Tax Credit

[Dublin ‘Eer]

Assuming the federal EV tax credit remains unchanged, do the Amazon deliveries count against the 200,000 that are eligible for the credit? Just curious because is Amazon can claim those credits, there will be less for private buyers.

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[SANZC02]

Assuming the federal EV tax credit remains unchanged, do the Amazon deliveries count against the 200,000 that are eligible for the credit? Just curious because is Amazon can claim those credits, there will be less for private buyers.

I would say they do, commercial vehicles are not excluded and it is by manufacturer not model.

 

[astonius]

Yep. Pretty genius move on Amazon’s part, honestly. Sucks for the rest of us, but respect the hustle.

 

[Autolycus]

Amazon will receive 100k through 2025. They’ll probably sell more R1s than that by the end of 2024. They’re still saying they’ll get through more than 70k R1 preorders by the end of 2023, with 15k of those coming in 2022. They’ll hit the 200k trigger at some point in 2024, which means the taper will run well into 2025. I’m sure they’ll try to play the game of holding some deliveries if they can extend the credit an extra quarter.

 

[Gamma rays]

I would say they do, commercial vehicles are not excluded and it is by manufacturer not model.

What's the cut off for exhausting the tax credit? I am hoping all consumer preorders will qualify.

GR

 

[CommodoreAmiga]

What's the cut off for exhausting the tax credit? I am hoping all consumer preorders will qualify.

200,000 units.

Even with 100k EDVs delivered to Amazon, all existing reservations would fit within the current limit.

Obviously that won't be true at some point, for future reservations/orders... But for now you should be safe -- unless the law changes, of course.

 

[NorthernOak]

What's the cut off for exhausting the tax credit?

Started to type a reply but then found a better source that explains the process. Posted the relevant text below.

The federal tax credit is phased out over time beginning the second quarter AFTER the quarter in which a manufacturer reaches a total of 200,000 BEV or PHEV vehicles sold since 2010. Here is how the phase out works:

• The full amount of the EV qualifying tax credit is in place DURING the entire calendar quarter in which 200,000 EVs are sold by a manufacturer, AND through the subsequent quarter.
• Then the tax credit amount is reduced by 50% for the next 2 quarters.
• The credit is reduced again to 25% of the original amount for the subsequent 2 quarters.
• At that point the credit expires completely.

source

 

[Gamma rays]

200,000 units.

Even with 100k EDVs delivered to Amazon, all existing reservations would fit within the current limit.

Obviously that won't be true at some point, for future reservations/orders... But for now you should be safe -- unless the law changes, of course.

I guess the Amazon contract is a double-edged sword. It obviously provides somewhat steady revenue for Rivian (not to mention the initial investment from Amazon plus other benefits I am not aware of), but some future customers may turn to other manufacturers who have comparable vehicles that can still offer the tax credit, which would put Rivian at a slight disadvantage.

GR

 

[astonius]

Admittedly this is my laziness asking, but does the law specify if it’s 200k unit sales for a given manufacturer or 200k claimed tax credits against a particular manufacturer? Amazon would be crazy not to take the credits, but hypothetically if they didn’t take the credit on their vans would that potentially free up 100k credits for consumer purchases?

 

[CommodoreAmiga]

I guess the Amazon contract is a double-edged sword. It obviously provides somewhat steady revenue for Rivian (not to mention the initial investment from Amazon plus other benefits I am not aware of), but some future customers may turn to other manufacturers who have comparable vehicles that can still offer the tax credit, which would put Rivian at a slight disadvantage.

What other manufacturers?

GM and Tesla have already exhausted their EV credits.

Ford still qualifies... But that won't last long. I bet Rivian keeps their eligibility longer.

 

[CommodoreAmiga]

Admittedly this is my laziness asking, but does the law specify if it’s 200k unit sales for a given manufacturer or 200k claimed tax credits against a particular manufacturer? Amazon would be crazy not to take the credits, but hypothetically if they didn’t take the credit on their vans would that potentially free up 100k credits for consumer purchases?

200k sold; not necessarily credits claimed, afaik.

 

[Bobthebuilder352]

Admittedly this is my laziness asking, but does the law specify if it’s 200k unit sales for a given manufacturer or 200k claimed tax credits against a particular manufacturer? Amazon would be crazy not to take the credits, but hypothetically if they didn’t take the credit on their vans would that potentially free up 100k credits for consumer purchases?

Amazon will take every penny of credits and also 179

 

[Gamma rays]

What other manufacturers?

GM and Tesla have already exhausted their EV credits.

Ford still qualifies... But that won't last long. I bet Rivian keeps their eligibility longer.

This would be down the road. Maybe BMW (SUV). Perhaps a Japanese manufacturer would finally roll out a BEV at some point?

GR

 

[astonius]

Amazon will take every penny of credits and also 179

Not saying they wouldn’t, just positing the hypothetical. If it did make a difference I could see them not taking it for a couple of reasons. First, the credits aren’t refundable, and Amazon’s tax burden is already low to zero. Secondly, it could be a PR win to say “we’re foregoing claiming the tax credits to pass on the savings to consumers in the name of sustainability.”

Anyway, seems this is moot according to the credit being based on raw sales vs claimed credits. In that case there’s no benefit to not taking the credits.

 

[Gamma rays]

Not saying they wouldn’t, just positing the hypothetical. If it did make a difference I could see them not taking it for a couple of reasons. First, the credits aren’t refundable, and Amazon’s tax burden is already low to zero. Secondly, it could be a PR win to say “we’re foregoing claiming the tax credits to pass on the savings to consumers in the name of sustainability.”

Anyway, seems this is moot according to the credit being based on raw sales vs claimed credits. In that case there’s no benefit to not taking the credits.

I am sure Amazon's army of accountants had this all figured out before the order was placed and contract signed.

GR

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