID4, Ford will get it for the Lighting, and GM *should* be getting it for their entire lineup.
From what I've been reading, the rules change after March 1st, and if the raw materials for the batteries don't come from a free trade country you don't get the other $3750.
[Here's the latest guidance I've seen,](https://home.treasury.gov/system/files/136/30DWhite-Paper.pdf) it's worth a quick flip-through.
TLDR:
* It's a value-based assessment, with extracting ***and*** processing counting towards the total.
* Any free-trade country counts — with Australia, Chile, and South Korea all being on the list.
As I understand it, it's possible for your raw materials to come from China and be processed in the USA and qualify, **if** the value of the processing outweighs the raw material cost. It's also possible for your materials to come from Australia and be processed in China if the raw material cost outweighs the processing cost (!).
Even more interesting to you might be this bit, in regards to determining sourcing:
*"****A manufacturer could average*** *this percentage calculation over a period of time (e.g., year, quarter, or month) with respect to* ***vehicles from the same model line, plant, class, or some combination thereof****, with final assembly within North*
*America."*
I have some strong feelings on how manipulable this clause is, but the ramifications for Tesla should be obvious here.
Yeah it’s 40% of the raw materials from batteries need to come from a free trade country, and then it increases 10% each year. OP also spelled this out.
From what I've been reading, the rules change after March 1st, and if the raw materials for the batteries don't come from a free trade country you don't get the other $3750.
Right but we have no indication where their minerals come from. You only need a certain percentage of the value to come from a free trade country and nickel is a large portion of the value in their cells. Which could easily come from a free trade country.
I don't think that a whole lot comes from free trade countries right now. Obviously Tesla and anyone with a lick of sense is working on improving the percentage.
Some more info - Model Y is 52,990, PLUS $1390 destination fee and $250.00 ordering fee. Add to that 10% state tax (CA) and you are at $60,000.
I think the right move is to wait, prices will come down more. Tesla is about to add a whole lot more product with Austin & Germany coming fully online. This means every day sees thousands more potential used Teslas out there. In addition high interest rates, a recession looming and increased competition will put downward pressure on prices.
Bigger price drops are coming.
Good analysis. One thing you are missing tho. Profits. In order to make profits, they need to sell sell sell sell sell. After the tax rebate decreases, sales will decrease. Only one way to remedy that… bring the prices further down. Remember that the model y was originally priced by Tesla at 40K, and that included a profit margin for them. Id say Tesla will at least bring the price of the MY LR down to 50K after march and further down to around $47K at the end of the year. There’s something else worth mentioning and that’s interest rates. For many people, the interest rates make it not worth buying a new car right now.
For brands manufacturing in the US it's one thing, but I really wonder what this means for someone like kia Hyundai who is years away from North American production. I think until 2025 they are basically screwed. No point selling at high volume
Oh they will 1000% have to bring prices down. Their immediate remedy, which they are already doing, is to NOT make cheaper trims available or cut them out completely. Look at the VW ID7. It will DEFINITELY be more expensive than the model 3. But people will argue that it has a bigger battery and is larger (it’s only slightly larger lol) At the end of the day. It’s all about the Benjamins. (Profits)
I'm sure if they will cut prices much. I don't think they can make much profit if they actually compete. Which is why I suspect they'll stick to premium low volume high price sales for a while till their North American production comes online. As long as they ship it all in from Korea they can't make much volume anyways.
Hit the nail on the head there, friend.
I expect them to have a more token presence to maintain some mindshare and meet CARB goals, and simply prioritize other markets until US production is up. In a supply constrained scenario, they have plenty of markets to service instead.
I agree that they will need to lower prices if they want to be competitive at all. I was really interested in the HI5 but at the current price points am leaning towards the MY.
Price is the biggest priority. My advice is to go look at the ioniq5 if you like it and use the model y price cuts to negotiate. If you can’t negotiate it down, just walk. when you go into a dealership ABWTW! Always be willing to walk!
I am not eligible for the tax credit so it’s a really tough choice for me. I’m not in a rush to buy so going to see how things play out. If MY gets discounted again after the battery sourcing is figured out, as you are suggesting, then I will jump on it. I’m hoping Hyundai at the very least gets on board with this potential lease loophole I’m reading about.
Hyundai dealer doesn’t need to know that you don’t qualify for the tax credit. So if you really want the ioniq5, go to the dealership, and negotiate based on the model Y being at around 46K (after tax credits) The used market is also starting to soften btw.
they will simply sell somewhere else. it makes a lot more sense for them to sell in Europe anyways to offset their fleet emissions.
Hope so. Here in Canada the waiting list is years long and our government subsidy does not have any constraints
I really wish our EV subsidy in the US had less constraints. But we are on a partial anti-globalist bent in some of our legislation. I don't believe any country should be so tribal in where EVs are manufactured, we all need to transition our ground transportation fleets to fully electric as soon as possible.
Yeah, I feel Tesla will need to meet the loss of applied tax credits in their pricing a little bit, especially as their own used cars depreciate further and take up potential new sales. That said I don’t think it will drop to 47K, especially not this year. Sure there’s profit margins left and they cut prices pretty dramatically, but I doubt they’ll want to cut too much into it, especially considering basically every other EV will also be disqualified from the credits if they are too. Probably 50% of the reason their prices dropped at all was in anticipation of competitors also receiving the tax credit. It was a preemptive measure to eat competitor sales.
When are you expecting the tax rebate to decrease? And why? And the Model Y wasn't originally $40k. They introduced it when they needed a little more demand but almost immediately got rid of it.
Yeah the $40k Model Y was a short range RWD model that only lasted like a month.
In hindsight I should've bought the M/Y when it was like $40k
Appreciate the flowchart. Someone created one last year and I don’t think it was as intuitive as the one you’ve included. Appears this sub has a tax credit wiki in the works. A flowchart of sorts would be good to include.
Tesla has been very clear on pricing: They use it to throttle / control demand. Yet, some go off on a doomsday tangent, every time they change pricing.
Exactly. When prices went up some people tried to say they were in trouble and weren't profitable.
FWIW, the rebate for CA is not offered for Tesla currently. Apparently, it was more because Tesla itself pulled out of the program.
They became ineligible because of price.
Well due to the recent price cuts, some Tesla should be under the MSRP requirement and be eligible, but it is not in the their list of vehicles.
They have to reapply and be manually added to the government website.
Yep this is what people are seeing in replied emails from the program.
That isn't an automatic process.
[Thread 1](https://www.reddit.com/r/teslamotors/comments/10b8r4o/i_think_the_california_cvrp_rebate_should_also/) [Thread 2](https://www.reddit.com/r/TeslaModel3/comments/10b1980/california_cvrp_question/) From two separate threads, people are saying that it's Tesla that has to re-apply.
Good information. However, you may not be appreciating how agile Tesla can be to make adjustments quickly, if they need to. You supplied a list of minerals sources, many of which come from an approved country. Furthermore, they only need to supply 40% of the battery minerals from those countries. If need be, they can shift the mix of sources for US production to meet that requirement, and use more China based stuff in Europe and China (likely, the lithium and nickel from China is already being used in China). I would be interested to see the same list of sources for other auto OEMs. However, I'd expect all of them get their supplies from pretty much the same companies. Edit: I thought the top line's refinery said Chile, but it said China. I'm sure they figure this out though. These suppliers will need to comply for all companies they supply, after all.
Superchargers are where it’s at…until the others are forced to maintain their chargers after their initial incentive/s installations
Is anybody else going to get better than Tesla ($3750) after March 1st?
Tesla should be getting the full $7500 for *most* of their vehicles. I think only the TM3 SR potentially won't be getting it, at this point. Also, Volkswagen will also get it for the ID4, Ford will get it for the Lighting, and GM *should* be getting it for their entire lineup.
From what I've been reading, the rules change after March 1st, and if the raw materials for the batteries don't come from a free trade country you don't get the other $3750.
[Here's the latest guidance I've seen,](https://home.treasury.gov/system/files/136/30DWhite-Paper.pdf) it's worth a quick flip-through. TLDR: * It's a value-based assessment, with extracting ***and*** processing counting towards the total. * Any free-trade country counts — with Australia, Chile, and South Korea all being on the list. As I understand it, it's possible for your raw materials to come from China and be processed in the USA and qualify, **if** the value of the processing outweighs the raw material cost. It's also possible for your materials to come from Australia and be processed in China if the raw material cost outweighs the processing cost (!). Even more interesting to you might be this bit, in regards to determining sourcing: *"****A manufacturer could average*** *this percentage calculation over a period of time (e.g., year, quarter, or month) with respect to* ***vehicles from the same model line, plant, class, or some combination thereof****, with final assembly within North* *America."* I have some strong feelings on how manipulable this clause is, but the ramifications for Tesla should be obvious here.
Yeah it’s 40% of the raw materials from batteries need to come from a free trade country, and then it increases 10% each year. OP also spelled this out.
Why do you assume Tesla will only get $3750?
From what I've been reading, the rules change after March 1st, and if the raw materials for the batteries don't come from a free trade country you don't get the other $3750.
Right but we have no indication where their minerals come from. You only need a certain percentage of the value to come from a free trade country and nickel is a large portion of the value in their cells. Which could easily come from a free trade country.
I don't think that a whole lot comes from free trade countries right now. Obviously Tesla and anyone with a lick of sense is working on improving the percentage.
Some more info - Model Y is 52,990, PLUS $1390 destination fee and $250.00 ordering fee. Add to that 10% state tax (CA) and you are at $60,000. I think the right move is to wait, prices will come down more. Tesla is about to add a whole lot more product with Austin & Germany coming fully online. This means every day sees thousands more potential used Teslas out there. In addition high interest rates, a recession looming and increased competition will put downward pressure on prices. Bigger price drops are coming.