Not that I care cause I never planned on selling soon nor does anyone really know - but how do we think Tesla cutting prices to 15-20% impacts us from a depreciation standpoint?

 

I just read you can get a Tesla model 3 performance now for $53.9k before the tax incentive. Yeah that doesn't bode well for everyone else. There's no denying Tesla is a poorly manufactured POS, but no other car can match the performance dollar-per-dollar. Dang...

 

 

That partially explains how they leapfrogged BMW on sales this year.

Depreciation does seem to have ramped up on my IS 350. I was able to break even on a sale or trade until recently. But, that's also because the car market is (slowly) stabilizing as chip shortage issues get resolved and demand has gone down.

 

yep although Tesla is ranked 17th in consumer reports and Tesla had 19 recalls in 2022 - the price is damn good. Tax incentive is a little weird, it’s not a rebate it just lets you write off 7500 of your income in next years tax write off to get a better bracket according to my understanding. But still this is going to cause a general decline in car depreciation IMO across all cars. Long RUN curious to see - I had a friend who bought an 2012 isf for 29k with 80k miles in 2021 (before the car price hikes).

I still wouldn’t buy one as my only car but apart of me thinks maybe is 500s will start selling for below MSRP in 2023 and 2024. **** happens - I don’t care but I kind of do at the same time.

 

You're incorrect, the $7500 is a tax credit. You get $7500 in your pocket.

https://www.irs.gov/credits-deductio...-2023-or-after

 

Just my .02 I believe Tesla rapidly increased their prices in line with demand during all of 2021 and into 2022. Several mid-year adjustments on a build to order vehicle is so different than every other major manufacturer with annual adjustments to MSRP that doesn’t offer direct to consumer sales. I think as demand has waned, competition has increased, and supply bottlenecks are starting to loosen the downward shift in prices is expected for the Tesla brand. Those in the EV market now have many options from nearly every brand, Toyota to Hyundai to BMW, Ford, GM…

TLDR I don’t see Tesla price cuts having a direct impact on pricing of major manufacturers.

As for depreciation on the IS 500 specifically, again, just my biased opinion but this is clearly a cult car built for a niche customer. The private party resale value will almost always exceed that of NADA / KBB or dealer valuations. The Toyota and Lexus brand remain at the top of the podium for value retention which helps as well.

 

Gotcha thanks - I do stand corrected.

 

Just at a glance, looks like they removed the manufacturer restrictions for 2023. I believe 2022 and before, manufacturers with high volume sales (ie. Tesla) were ineligible for the full credit, which also pushed people to look at competitor vehicles that qualified.

 

As I researched it more I think we were both right and wrong. There's a tax deduction, tax rebate, and tax credit. You were speaking of a tax deduction, and I was speaking of a tax rebate. A credit, on the other hand, appears to be a credit on your owed income taxes only when you file. So if you've set up your withholdings so that you owe money at the end of the year, a tax credit works in your favor. You'd get up to $7500 until your amount owed hits $0. However, if you've set up your withholdings so that you get a refund at the end of the year, you get nothing from this tax credit. This is extremely tricky, and if I'm correct, seems completely unfair. Why should people be penalized (i.e. not receive the credit) simply for paying the government in taxes all year as they're supposed to? More proof this country is going down the drain...

I would appreciate someone else with more financial literacy to correct me if I'm wrong. Thanks lol.

 

I think that’s how I understand it as well after doing research all I know is that it’s not as clear cut as 7500 in your pocket.

 

Tax credit is dollar for dollar. $1,000 credit = $1,000 saved in taxes. There are both refundable and non-refundable credits. The EV credit is as you described, benefit cannot exceed a $0 liability and will not be refunded to you. If maximizing non-refundable credit, it would be beneficial to review your tax position well before year-end to avoid leaving any money on the table.

Tax deduction lowers taxable income, and the savings is based on your tax bracket. Example $1,000 deduction, and 10% bracket, is a $100 tax savings (equivalent of a $100 credit).

 

^Ohhh am I conflating a tax bill with tax owed at the end of the year?

For example: You owe $7500 in federal tax for the year. However, you owe $0 when filing because you already paid that $7500 throughout the year via additional withholding or estimated taxes. But since the total tax bill was $7500, you'll get a $7500 refund check.

Is this right?

 

Let’s say you owe $7,500 in federal taxes based on your adjusted income. And in your example, you had perfectly matched this and had $7,500 withheld from payroll or other estimated payments. You’ll owe $0 when you file because you made those payments throughout the year in some form or another.

Generally, any refund pertaining to credits are based on type. A non-refundable credit, such as the EV one being discussed, will give you no additional benefit and is basically lost in the above example. A refundable credit, such as a child tax credit, would be paid to you regardless of any remaining tax liability (final tax bill) in the form of a tax refund.

To take full advantage of any non-refundable credit, you would want to take steps to estimate your taxes early on, and adjust as needed. This may be as simple as reducing your payroll witholding. But it can get very complicated, due to income caps and other unique factors. Basically, consult a tax professional before doing anything with large credits to maximize the benefit or avoid misinterpreting eligibility and owing as a result.

I hope this is helpful or that I’m somewhat accurate, someone please stop me if not!

 

At a glance, this appears to be a good resource on the topic.

https://www.npr.org/2023/01/07/11472...-volkswagen-ev