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Discussion Starter · #1 · (Edited)
First, see @Jezza’s post about political jabs and unnecessary negativity. This is not an invitation to thrash each other’s politics, I’m just trying to make sense of the language in this bill.

Inflation Reduction Act H.H.R. 5376 full text

My understanding is that this bill has gone to the Senate parliamentarian for review to determine if it can be passed via reconciliation (which would mean not subject to filibuster, and able to be passed with 50+1 VP votes).The vote is likely to take place next week and I read the House is ready to stay through August recess to take it up.

The part pertaining to electric vehicles starts on page 366 (search for the phrase clean vehicle credit).

I’m not particularly good at reading legislative-ese, but here’s what I see so far
  • Income thresholds for rebates eligibility: $300,000 for joint filers, $225,000 for single head of household, $150,000 for single filers.
  • Removal of the limitation on the number of vehicles eligible for rebates.
  • Vehicle MSRP limits of $80,000 for vans/SUVs/trucks, $55,000 for “other” (so sedans/hatchbacks)
  • Full credit total of $7500 depends on how much of the vehicle, its battery and “critical minerals” come from North America. The percentage of North American battery and mineral requirements are phased in over time (50% for sales prior to 2024, ramping up to 100% in 2028)
  • Credit on used EV (the lesser of $4000 of 30% of the sale price).
  • Credit would be refundable, meaning it would be given even if the individual did not owe that much in taxes.
  • Credit would be transferable, which (I believe means the dealer could get it and pass it along to the customer as an incentive at the point of sale, rather than having the customer apply for it on the tax return.)
 

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I've only had a chance to read others' interpretation of it, but it doesn't sound good for the XC40 Recharge? Since it essentially breaks the $7,500 into two $3,750 credits. One for being assembled in North America, and one for having battery components which were extracted or processed in North America. The XC40 is assembled in Belgium (for the US market) and I'm not sure on the battery, but I'd guess it's unlikely.
 

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Discussion Starter · #3 ·
I've only had a chance to read others' interpretation of it, but it doesn't sound good for the XC40 Recharge? Since it essentially breaks the $7,500 into two $3,750 credits. One for being assembled in North America, and one for having battery components which were extracted or processed in North America. The XC40 is assembled in Belgium (for the US market) and I'm not sure on the battery, but I'd guess it's unlikely.
That's my understanding as well. But Volvo is planning on building its "next generation of electrified Volvo cars" and the Polestar 3 at its South Carolina plant. I imagine this would be an incentive for sourcing battery components for those from North America as well.
 
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I've only had a chance to read others' interpretation of it, but it doesn't sound good for the XC40 Recharge? Since it essentially breaks the $7,500 into two $3,750 credits. One for being assembled in North America, and one for having battery components which were extracted or processed in North America. The XC40 is assembled in Belgium (for the US market) and I'm not sure on the battery, but I'd guess it's unlikely.
Yeah, I think this is going to torpedo Recharge sales in the US next year. Which ultimately will not be great for current owners, as the US market may receive less attention for service and support down the road.
 

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Yeah, there is basically nothing good in here for Recharge owners (or anyone thinking about buying one.) The only upside is that the current $7500 credit will still apply if you take delivery this year, or if you have a "written sales order" dated prior to this law being signed, even if you take delivery next year. I'm sure Volvo dealers are not happy right now.
 

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I wonder if we will see a bump in production/delivery to North America to get cars in before 12/31 (maybe taking from Europe production slots) and at the same time their plans for the SC plant get moved up/changed. Also with Volvo's continued aggressive push towards a full EV lineup, I'm sure they will figure it out sooner than later (plus I'm sure like every law, there will be loopholes).
 

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I've seen some people speculate that you need to take delivery before the bill is signed to get the $7500 credit under the previous rule, not just before the end of the year. Can anyone confirm/deny?
 

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Discussion Starter · #9 ·
I've seen some people speculate that you need to take delivery before the bill is signed to get the $7500 credit under the previous rule, not just before the end of the year. Can anyone confirm/deny?
Can’t say what a final version would say (assuming this passed) but they pretty clearly spelled out in this draft that this is not the case. You would need to be in a written binding agreement prior to the bill being signed into law. It’s there on page 386 starting on line 20.
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I've seen some people speculate that you need to take delivery before the bill is signed to get the $7500 credit under the previous rule, not just before the end of the year. Can anyone confirm/deny?
No. If you take delivery this year, you're still good. If you're taking delivery next year, you need to have a written sales order ASAP before the bill is isgned.
 

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No. If you take delivery this year, you're still good. If you're taking delivery next year, you need to have a written sales order ASAP before the bill is isgned.
Hmm, a Reddit user seems to interpret this differently. reddit.com/r/electricvehicles/comments/waflzy
So I think because Volvo is not NA based, unless you have a bill of sale signed before the bill is signed, you don't get the credit (even if you take delivery this year)

  • Additionally, there's a "transition rule" that covers you if you have a "written binding agreement" signed on or after January 1, 2022 but before the bill is enacted into law (e.g., no later than August 31, 2022, if the President signs it September 1). This provision allows you to take delivery after December 31 of this year (when the new rules, e.g., re: final assembly in North America would otherwise apply) and still apply the old (2022 and earlier) rules to get the credit. This is not retroactivity, but rather the opposite of it (grandfathering).
 

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Hmm, a Reddit user seems to interpret this differently. reddit.com/r/electricvehicles/comments/waflzy
So I think because Volvo is not NA based, unless you have a bill of sale signed before the bill is signed, you don't get the credit (even if you take delivery this year)
The bill wouldn't go into effect until 2023, so any deliveries in 2022 would be unaffected.
 

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The bill wouldn't go into effect until 2023, so any deliveries in 2022 would be unaffected.
Not so; any deliveries after the adoption of the bill (presumably when it's signed) are immediately subject to the North American manufacturing requirement, unless there's a binding written sales agreement in place beforehand. A refundable deposit probably doesn't count as binding, so if you have an order in now but it isn't delivered until after the bill is signed, it'll probably be ineligible for the credit.
 

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Not so; any deliveries after the adoption of the bill (presumably when it's signed) are immediately subject to the North American manufacturing requirement, unless there's a binding written sales agreement in place beforehand. A refundable deposit probably doesn't count as binding, so if you have an order in now but it isn't delivered until after the bill is signed, it'll probably be ineligible for the credit.
This is correct. I contacted the volvo dealership I have a deposit with and they are not allowed to sign a Purchase & Sale agreement until they have the car on the lot. Best we can hope for is the bill not getting signed until our cars are delivered.
 

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Not so; any deliveries after the adoption of the bill (presumably when it's signed) are immediately subject to the North American manufacturing requirement, unless there's a binding written sales agreement in place beforehand. A refundable deposit probably doesn't count as binding, so if you have an order in now but it isn't delivered until after the bill is signed, it'll probably be ineligible for the credit.
Gah, I think you're right. I finally looked at the text of the bill itself, and the "Final Assembly" requirements (i.e. made in North America) go into effect immediately upon enactment.
 

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Here's a list of cars that would/would not qualify under the 'new' 2023 tax credit. I originally had a deposit down for an XC40 that would be delivered in early 2023. Given the potential (and likelihood) of changes to the tax credit, I decided to switch my order to a C40 which will arrive in Nov/Dec this year. For me, the piece of mind and guarantee that I'll receive the credit was worth the switch.

There's also a lot of speculation going on right now on what qualifies as a 'written binding contract' -- the fact is that isn't finalized and thus the IRS hasn't defined what this means. It would be best to talk to your tax adviser/accountant once this goes through, which hopefully won't be too late to be grandfathered in.

Senate moves forward with EV tax credit reform; Tesla (TSLA) to be included back and more
 

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Here's a list of cars that would/would not qualify under the 'new' 2023 tax credit. I originally had a deposit down for an XC40 that would be delivered in early 2023. Given the potential (and likelihood) of changes to the tax credit, I decided to switch my order to a C40 which will arrive in Nov/Dec this year. For me, the piece of mind and guarantee that I'll receive the credit was worth the switch.

There's also a lot of speculation going on right now on what qualifies as a 'written binding contract' -- the fact is that isn't finalized and thus the IRS hasn't defined what this means. It would be best to talk to your tax adviser/accountant once this goes through, which hopefully won't be too late to be grandfathered in.

Senate moves forward with EV tax credit reform; Tesla (TSLA) to be included back and more
A November or December 2022 delivery date in no way guarantees it will be eligible for the current tax credit. The cutoff date is the signing of the bill. At that time, the new "Final Assembly" requirement immediately goes into effect, and foreign-built EVs will be ineligible.
 

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Our XC40 is being leased under my wife's name, I was hoping if I decided to but it after the lease was up, I would be eligible for the $4k credit for used EV's, unfortunately the lease buyout price is more than $25k which is the limit for the credit.

Oh well, still very happy with the car, and still might puchase it when the lease is up, depending on the resale value and the state of EV cars in the marketplace.
 

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A November or December 2022 delivery date in no way guarantees it will be eligible for the current tax credit. The cutoff date is the signing of the bill. At that time, the new "Final Assembly" requirement immediately goes into effect, and foreign-built EVs will be ineligible.
So frustrating, my XC40 is due within the next two weeks or so, both dealer and I have the VIN and they are making no effort to put anything in writing about a purchase agreement to get around this.
 

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So frustrating, my XC40 is due within the next two weeks or so, both dealer and I have the VIN and they are making no effort to put anything in writing about a purchase agreement to get around this.
You should be fine. The House isn't scheduled for voting until September 13th. Even if this bill gats through the Senate today, we should have a month before it can be enacted.
 
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