Tax Planning For EV Tax Credits

Investing Strategies Retirement Investing
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… and it even has the WSJ’s imprimatur.

What to Know About the Electric Vehicle Tax Credits, and How to Get More Money Back
[https://www.wsj.com/articles/navigating-the-new-electric-veh…](https://www.wsj.com/articles/navigating-the-new-electric-vehicle-tax-credits-to-get-more-money-back-11661105490?mod=hp_user_preferences_pos1#cxrecs_s\)

Income-limit workarounds

Congress designed the income limits as a cliff, meaning once you are over the amount, the credit is gone, says Mark Luscombe, a federal tax analyst at Wolters Kluwer Tax & Accounting. The limits aren’t adjusted for inflation either, he adds.

But there is a potential workaround.

“For taxpayers who are hovering over the limits, it’s not the end of the road. They may be able to benefit from the tax credit with the right tax planning,” says Laura Caiafa, an enrolled agent in Hamden, Conn. A powerful way to lower adjusted gross income is by boosting contributions to a pretax 401(k) retirement account or a health-savings account, she says.

Another way to lower AGI is to max out workplace dependent-care benefits and commuter benefits, says Mr. Luscombe.

intercst

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This is good news as everything I read prior to the law being finalized referred to it as gross income instead of AGI.

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This is good news as everything I read prior to the law being finalized referred to it as gross income instead of AGI.

Yes that is good. I thought it was gross, too.

Polestar is out. ID4 Pro AWD is worth a look. What else? Personally, I think the Model Y is overpriced and incredibly ugly, so that’s not a consideration for me.

I’m 6 hours away from home on a business trip and had to have the ICE car towed to a shop today. $857 later I have a running car again, and a new mass airflow sensor. That doesn’t happen in an EV!

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“I’m 6 hours away from home on a business trip and had to have the ICE car towed to a shop today. $857 later I have a running car again, and a new mass airflow sensor. That doesn’t happen in an EV!”

I’m sure various model EVs will develop their own set of problems, from computer failing to boot up and run the car, to ‘critical battery cooling system’ error… and they still have brakes, suspension parts, steering mechanisms, heating and cooling systems, power windows and door locks, seats/seat belts, accessory sockets, electronic wi-fi and entertainment systems, headlights and taillights, charging ports/connectors gone bad, etc. Failure to talk to charge points, etc.

What ICE died on you? A Ford?

t.

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I’m 6 hours away from home on a business trip and had to have the ICE car towed to a shop today. $857 later I have a running car again, and a new mass airflow sensor. That doesn’t happen in an EV! - AdrianC

===========================

In my F250, in 5 minutes I can add enough diesel to take me 650 miles. That too doesn’t happen in an EV. And I have enough room to carry four passengers and a couple of canoes if I wanted to.

Just sayin’, there are pluses and minuses.

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and a new mass airflow sensor. That doesn’t happen in an EV!

Because an EV doesn’t have a mass airflow sensor.

Does an EV have any other sensors. That might fail? Like, perhaps, a battery temperature sensor?

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Does an EV have any other sensors. That might fail? Like, perhaps, a battery temperature sensor?

I’ve had a sensor fail on my Model S. But it was due to blunt force trauma. Ice impact. Made autopilot refuse to do its thing until I got it fixed.

Never had any other sensors fail. And I’ve never heard of a Tesla becoming unusable due to sensor failure. Since Teslas are designed to support autonomous operation, pretty much everything has to be failsafe. Single points of failure are avoided.

I’ve had Model S door handles fail, multiple times in the early ones. All fixed under warranty. While it is possible that some of those failures were due to pressure sensors, I don’t think so. The failure mode I know about was the mechanical motor linkage.

-IGU-

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With my ICE Mazda, I can drive 350-400 miles and then start looking for a gas station, from which over a 50 or so mile stretch I will find several gas stations to choose from. With a BEV, if you get off the major interstates around large cities, you must carefully plan out your trip and charging locations before you leave. You don’t drive until you get to 10% charge and start looking for a charging station. To get to this point will require decades to install new power substations for the multi-phase 440V frequent charging stations every few miles on the hundreds of obscure state highways throughout the country. I doubt this kind of infrastructure necessary for the BEV to replace the ICE auto will be happening in our lifetime.

BruceM

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What ICE died on you? A Ford?

Mazda.

Yep, EVs have problems. Our own EV has been under a battery recall for a year now. No issue for us, and we will get a new traction battery free of charge eventually. In the meantime, we get to use this one up as much as possible (22k miles in 14 months, so far).

My comment about my ICE was, of course, somewhat tongue-in-cheek. The Mazda has been a good car until now, brakes, tires and oil changes only. The MAF going bad was a surprise - they’re supposed to last the life of the car - and yet the independent shop it was towed to had one in stock. The local Mazda dealer couldn’t look at the car for a week…

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With my ICE Mazda, I can drive 350-400 miles and then start looking for a gas station, from which over a 50 or so mile stretch I will find several gas stations to choose from. With a BEV, if you get off the major interstates around large cities, you must carefully plan out your trip and charging locations before you leave. You don’t drive until you get to 10% charge and start looking for a charging station. To get to this point will require decades to install new power substations for the multi-phase 440V frequent charging stations every few miles on the hundreds of obscure state highways throughout the country. I doubt this kind of infrastructure necessary for the BEV to replace the ICE auto will be happening in our lifetime.

This basic complaint comes up a lot and is overblown, IMO. For one, 350-400 mile trips are rare. And when they do occur, that’s six or seven hours of driving. Doing that in one shot would be unusual. And before someone says “I do it all the time.” Yes, I believe you. However, it is still rare and unusual. Most people don’t do that with any frequency. And even if you do, you’ve already dedicated the whole day for that Thanksgiving trip to Sheboygan so taking an hour for a pit stop (which you probably were going to make anyway) while you charge really isn’t going to make a difference. Another reason why this is overblow is that your onboard navigation knows where open chargers are. There are more out there than you think and they are not hard to find on the go. Sure, if you are off in the boonies you should do a little extra planning, but it isn’t at all hard.

But the other part of the issue, is that you probably won’t own an EV unless you can charge it where you normally park. The Dept. of Energy tells us that 95% of non-commute are trips are less than 30 miles.

https://www.energy.gov/eere/vehicles/articles/fotw-1042-augu…

That means in your daily life you almost never have to find a charger outside of where you normally park. With an ICE however, you have to go to a gas station regularly. Even if the gas station is on your normal route, it is still time out of your day. If you add up all the time you spend on routine trips to the gas station it will add up way more than that extra house you spent at Thanksgiving.

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taking an hour for a pit stop (which you probably were going to make anyway) while you charge really isn’t going to make a difference.

Let’s completely assume that there are no other cars getting a charge, so you don’t have to wait for the guy(s) who got there before you to finish their charge.

On our last couple of long distance trips we pulled into gas stations that had 16-24 pumps. Usually there were 2 or 3 pumps open. The others had somebody getting gas. Standing next to the fuel cap, waiting as much as 5 minutes to fill up, then they pulled away from the pump. Standing right there. Not walking away to get food or whatever, and then somehow knowing when the car was full, and then strolling over to the car to disconnect.

With 16 pumps, average of say 12 pumps busy for 5 minutes each is 60 fillups per hour. Very little waiting for a pump, because only 75% occupied.

But with a 1 hour fillup, all 16 pumps will be occupied. That’s 16 fillups per hour.

60 per hour for ICE vs. 16 per hour for EV.

Plug those numbers into a queueing theory calculation. Service time 1 hour, arrival rate 5 minutes, 16 servers. See how long you will be waiting for your turn to get to a charger.

You stay there not only for lunch, but also dinner and midnight snack. But eventually you’ll get your charge. Better bring sleeping bags.

Of course, Pilot could install more chargers. Maybe remove 16 gas pumps and install 60 charger stations. And also a 1,000 KW feeder line from the nearest power station.

Just checking for our last trip, very few EV charge stations showed up.
Typical: Tower Station & U-Drop Inn Cafe, Shamrock, Texas, “Circa-1936 gas station & art deco cafe now a gift shop & museum”
Closes 5PM
Tesla Supercharger, 6 stations, open 24 hours,

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“Of course, Pilot could install more chargers. Maybe remove 16 gas pumps and install 60 charger stations. And also a 1,000 KW feeder line from the nearest power station.”

Those fast charge stations are 265KW each. Times 60… that’s 15 Megawatts if my math is right…a very healthy 440v 3 phase line, or 10Kv line probably from a major power substation. Enough to run a TX town of 10,000 people…and there would be a small substation on the property as well…

That lone Pilot station would require 3 5 megawatt turbines running full steam day and night (they typically run a 30% duty factor)… or a good portion of a solar farm…or horrors…fossil fuel (NG) at night.

t.

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I just finished a trip with four days of driving - two there (CT to GA), two back, with a couple of days just driving around. The longest I spent charging my Tesla Y Long Range was 25 minutes. I never had to wait for a charger. Only once did my arrival bring the number of cars charging there over half the capacity. I was traveling on busy interstate highways, and similar.

If you really want to see what it might be like, go to https://abetterrouteplanner.com/. Put in the start and end points and see what it suggests. Note that you will have to choose a Model, specify the charge when starting out (I charge to 84% at home), and make one of five choices about charging stops, ranging from few-but-long to short-but-many.

Tesla has their own trip planner in the web (https://www.tesla.com/trips) but I prefer ABRP.

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Plug those numbers into a queueing theory calculation. Service time 1 hour, arrival rate 5 minutes, 16 servers. See how long you will be waiting for your turn to get to a charger.

You stay there not only for lunch, but also dinner and midnight snack. But eventually you’ll get your charge. Better bring sleeping bags.

Strange thing, but that kind of delay never happens. I wonder why that is? Oh, right, it’s because the folks who provide charging aren’t stupid. To begin with, the typical usage for superchargers is nowhere near an hour, more like half an hour. At least with Tesla, when charging stations start seeing crowds, they build more. If they need immediate relief, they have portable chargers they can deploy.

I shouldn’t actually say never. Long delays do happen occasionally. About as often as round the block several hours to get gas delays. My wife encountered one once, in Oregon after the solar eclipse in 2017. The superchargers were having a wait time of over an hour. But then, so were gas stations.

Just checking for our last trip, very few EV charge stations showed up.

How were you looking for EV charge stations? Mostly, they’re invisible except to those who need them. Unlike gas stations, which are a blight on the landscape everywhere.

Typical: Tower Station & U-Drop Inn Cafe, Shamrock, Texas

Yeah, six superchargers there; and within 100 miles there are 6 in Weatherford, OK, 6 in Childress, TX and 20 in Amarillo, TX. That’s just superchargers. There are a ton of others as well. Just look at PlugShare.

-IGU-

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went to that site.

MOdel S…

Here to Dalhart TX - 488 miles…takes 3 stops at Super Chargers to get there…

ICE car - stop once after 250 miles for 10 min gas/pit stop. Still have more than 3/8ths tank.

less than 7 hours in ICE.

7 1/2 to 8 hours in EV…3 stops.

If you have longer range car…better…

When I can buy at competitive price and EV that gets 350-400 miles on each 20 min charge…I might be interested…meanwhile, it’s an urban/suburban commuter car…

t.

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You stay there not only for lunch, but also dinner and midnight snack. But eventually you’ll get your charge. Better bring sleeping bags.

You could do it that way. But it would be much easier to use the app on your car’s navigation or smart phone and simply drive straight to an open, available charger and skip the line. And yes, the app knows if the charger is being used or not. And there are also plenty of dumb chargers that the app at least knows the location of.

You’re fixed on the gas station model of car charging. They’ll be some of that, sure. But for the most part they are placed in places where people normally park already. Like in shopping center or restaurant parking lots. Businesses offer them (often with free charging) as an incentive to park in front of their business and of course charging companies offer them as a revenue source. Once you start looking you’ll find there are a lot more of them out there than you think.

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With a BEV, if you get off the major interstates around large cities, you must carefully plan out your trip and charging locations before you leave.

At the moment. Current state of the un-maintained non-profit charging networks. And, repeating, careful planning is not required if you have a Tesla base model sedan.

decades to install new power substations for the multi-phase 440V frequent charging stations every few miles on the hundreds of obscure state highways throughout the country.

Decades? Tesla did it themselves in what, 5 years (and still expanding rapidly)? Every few miles? Did it take decades for locally available gas stations to be set up as more and more people could afford cars? And, how much more power incrementally does it take to charge a car, vs powering a gas pump? What will the incremental / additional power profile look like when the corner gas stations finally install chargers?

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Strange thing, but that kind of delay never happens. I wonder why that is? Oh, right, it’s because the folks who provide charging aren’t stupid.

There’s that.

And there’s a lot of folks who have two cars in the house. They take the ICE one on longer trips.

But in general, this is one of my rare points of agreement with you. Range issues with EVs are often overblown. There is a bit of planning ahead involved - having good sources of info, knowing where you will need to stop to recharge, perhaps thinking about alternates. But none of this is rocket science.

However, it is slightly different than trip planning with an ICE, which can often be no planning at all. Just go. The fear of change can keep people from changing.

–Peter

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But the other part of the issue, is that you probably won’t own an EV unless you can charge it where you normally park. The Dept. of Energy tells us that 95% of non-commute are trips are less than 30 miles.

Are you aware of any data on the inability/difficulty to install lvl 2 chargers in primary residences?

I had not thought of this issue previously but a good friend of mine just had to back out of their Tesla purchase because they could not get a lvl 2 charger installed without a massive expense. I had previously assumed that such an installation was rather trivial but now wonder if it might be a more significant potential barrier to ownership.

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Are you aware of any data on the inability/difficulty to install lvl 2 chargers in primary residences? – Hawkwin

A level 2 charger is just a 40 amp outlet, just like an electric clothes dryer.

Do you hear about people having trouble getting dryers installed? :wink: We had two Tesla chargers installed in our garage and had a bit of cost because I wanted the wiring behind the drywall. About $2k installation cost (and I paid for the chargers separately). If you’re spending $50k-$60k for a vehicle, that charger cost is trivial

We also paid to have ceramic coatings on the vehicles and to have the front ends wrapped in protective film. Also trivial.

Rob
Former RB and BL Home Fool, Supernova Portfolio Contributor & Maintenance Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.

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