Yahoo Autos Tesla Warns the Model 3's Sweet Tax Subsidies Are About to Disappear
Tesla predicts the Model 3 will not get any cheaper in the next few days, everybody wants to run a Kia dealer, and a forgotten South Korean automaker vows “never [to] collapse again.” All that and more in this edition of The Morning Shift for Thursday, March 30, 2023.
1st Gear: The Tax Credit Party’s Over for the Tesla Model 3
As we continue to wait for the U.S. Treasury to issue its battery sourcing guidelines (so customers can have some idea of what they can expect to save on their next EV purchase), Tesla has put out a warning. The manufacturer stated Wednesday, per Reuters, that the existing $7,500 discount on the single-motor version of the Model 3 sedan will be reduced by Friday, the last day of March.
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Tesla Inc said on Wednesday a $7,500 tax credit in place since January will be reduced for its Model 3 rear-wheel drive by March 31, subject to guidance due this week from the U.S. Treasury Department on the sources of battery components.
The Treasury Department is due to issue guidance on sourcing of electric vehicle (EV) batteries by Friday that will impact the credit available for some EVs. The credit is in effect for deliveries taken before the updated guidance is issued.
A U.S. official told Reuters that the Treasury Department’s guidance on the EV tax credit due March 31 would result in fewer vehicles getting full or partial credits.
While Tesla builds the U.S.-sold Model 3 at its Fremont, California plant, that alone won’t be enough to secure the maximum tax credit going forward. Under the new regulations, EV batteries must be built using a certain percentage of free-trade-sourced components and “critical minerals” to ensure full credit eligibility. The discount only applies to electric passenger cars priced below $50,000, and because the dual-motor version of the Model 3 starts at about $54,000, it hasn’t gotten the benefit of tax credits since the start of the year anyway.
As Reuters’ article notes, it’s almost certain that fewer vehicles in total will receive full or partial credits once these new rules take effect. But we don’t know precisely which ones, nor how many will be cut out, until the Treasury explains its interpretation of the Inflation Reduction Act’s language. Just know that if it makes buying an EV too convenient, Senator Joe Manchin is prepared to “stop it all” in court.
2nd Gear: Everybody Loves Kia
Kia’s image has very much been on the rise, at least if you ask car dealers eager to add the brand to their showrooms. From Automotive News:
Joe Ozog, president of Ozog Consulting Group in Scottsdale, Ariz., said he has been calling on dealers at the end of each quarter for more than 20 years to see what their target brands are. Recently, for the first time, he said, Kia made the top three most requested brands.
In February, Ozog’s firm represented the sellers in the sale of a Kia store in Lufkin, Texas. Some younger dealers think Kia is the next Toyota, he said.
“Ten years ago, there was the Kia-Hyundai stigma,” Ozog said. “This generation doesn’t have a Kia-Hyundai stigma. They look at it as how Toyota and Honda were 10 years ago.”
It’s a similar situation for Alan Haig of Haig Partners, a buy-sell firm in Fort Lauderdale, Fla. In the past, Haig said, his firm would hear dealers say they were only interested in buying stores selling such brands as Honda, Toyota, BMW, Lexus, Mercedes-Benz and Porsche.
“Now we’re hearing Kia included in that conversation as a brand that they want to have if they don’t yet have it, or they have one [and] they want to have another one,” Haig said.
The Kia-Hyundai stigma seemed pretty dead by 2013, though if the brand was merely tolerated then, it’s certainly desired now. You can thank the Telluride for that, maybe the EV6 too and the logo that’s confused everyone. Something tells me this could kick off a worrying trend with future badge redesigns.
3rd Gear: German Ford Plant’s Future Still Not in Focus
Last summer, Ford announced that the Saarlouis, Germany facility where it builds the Focus would be winding down activity after 2025, when the Focus is likely to end production. But now Ford has decided to give the plant a rather lengthy stay of execution — until 2032, as a matter of fact — though what it’ll be used to make, nobody really knows yet. From Automotive News via its sister publication Automobilwoche:
The plant will stay open at least until the end of 2032, with 1,000 jobs to be retained until then, employees representative Markus Thal told staff.
Currently, the workforce in Saarlouis, which builds the Focus compact car, is about 4,500. [...]
A Ford spokesman said it remains unchanged that no more Ford vehicles will be built in Saarlouis after 2025. Priority will be given to attracting investors to take over the factory, the spokesman said.
Ford had planned to shut the factory entirely in summer 2025, when production of the Focus ends.
In return for job security, employees have agreed to reduce the capacity of the plant. Instead of a daily construction rate of 860 units, this will be reduced to 600 units a day from April 1.
However, the planned annual capacity of 117,000 Focus units will remain in place. The cars will continue to be built in two shifts, but in the future there will be only 300 vehicles per shift.
So Focus manufacturing will drag on for about 18 more months until it peters out, at which point Ford will use Saarlouis for... something. Maybe Ford will sublet the factory, or maybe it’ll change its mind and retool it for an EV. It’s hard to predict what will happen, but the silver lining is that if you happen to live in a country where you’re still lucky enough to be able to buy a Focus, you have a bit of time to follow through before that becomes impossible.
