On New EV Tax Credits, Car Dealers ‘Don't Have the Answers'

First Up 01/17/23

On New EV Tax Credits, Car Dealers ‘Don't Have the Answers'

The U.S. Treasury Department's attempt last month to clear up confusion on the Inflation Reduction Act's revised $7,500 tax credit for new electric vehicles has instead stirred up more questions than answers. Adding to the confusion, Treasury missed its year-end deadline for issuing proposed guidance on the tax credit's critical mineral and battery component requirements. Instead, the department said it will issue the guidance in March, reports Automotive News.  Between now and at least March, some dealers have opted to take a more hands-off approach, explaining the credit's intricacies to the best of their knowledge but steering customers to federal government websites and tax professionals to determine credit eligibility. "Right now, it's good that it's not a point-of-sale credit," said Mike DeSilva, owner of Liberty Auto Group, which has three stores in New Jersey and sells vehicles from Genesis, Hyundai, Kia, and Subaru. "What we're telling any of our customers that are buying EVs that inquire about it is just to inquire with their own tax accountants ... because we can't issue guidance on whether or not they qualify for the credit," he said. "We just don't have the answers." Click here for the full story.

84-Month Auto Loans Gain in Popularity

Eighty-four-month auto loans have soared in popularity among new vehicles and more than doubled on used vehicles over the past five years, credit bureau data show. As of the third quarter of 2022, one-fifth of all new-vehicle borrowers and one-tenth of all used-vehicle borrowers were committing to seven years of debt on their vehicle, Experian said. In the third quarter of 2018, only 11 percent of new-vehicle borrowers and 4.1 percent of used-vehicle borrowers were on the hook for 84 months, reports Automotive News. Five years later, those proportions had grown to 1.8 percent for new vehicles and 0.9 percent for used models. "It's insane," Headquarter Hyundai Finance Director Jasmine Figueroa said when asked if her area had seen growth in 84-month loans. Figueroa, whose store is part of the Headquarter Automotive group, described 60 to 70 percent of auto loans carrying 84-month terms. "And it's just due to the fact that the customer is asking for it," Figueroa said Jan. 3. Consumers are requesting " 'the longest term possible' " as a means of lowering their monthly payment, she said. Click here for the full story.

Significant Risks Emerge for the EV Trade War

Will Ferrell’s appearance in the General Motors 2021 Super Bowl ad was at best foreshadowing. The actor’s comedic rage at being “out-EV’d” by Norway touched on a fact that was a source of pride for Europe.  Due to a lack of investment and governmental support, the U.S. has lagged behind China and Europe in electric vehicle sales. The European Union and countries like South Korea view the Biden Administration’s revamped EV tax credit requirements in the $369 billion Inflation Reduction Act, as an “aggressive” competitive threat, reports CBT News. When asked about the tax credits, European commission spokeswoman Miriam Garcia said, “We think that it’s discriminatory, that it’s discriminating against foreign producers in relation to U.S. producers.” The U.S. has come a long way since Trump threatened to impose taxes on European cars, and the conflict in Ukraine has brought NATO allies closer together. But a new era of multilateralism under Biden is still a way off. Click here for the full story.

Feds Prefer EVs over Hydrogen for Future Cars in New 'Decarbonization’ Blueprint

Last fall, the Departments of Energy, Transportation, Housing and Urban Development, and the Environmental Protection Agency announced they will work together to create a "clean, safe, accessible, equitable, and decarbonized transportation system for all." This week, the agencies released their promised blueprint that puts some details on those bones, reports Car and Driver. Called the U.S. National Blueprint for Transportation Decarbonization, the first-of-its-kind document envisions three familiar technology solutions for net-zero travel by 2050: batteries, hydrogen, and sustainable liquid fuels. It's how the blueprint predicts these three technologies will be used that is most interesting, if not exactly surprising, for drivers. The technology with the "greatest long-term opportunity" to decarbonize light-duty vehicles, for example, is battery power. For long-haul heavy trucks, hydrogen is at the top of the list. And sustainable liquid fuels are likely best for boats and planes. More interesting, perhaps, is that the agencies do not see a place for hydrogen in the light-duty vehicle fleet. While hydrogen is considered to have limited opportunity to green up short-haul heavy trucks and off-road vehicles, the blueprint's chart doesn't even support that bit of optimism for passenger cars. Click here for the full story.

Toyota Wants to Build 10.6 million Vehicles This Year

Toyota says it is aiming to produce 10.6 million vehicles for the 2023 calendar year but remains wary of supply chain shortages. The Japanese car manufacturer says that the spread of COVID-19 throughout 2022 and continued shortages of parts including semiconductors prompted it to repeatedly adjust its production plans. Its approach for 2023 is to place the highest priority on safety and quality “while making every effort to deliver as many vehicles as possible to our customers at the earliest date.” Toyota notes that it has set a baseline production volume with a downward risk fluctuation of approximately 10 percent, reports Carscoops. This helps communicate production plans to suppliers and other stakeholders and incorporates a range as there will be fluctuation risks to its production volume ceiling in the event of parts supply shortages as there were in 2022. “The situation this year remains difficult to predict due to factors such as semiconductor shortages and the spread of COVID-19,” Toyota added. Click here for the full story.


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