EV tax credit rule adjustment provides short-term win, but long-term warning

"It now allows car buyers to lock up an agreement to buy a vehicle instead of having to take delivery before the deadline of September 30. This has tremendous advantages for both consumers and companies. For consumers, they are no longer rushed to take delivery of a car that might not be their exact pick just to qualify for the tax credit."

"Instead, they can build the car they want, make a marginal down payment on it, and still take delivery, even after September 30, and still get the $7,500 off. For carmakers, they are no longer restricted by production capacity or supply bottlenecks, and can get a vehicle to a buyer after the deadline instead of delivering bad news. The consumer just needs to commit monetarily first."

"However, there are broader implications of the credit's new rules, which could be viewed as an "extension," although, fundamentally, the credit could mask the true issue that many EV makers will face: generally speaking, electric cars are still too expensive. Everyone is expecting EV makers' Q3 sales to be slightly higher than normal, as this is the final quarter when the $7,500 EV credit will be available. Buyers are rushing to take advantage of the credit before it expires."

The IRS rule adjustment permits car buyers to lock purchase agreements to qualify for the $7,500 EV tax credit without taking delivery before September 30. Buyers can build the exact vehicle they want, make a marginal down payment, and receive delivery after the deadline while retaining the credit. Automakers gain flexibility to fulfill orders past the deadline despite production or supply constraints. The adjustment is driving a rush of Q3 orders as buyers seek the credit, creating risk of a subsequent sales slump. The credit currently masks the core problem that many electric vehicles remain too expensive, risking abrupt sales declines when incentives end.

Read at TESLARATI