Welcome to the New World of EV Tax Rebates

A Price Drop Trend? An All-new Dodge

Author

David Goldberg
August 18, 2022

Greetings. 

Along with declining temperatures (at least in some parts of the country) and falling gas prices is a drop in used car retails. Is it the start of the trend? A cloudy crystal ball makes the future unpredictable.  

We also summarize how the world of EV tax rebates has changed (for better or worse) in a matter of days. There’s also a new Dodge on the horizon that gives the storied brand a competitive entry into a hot market segment.

Let's dive in.

Market At A Glance

  • Used car prices continue to decline

CarGurus

Check out the latest CarGurus used car index. In a nutshell, numbers continue to head south, but you can breathe easy as it’s still a modest decline (down by just $38). But, this movement marks the second consecutive week of a drop. When was the last time you analyzed the used cars in inventory?

Breaking Headlines

New Vehicle Inventory Report

A Cox Automotive report shows a supply of 1.09 million unsold new cars in the U.S. at the end of July. This works out to 37 days of supply. At this time last year, the supply stood at 1.07 million units or 29 days of supply. 

“This marks the first time in 2022 that the new-vehicle supply has been higher compared with the same week last year. But this is not due to a big jump in inventory recently, but rather an indication of how bad it was last year,” said Cox senior economist Charlie Chesbrough.

Given high gas prices, it’s no surprise that inventory was in the worst shape for smaller, more fuel-efficient models. On the contrary, there’s ready availability of full-sized SUVs, pickups, and passenger cars (with supplies in the 50-60 days range). 

As gas prices continue to drop from record levels, it’s worth keeping an eye on how new car inventories may change.

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EV Tax Credit Turmoil

With the passage of the Inflation Reduction Act, the federal government’s approach to tax credits for electric vehicles has radically changed. In case you’ve been on vacation or been busy with back-to-school adventures, here’s a very brief summary:

  • The 200,000-unit EV production cap has been eliminated in favor of a ten-year period open to all automakers (with other conditions, see below). Future buyers of qualifying Tesla and GM vehicles can again claim a $7,500 tax credit as of January 1, 2023.

  • BEVs and plug-in hybrids qualify for the $7,500 credit (with some big ifs)

  • The tax credit can be claimed as a rebate at the time of purchase, knocking a nice chunk of change off the MSRP. 

  • Income limits now apply for EV purchasers, with the rebate being available to individual buyers having a modified adjusted gross income below $150,000 ($225,000 for head of household, $300,000 for joint return filers). 

  • There’s also a price cap for qualifying vehicles: $55,000 for passenger cars and $80,000 for light-duty trucks, SUVs, and vans.

  • For the first time, a rebate is available for used EVs when purchased through a dealer. Buyers can receive up to 30% of the selling price or $4,000, whichever is less.

  • Most significantly, and this is where the major qualifiers and ifs come in, the new law mandates that EVs and PHEVs must be assembled in North America. This pulls the tax credit rug out from under several models manufactured overseas. The IRS just issued a list of qualifying vehicles, with some notable absences (like Toyota, Hyundai, and Kia). This roster represents about 30% of the more than 70 EVs currently for sale in the U.S.

  • Further complicating the vehicle qualification process is the stipulation that a percentage of key battery components must be sourced from the U.S. or allied nations. It’s a formula that starts at 40% by 2024 and rises to 80% in 2027. By 2029, the entire battery must be built in North America.

The Buzz on the Dodge Hornet

As we’ve mentioned before, we’ll leave the in-depth car reviews for other outlets. But, some upcoming vehicles are worth paying attention to. Among them is the Dodge Hornet, a model name borrowed from defunct AMC (and Stellantis-owned intellectual property). Unless you follow enthusiast publications or sell Dodges, you might be unaware of this compact crossover that will reach showrooms at the end of the year. 

The Hornet is a rebadged Alfa Romeo Tonale (both will be built in Italy), but Dodge is taking its own approach. Here’s what makes the Hornet stand out in a crowded segment.

  • It’s the first all-new Dodge since the 2013 Dart (Dodge dealers are undoubtedly doing a happy dance)

  • The base Hornet GT is priced under $30,000 and comes with a turbo four-cylinder making 265 horsepower and 295 lb-ft of torque. Stellantis is already forming its marketing around a “most powerful utility vehicle under $30,000” message. Other standard equipment includes a 12.3-inch touchscreen and a bevy of ADAS equipment.

  • A pricer Hornet R/T promises increased performance and a standard plug-in hybrid setup with 30 miles of gasless operation. 

Stellantis/Dodge

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