2023 Toyota Prius - WOW!

[Isaac Zachary]

Originally Posted by JSH

Most people don't do math when buying a car. They go into a dealer with a price per month in their head that they are willing to pay - and then let the dealer do the math. It is all about the monthly payment and on a PHEV (or EV) that payment doesn't include the discount for the tax credit. (I think we will see more of both EVs and PHEVs sold when the tax credit becomes a point-of-sale rebate in 2024)

The typical person can't tell you how much they spend on gas let alone tell you the cost per mile to fuel their car. Less than 1/3rd of households have a budget or track spending by category.

This is very true. Of course, if you're getting a $30,000 loan and paying $600 per month, a 30mpg vehicle @ 1250 miles per month @ $4 per gallon is only $167 per month, quite a bit less than the monthly payment.

But if you're more frugal and get a loan for under $10,000, then the fuel costs for even an average driver can start creeping up past the cost to finance the vehicle.

Of course that's starting from zero. Someone who sells or trades in a used car gets back part of what they invested into it, for an example.

Originally Posted by JSH

(I think we will see more of both EVs and PHEVs sold when the tax credit becomes a point-of-sale rebate in 2024)

Despite rumors, according to the IRS the tax credit will still be "non-refundable" even after it becomes point-of-sale. So you can't owe less than the tax credit at the end of the year to benefit from all of it. If you get the full credit applied at the point of sale but then owe less at the end of the year you'll have to pay that back. That throws pretty much all median wage or less earners out from being able to get the full credit or $7,500. A married couple filing jointly that makes $70,000 will owe around $4,900 if they don't have any other deductions. If they have kids that owed tax will be even less, so less of a credit can be applied without having to pay part of it back at the end of the year.

[redpoint5]

The whole tax subsidy is idiotic to the core. It's a feel-good political device for certain constituents at the expense of an efficient market.

[JSH]

Originally Posted by Isaac Zachary

Despite rumors, according to the IRS the tax credit will still be "non-refundable" even after it becomes point-of-sale. So you can't owe less than the tax credit at the end of the year to benefit from all of it. If you get the full credit applied at the point of sale but then owe less at the end of the year you'll have to pay that back. That throws pretty much all median wage or less earners out from being able to get the full credit or $7,500. A married couple filing jointly that makes $70,000 will owe around $4,900 if they don't have any other deductions. If they have kids that owed tax will be even less, so less of a credit can be applied without having to pay part of it back at the end of the year.

I'm not going by rumors - I actually read the bill.

In 2024, there will be the option to transfer the tax credit to the dealer. The dealer takes the credit not the buyer so it is no longer dependent on the financial situation of the buyer. This is the same way that leasing works today and under the old tax credit.

The difference between the old and new tax credit is that the law specifically states that if the buyer transfers the credit to the dealer the dealer MUST by law role the full value of the credit into the purchase agreement as a point of sale discount. Under the old law the company leasing the vehicle was under no obligation to roll in the tax credit - it was purely up to them. Most rolled in the full credit so they could advertise a low lease price but some did not and kept a portion or the entire tax credit for themselves as extra profit.

[JSH]

Originally Posted by redpoint5

The whole tax subsidy is idiotic to the core. It's a feel-good political device for certain constituents at the expense of an efficient market.

An efficient market requires that all costs be factored into the price of a good. Our current market place isn't anything close to an efficient market because the cost of pollution is not paid by the buyer or user of an automobile.

[Isaac Zachary]

Originally Posted by JSH

I'm not going by rumors - I actually read the bill.

In 2024, there will be the option to transfer the tax credit to the dealer. The dealer takes the credit not the buyer so it is no longer dependent on the financial situation of the buyer. This is the same way that leasing works today and under the old tax credit.

The difference between the old and new tax credit is that the law specifically states that if the buyer transfers the credit to the dealer the dealer MUST by law role the full value of the credit into the purchase agreement as a point of sale discount. Under the old law the company leasing the vehicle was under no obligation to roll in the tax credit - it was purely up to them. Most rolled in the full credit so they could advertise a low lease price but some did not and kept a portion or the entire tax credit for themselves as extra profit.

Which bill? as I cannot find anywhere where it says that.
Here it says

The credit is nonrefundable, so you can't get back more on the credit than you owe in taxes. You can't apply any excess credit to future tax years.

https://www.irs.gov/credits-deductio...hicle%20(FCV).

TBH, I don't think we have all the final info on how the IRS really intends to impliment this bill.

What I do see, by comparison, are other tax credits, such as health insurace tax credits under the Affordable Health Care Act. If you get health insurance and the government pays part of it, you can have that applied directly to your insurance provider, or you can just pay full price and then get the tax credit back at the end of the year. But the tax credit is dependant on how much you make. If you you have too much sent to the insurance provider as payment then you have to pay that back to the IRS at the end of the year.

[cRiPpLe_rOoStEr]

Originally Posted by redpoint5

The whole tax subsidy is idiotic to the core. It's a feel-good political device for certain constituents at the expense of an efficient market.

And it doesn't really seem to lead to an improvement to the average Joe, who even if could afford a new "eco" car would most likely go out of budget if a complex repair is needed, in contrast to how some shade-tree mechanic would solve any issue a small-block Chevy may have. Some folks seemingly don't remember an EV will also need some maintenance once in a while, and are not simply cheaper to dispose of and replacing with a new one like any other home appliance, and they tend to see cars basically as just another appliance.

[redpoint5]

Originally Posted by cRiPpLe_rOoStEr

And it doesn't really seem to lead to an improvement to the average Joe, who even if could afford a new "eco" car would most likely go out of budget if a complex repair is needed, in contrast to how some shade-tree mechanic would solve any issue a small-block Chevy may have. Some folks seemingly don't remember an EV will also need some maintenance once in a while, and are not simply cheaper to dispose of and replacing with a new one like any other home appliance, and they tend to see cars basically as just another appliance.

New car buyers don't make repairs. They purchase a new car in 3 to 5 years before they have to deal with issues.

I suspect EVs will be easier to maintain in every regard except battery degradation.

My expectation for any hybrid or electric car would be brake pads that last the lifetime of the vehicle, for example. I'd only need to grease the slide pins periodically.

[cRiPpLe_rOoStEr]

Originally Posted by redpoint5

My expectation for any hybrid or electric car would be brake pads that last the lifetime of the vehicle, for example. I'd only need to grease the slide pins periodically.

It will also need new tires and a suspension job once in a while, but when it comes to brakes I wouldn't really hold my breath for any component of this system to last the lifetime of the vehicle. Just look at how some trucks rely a lot on Jake-Brakes and other auxiliary brake retarders, which do improve the lifespan of normal brakes but not make them last the lifetime of the vehicle.

[redpoint5]

Originally Posted by cRiPpLe_rOoStEr

It will also need new tires and a suspension job once in a while, but when it comes to brakes I wouldn't really hold my breath for any component of this system to last the lifetime of the vehicle. Just look at how some trucks rely a lot on Jake-Brakes and other auxiliary brake retarders, which do improve the lifespan of normal brakes but not make them last the lifetime of the vehicle.

I've only ever had to replace a set of brakes once in my ownership of any vehicle. My estimate is based on that, and having owned the Prius 5 years. The pads are getting used to slow the last 5 MPH, or in an emergency when a deer runs out into the road.

Rust isn't an issue here, so it comes down to greasing the dry things. Brake fluid changes, too.

[cRiPpLe_rOoStEr]

See? That's why I often say hybrids and EVs may have a similar lifespan of the brakes as some heavy-duty trucks.