No tax credit for Rivian (effective April 18, 2023)

[shumdit]

The reason Rivian is nolonger on the list is because it has zero cars currently available for reservation that start at under $80,000.
Your reservation for an R1S or R1T, if it is under $80,000 will still qualify for the credit.

why do you say that? They have the dual motor small pack you can technically get for $73K (yes I know it’s not technically available yet but neither is the new Silverado EV, Blazer or Equinox yet they are listed on the updated list of qualifying vehicles)

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[DuoRivians]

The reason Rivian is nolonger on the list is because it has zero cars currently available for reservation that start at under $80,000.
Your reservation for an R1S or R1T, if it is under $80,000 will still qualify for the credit.

I don’t believe this is the reason. The reason is the battery source requirement

 

[DuoRivians]

Rivian should:

1. Create a lease option
2. Allow lessees to purchase vehicle after lease.

This would get around this stupid tax credit issue

 

[lefkonj]

BPA is Binding Purchase Agreement. If you signed one of these you have an obligation to purchase. The agreement just stated "An R1 vehicle" so switching models doesn't affect your obligation.

This is not accurate. The BPA given to pre-order holders only meant you lost $100 of the $1000 deposit, that made it binding. You could still back out, you would just lose the $100. This was enough to cover the EV tax credit for me.

Rivian qualifies under the dual motor variant but only if the buyer is under the income thresholds.

 

[Shaq9.7R1S]

Directly from the Fuel Economy.gov

Note: Some qualified manufacturers have yet to submit information on eligible vehicles that meet the requirements for vehicles placed in service on or after April 18, 2023. Please check back for updated information.

 

[DuoRivians]

This is not accurate. The BPA given to pre-order holders only meant you lost $100 of the $1000 deposit, that made it binding. You could still back out, you would just lose the $100. This was enough to cover the EV tax credit for me.

Rivian qualifies under the dual motor variant but only if the buyer is under the income thresholds.

I don’t a new reservation right now qualifies, even for the dual motor variant, assuming income requirements met. The crux is the battery source issue, not msrp

 

[RivianDeac]

Probably already answered (I did read thru most of the thread).

My wife reserved an R1S about 17 months ago. We did the PBA thing in early August. Picked one off the shop. Its now on a train somewhere, ETA 2 weeks. The 8 steps are done and paid the balance (pending trade in). I insured it just for good measure. I have a VIN.

2022 tax return is done.

Should I (or even can I ) amend the 2022 return before tomorrow, just to be safe, since I own it. Or wait to file after delivery?

Thx!

 

[Tahoe Man]

Yeah, and the income limit.

I'm amazed how many people on this board buy such expensive cars and make such little money.

It's income based, not net worth.

 

[tomis916]

Probably already answered (I did read thru most of the thread).

My wife reserved an R1S about 17 months ago. We did the PBA thing in early August. Picked one off the shop. Its now on a train somewhere, ETA 2 weeks. The 8 steps are done and paid the balance (pending trade in). I insured it just for good measure. I have a VIN.

2022 tax return is done.

Should I (or even can I ) amend the 2022 return before tomorrow, just to be safe, since I own it. Or wait to file after delivery?

Thx!

When you say your 2022 tax return is "done", I assume that means filed. Don't worry about doing anything tomorrow. It sounds like you qualify for the credit. You just need to file an amended return for 2022 within the next 3 years. I wouldn't file the amended return until you actually take delivery - just in case it falls through for some unforeseen reason.

 

[Yossarian]

As of 18 April, the battery is now the primary determinant of tax credit applicability.

I previously thought that the the two tests needed to qualify for the $7,500 tax credit were 1) manufacture/assembly of the vehicle in North America and 2) battery sourcing from listed trade partners and/or manufacture/assembly of the battery in North America. To get the full amount of the credit, vehicles needed to pass both tests, but my understanding was that passing one of the tests would qualify the vehicle for 50% of the credit. For vehicles delivered beginning today at least, that interpretation is considerably off the mark.

The newly released IRS guidance retains the requirement to "Undergo final assembly in North America" but as of 18 April, applies a two-factor test for tax credit qualification effectively only to the the vehicle's battery. From the IRS website:
For vehicles placed in service April 18, 2023 and after:
Vehicles will have to meet all of the same criteria listed above, plus meet new critical mineral and battery component requirements for a credit up to:

• $3,750 if the vehicle meets the critical minerals requirement only
• $3,750 if the vehicle meets the battery components requirement only
• $7,500 if the vehicle meets both

A vehicle that doesn't meet either requirement will not be eligible for a credit. (emphasis added)
This explains why even though the Rivian is built in the US, it no longer qualifies for any of the EV tax credit.

It also appears that as of 18 April, the IRS has modified its interpretation of the applicability of pre-IRA purchase agreements with respect to the vehicle in-service date. The language on the website seems now to define the in-service date as the date of vehicle delivery only, no longer recognizing the date of the purchase agreement as the in-service date. Again from the IRS website:
Credit Amount
The amount of the credit depends on when you placed the vehicle in service (took delivery), regardless of purchase date.

 

[Hillbilly]

As of 18 April, the battery is now the primary determinant of tax credit applicability.

I previously thought that the the two tests needed to qualify for the $7,500 tax credit were 1) manufacture/assembly of the vehicle in North America and 2) battery sourcing from listed trade partners and/or manufacture/assembly of the battery in North America. To get the full amount of the credit, vehicles needed to pass both tests, but my understanding was that passing one of the tests would qualify the vehicle for 50% of the credit. For vehicles delivered beginning today at least, that interpretation is considerably off the mark.

The newly released IRS guidance retains the requirement to "Undergo final assembly in North America" but as of 18 April, applies a two-factor test for tax credit qualification effectively only to the the vehicle's battery. From the IRS website:
For vehicles placed in service April 18, 2023 and after:
Vehicles will have to meet all of the same criteria listed above, plus meet new critical mineral and battery component requirements for a credit up to:

• $3,750 if the vehicle meets the critical minerals requirement only
• $3,750 if the vehicle meets the battery components requirement only
• $7,500 if the vehicle meets both

A vehicle that doesn't meet either requirement will not be eligible for a credit. (emphasis added)
This explains why even though the Rivian is built in the US, it no longer qualifies for any of the EV tax credit.

It also appears that as of 18 April, the IRS has modified its interpretation of the applicability of pre-IRA purchase agreements with respect to the vehicle in-service date. The language on the website seems now to define the in-service date as the date of vehicle delivery only, no longer recognizing the date of the purchase agreement as the in-service date. Again from the IRS website:
Credit Amount
The amount of the credit depends on when you placed the vehicle in service (took delivery), regardless of purchase date.

I've seen where Rivian has declined to comment on a few articles confirming they're not on the list of eligible vehicles. They should address this promptly. Those of us holding out on new R1T orders for the dual motor option (with silver paint) to be at a price under $80k might go ahead and elect to configure a quad motor and large pack in order to get a vehicle more quickly depending on what the actual issue is with Rivian and how long, if ever, it may take them to requalify for the credit.

 

[Autolycus]

As of 18 April, the battery is now the primary determinant of tax credit applicability.

I previously thought that the the two tests needed to qualify for the $7,500 tax credit were 1) manufacture/assembly of the vehicle in North America and 2) battery sourcing from listed trade partners and/or manufacture/assembly of the battery in North America. To get the full amount of the credit, vehicles needed to pass both tests, but my understanding was that passing one of the tests would qualify the vehicle for 50% of the credit. For vehicles delivered beginning today at least, that interpretation is considerably off the mark.

The newly released IRS guidance retains the requirement to "Undergo final assembly in North America" but as of 18 April, applies a two-factor test for tax credit qualification effectively only to the the vehicle's battery. From the IRS website:
For vehicles placed in service April 18, 2023 and after:
Vehicles will have to meet all of the same criteria listed above, plus meet new critical mineral and battery component requirements for a credit up to:

• $3,750 if the vehicle meets the critical minerals requirement only
• $3,750 if the vehicle meets the battery components requirement only
• $7,500 if the vehicle meets both

A vehicle that doesn't meet either requirement will not be eligible for a credit. (emphasis added)
This explains why even though the Rivian is built in the US, it no longer qualifies for any of the EV tax credit.

It also appears that as of 18 April, the IRS has modified its interpretation of the applicability of pre-IRA purchase agreements with respect to the vehicle in-service date. The language on the website seems now to define the in-service date as the date of vehicle delivery only, no longer recognizing the date of the purchase agreement as the in-service date. Again from the IRS website:
Credit Amount
The amount of the credit depends on when you placed the vehicle in service (took delivery), regardless of purchase date.

Yes, that's correct, there are several threshold questions to qualify for ANY credit and then two specific requirements that get you $3750 each. That is the way the IRA itself was written. No credit at all unless:

1) Final assembly of vehicle in North America,
2) Income under thresholds (e.g. $300k for married filing jointly), AND
3) MSRP of vehicle <$55k for cars or <$80k for vans, trucks, and SUVs

If you meet ALL of those, you then move to the following for 2023 (%s increase yearly):

a) 40% of the value of the battery's critical minerals must be mined or processed in the US or a free trade partner (or recycled in the US), OR
b) 50% of the value of the battery components must be manufactured or assembled in North America

Each of (a) and (b) gets you $3750. Meet 1, you get $3750. Meet both, you get $7500.

 

[Kidentist]

Wow.......interesting times. I wonder if this is not one of the final "nails" on Rivian's coffin? I hope not, as I still think of the dual motor R1T as a candidate for my next vehicle.
When I looked at the " car options" for tax credit on Fueleconomy.gov website, none really stand out, so I would be buying this car based solely on looks and performance. If more folks feel the same way, then Rivian will be ok.

 

[Attesan997]

Folks using that loophole tread a fine line between tax avoidance (legal) and tax evasion (illegal).

It strikes me as being very similar to the rules for taking the credit when it comes to resale. It is legal to buy a Rivian and get the tax credit, and then decide afterwards to resell it. But you cannot buy a Rivian with the intention to resell it and still claim the tax credit. That would violate the tax law.

I haven't dug into this fully, but my initial impression would be that it would be perfectly fine to lease a car and get the credit, and then later decide to buyout the lease. But going into the lease with the intention of buying it out immediately just to get a tax credit that you wouldn't otherwise be entitled to through doing a straight purchase is a bit of a red flag. The IRS could determine that you essentially made a straight purchase and deny the credit and apply interest and penalties.

Ideally if Rivian were to do it, it works like Hyundai has been doing since Feb 2023, as an instant $7500 rebate you get at the time of lease signing. Hyundai must go back to the gov't and get the credit but as lessee all that's required is to buy out said lease and you're in the clear with no further tax shenanigans. In my partners case it ended up being a wash as between Hyundai financial and state incentives the net rebate was only around $2000. Probably should've have still used the loop hole but was in a bit of a time crunch to get everything done and had already planned to purchase.

 

[Yossarian]

Wow.......interesting times. I wonder if this is not one of the final "nails" on Rivian's coffin? I hope not, as I still think of the dual motor R1T as a candidate for my next vehicle.
When I looked at the " car options" for tax credit on Fueleconomy.gov website, none really stand out, so I would be buying this car based solely on looks and performance. If more folks feel the same way, then Rivian will be ok.

I suspect that the tax credit issue effects only a relatively small number of potential Rivian purchasers, and its lack of applicability will not have a great negative impact on the company's overall sales. What I suspect will have an impact however is an economic downturn, something that is real possibility in the coming months. A recession would surely depress Rivian sales, both its consumer vehicles and the commercial EDVs. If the downturn is prolonged, I think it will seriously impact the company's ability to continue as a going concern.

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