Should I wait to Order MYLR? Tax Credit?

[ZenRockGarden]

researching the tax credit today and it appears there is a requirement that the battery components are sourced in the USA. Teslas is sourced from China. Apparently most EVs won’t qualify due this requirement.

Yeah, Tesla sources batteries from several places, depending on model and which factory we're discussing.

The domestic-content aspect of the new EV tax credit law is a mess, and it's totally unclear if any maker will qualify at all in 2023 - they're not even set up to prove which battery cells came from what supplier which used which batch of minerals to go into what car's pack.

Regulators might go "soft" and give makers with good intentions a first year pass, or they might be strict and just insist that if every box can't be checked, there is no tax break. I somewhat suspect the later given the usual mentality of regulators.

 

[LLWS]

I was just looking at a few local car dealers and what’s on the lot. They unquestionably have cars to sell and interestingly they have a lot of Tesla inventory.

Here’s a large Chevy dealer with 40 Teslas:
Koon’s Chevrolet

Here’s a large VW dealer with 16 Teslas:
Lindsay VW

It takes too many bets to win and get something perhaps less expensive in January. You have to win the used car market, interest rate, application of the tax code (which might only result in $3,750 savings), and avoiding a price increase. If you lose even one of those bets it could be less expensive to order an MYP now. Honestly, I see all these nice folks in line on MYLR orders with depreciating cars in hand. It seems like they could easily switch to a P and get their order quickly. I don’t know the math behind why they don’t do the switch, unless 7 seat config is a mandate for the family. But, I suspect in the end they’re losing the war of depreciation on their existing cars as time marches on.

 

[acpd]

For me, I don't have trade-in.
I agree, it might make sense to buy now if you do have trade-in. But you still run the small risk of IRS coming out with guidance on tax credit before you take delivery. Your trade-in may not be worth same and you miss out on Tax Credit.

 

[voxel]

For me, I don't have trade-in.
I agree, it might make sense to buy now if you do have trade-in. But you still run the small risk of IRS coming out with guidance on tax credit before you take delivery. Your trade-in may not be worth same and you miss out on Tax Credit.

If you qualify for the tax credit and it matters to you… wait a few months before ordering.

Your assumption that demand is slowing is why delivery times are shorter is not correct. Austin is cranking out Ys according to my inside source. There will be downward pressure on used Tesla prices because there will be more supply now. In general the used car market is softening so buy what you want and keep it for 5-10 years. And again, if the tax credit is that important… wait OR put in an order for a Blazer EV or ID.4.

 

[240vPlug]

If you qualify for the tax credit and it matters to you… wait a few months before ordering.

Your assumption that demand is slowing is why delivery times are shorter is not correct. Austin is cranking out Ys according to my inside source. There will be downward pressure on used Tesla prices because there will be more supply now. In general the used car market is softening so buy what you want and keep it for 5-10 years. And again, if the tax credit is that important… wait OR put in an order for a Blazer EV or ID.4.

Great advice here! On shorter delivery times I think its a combo of things. As you point out Austin is rolling vehicles off its line, but you have a softening used car market, higher interest rates, and folks holding out to see what’s happening with the tax credit. The last two are probably slowing demand at least a little for Tesla.

Overall though I still think Tesla is a good investment. Does anyone think gas prices will stay where they are after the election? FSD is becoming better each month so I still think buying a Tesla is a great choice . You just aren’t going to be able to flip them for 10k above MSRP like you could in June and July.

 

[acpd]

Great advice here! On shorter delivery times I think its a combo of things. As you point out Austin is rolling vehicles off its line, but you have a softening used car market, higher interest rates, and folks holding out to see what’s happening with the tax credit. The last two are probably slowing demand at least a little for Tesla.

Overall though I still think Tesla is a good investment. Does anyone think gas prices will stay where they are after the election? FSD is becoming better each month so I still think buying a Tesla is a great choice . You just aren’t going to be able to flip them for 10k above MSRP like you could in June and July.

Don't see how 6 months of wait was gone in the last 2 months. Whatever the reason, demand is soft.
Based on this, Tesla is making more cars in the last 2 months than new orders.

 

[Whitehawk]

I ordered a Model Y last March after the start of the Ukrainian war as a hedge against fuel shortages. I cancelled The order several weeks ago because my fuel concerns have abated and I think we’re headed into a recession. With MY production rapidly ramping, supply will soon exceed demand and prices will decline and/or range will increase. For the current price of the model Y I could instead drive a true luxury SUV like the BMW X5 45e plug in that won’t be range constrained, provide electric propulsion in town, and will be far more comfortable on road trips. I previously had a model 3 and liked it…but the build quality was far less than stellar…a problem that continues with the MY. The next 12 months will be very interesting….

 

[voxel]

I ordered a Model Y last March after the start of the Ukrainian war as a hedge against fuel shortages. I cancelled The order several weeks ago because my fuel concerns have abated and I think we’re headed into a recession. With MY production rapidly ramping, supply will soon exceed demand and prices will decline and/or range will increase. For the current price of the model Y I could instead drive a true luxury SUV like the BMW X5 45e plug in that won’t be range constrained, provide electric propulsion in town, and will be far more comfortable on road trips. I previously had a model 3 and liked it…but the build quality was far less than stellar…a problem that continues with the MY. The next 12 months will be very interesting….

The X5 PHEV is a good choice but I think build/wait times are 6-8 months at least. The EV range is a tad low compared to the RAV4 Prime and I have doubts about the longevity of a BMW hybrid powertrain but it’s a luxury SUv and resale value is usually not a concern.

 

[acpd]

Looks like Tesla is already working on getting additional battery manufacturing to US, so that more of Teslas will qualify for Tax Credits.

https://twitter.com/x/status/1570111584130961408

 

[voxel]

Don't see how 6 months of wait was gone in the last 2 months. Whatever the reason, demand is soft.
Based on this, Tesla is making more cars in the last 2 months than new orders.

Austin is producing at least 1000+ Ys a week which is basically a third of Fremont’s Y production and more cars than Ioniq 5/EV6/Mach-E are sold in the US in year.

52K+ EVs in a year is basically an entire yearly production run. Heck Toyota was only going to build 6500 Solterras and 7K bz4xs for the US for all of the 2023 model run. BMW is building something like 250-500 i4 M50s a month for the entire world.

 

[pepperoni]

If I were in your shoes, I would wait until at least October. When I bought earlier this year, Tesla wasn’t forcing deliveries that were less than 90 days old, but would cancel your order if you delayed and were outside that window. You don’t want to get caught up in a December delivery rush if there is a tax incentive on the horizon Jan 1. No guarantees yet on the tax incentive, but it would be a shame to miss it by a few weeks.

 

[tangible1]

Great advice here! On shorter delivery times I think its a combo of things. As you point out Austin is rolling vehicles off its line, but you have a softening used car market, higher interest rates, and folks holding out to see what’s happening with the tax credit. The last two are probably slowing demand at least a little for Tesla.

Overall though I still think Tesla is a good investment. Does anyone think gas prices will stay where they are after the election? FSD is becoming better each month so I still think buying a Tesla is a great choice . You just aren’t going to be able to flip them for 10k above MSRP like you could in June and July.

cars are not an investment.

 

[tangible1]

I ordered a Model Y last March after the start of the Ukrainian war as a hedge against fuel shortages. I cancelled The order several weeks ago because my fuel concerns have abated and I think we’re headed into a recession. With MY production rapidly ramping, supply will soon exceed demand and prices will decline and/or range will increase. For the current price of the model Y I could instead drive a true luxury SUV like the BMW X5 45e plug in that won’t be range constrained, provide electric propulsion in town, and will be far more comfortable on road trips. I previously had a model 3 and liked it…but the build quality was far less than stellar…a problem that continues with the MY. The next 12 months will be very interesting….

Build quality of the MY is currently quite good.
You'd be hard pressed to find anyone to credibly present any issues with quality.
Even here on the TMC blog, complaints aren't even a trickle, while 18 months ago they were endemic.

Demand will remain high for quite some time.
Supply cannot keep up with the demand stoked by high fuel prices, inflation, govt tax credits, and climate anxiety.
Private passenger car sales exceed 10M units/yr even during recessions, and Tesla can only build 1.5M cars this year for the North American market.
Further, all the other EV mfrs combined won't deliver that many for the NA market.
Prices continue to reflect that.

Prices will abate, but no time soon.

 

[240vPlug]

cars are not an investment.

I disagree cars are certainly an investment. I think what you mean is cars are not an investment the produce a monetary return. The return from a car is through its use/utility. Not all investments produce a monetary return.

 

[AndrewZ]

If demand itself hasn't been hit by the quantitative tightening, interest rate hikes, and wealth destruction that has ensued since November, then we're not even close to done with the tightening.

New car prices were +0.8% MoM in the latest CPI report, +10.1% YoY. New cars haven't seen a single MoM decrease yet, and even used car prices have barely budged according to the CPI numbers.

Insane dealer markups, Tesla's equally-insane price increases (Model Y LR was briefly $48,990 at the start of 2021), we haven't restored price stability until these things unwind -- don't fight the Fed.

 

[voip-ninja]

I disagree cars are certainly an investment. I think what you mean is cars are not an investment the produce a monetary return. The return from a car is through its use/utility. Not all investments produce a monetary return.

A vehicle is a depreciating asset. The only time something that is going to depreciate over time would be considered an investment is if the economic output it generates exceeds its cost.... i.e., building new roads that can be shown to stimulate enough economic activity/tolls/taxes/etc. to offset their depreciation.

This will never happen with a vehicle, with the exception being investing in something like a collector car that will be garaged and is expected to continue going up in value over time, like buying a piece of artwork.

 

[acpd]

If demand itself hasn't been hit by the quantitative tightening, interest rate hikes, and wealth destruction that has ensued since November, then we're not even close to done with the tightening.

New car prices were +0.8% MoM in the latest CPI report, +10.1% YoY. New cars haven't seen a single MoM decrease yet, and even used car prices have barely budged according to the CPI numbers.

Insane dealer markups, Tesla's equally-insane price increases (Model Y LR was briefly $48,990 at the start of 2021), we haven't restored price stability until these things unwind -- don't fight the Fed.

Agreed! Plus Stock Market is down. CD rates are rising. Cash is king right now. Even Musk said, they could lower prices. At the minimum, prices would stay same.

 

[tangible1]

I disagree cars are certainly an investment. I think what you mean is cars are not an investment the produce a monetary return. The return from a car is through its use/utility. Not all investments produce a monetary return.

cars are a depreciating asset, with the minor and highly variable exception of collector cars

 

[240vPlug]

A vehicle is a depreciating asset. The only time something that is going to depreciate over time would be considered an investment is if the economic output it generates exceeds its cost.... i.e., building new roads that can be shown to stimulate enough economic activity/tolls/taxes/etc. to offset their depreciation.

This will never happen with a vehicle, with the exception being investing in something like a collector car that will be garaged and is expected to continue going up in value over time, like buying a piece of artwork.

View attachment 852759

I have always interpreted investment to also include the use of the property. In other words the investment is not always about monetary gain or income growth. Using the definition above I’ll agree a car is not typically an investment. Except of course the first half of this year

 

[tangible1]

I have always interpreted investment to also include the use of the property. In other words the investment is not always about monetary gain or income growth. Using the definition above I’ll agree a car is not typically an investment. Except of course the first half of this year

I think the best that can be said of a car, is that it's a tool.