[CarFan78]

Originally Posted by Jrg3170

The latest in this ongoing tax credit saga - sounds like 45e might continue to be eligible into 2023… IF msrp is less than $80k AND you fall below the income cap. (?).

Glad to see the Treasury is doing this, will be good for the industry to have more vehicles eligible for longer.

https://electrek.co/2022/12/19/us-tr...3-tax-credits/

So the income caps will still start on January 1? It's a bummer as we are just above the income limits for the federal tax credit.

[TurtleBoy]

Originally Posted by CarFan78

So the income caps will still start on January 1? It's a bummer as we are just above the income limits for the federal tax credit.

That is correct, the MSRP and Income limits are effective 1/1/23.

[cptcolo]

Originally Posted by paul21

I did some casual research on publicly available sourcing information to speculate on the 2023 rules.

1. Needs 40% of battery critical minerals to be from free-trade countries for the first $3,750

Speculation: Maybe


BMW assembles PHEV batteries in the US already and uses Samsung SDI 37Ah Prismatic Lithium-ion battery cells to build the packs. These are probably NMC-811 [1] which are 8% manganese, 72% nickel, 9% cobalt, and 11% lithium [2].

Cobalt:
Samsung sources Cobalt from Australia, but also 4 non-trade countries with most coming from DRC. It smelts it in China mainly [3] but some in Korea.
20% of 9% = + 1.8%

Lithium:
Mostly Australia and Chile [4], assuming 80%
+8.8%

Nickel:
Probably Australia [5] but this is the real question. The MoU is worth $150M/year and is roughly enough to make 60k 21 kWh battery packs, but of course Samsung SDI makes cells for lots of companies/applications, but it's not clear where sourcing would be. My guess would be 40%.
+28.8%

Manganese:
Probably from within Korea [6] or Australia. Rough guess 50%.
+4%

Total= 43% (guesstimate)


2. Needs 50% of components to come from US/Free Trade

Speculation: Probably

Samsung SDI has a large network of manufacturers [7], so it is easy enough to source the cells from Korea or US. They could also be made in China obviously, but given a strict sourcing requirement it may be doable.



What's not clear:
1. What are critical battery materials
2. Is the material source pre or post-smelting/refining
3. How is the 40%/50% measured as sources change throughout the year
4. How the chain of custody is managed, or if it is a bulk sum, when sources are mixed, e.g., plant A uses Cobalt from Australia while plant B uses Cobalt from China, is it that a battery from plant A is ok while plant B is bad or is it the whole battery series is bad, etc.


Just a guess that the list won't be 0 cars in 2023 and that the legislation wasn't created in a vacuum, so there is probably a path to get at least some models on the list in 2023. My guess is at least one free-trade cell supplier can meet the 40% requirement which would be LG/SK/Samsung/Panasonic. BMW is at least pulling cells from Samsung for the US xDrive45e which keeps the hope alive.


[1] https://pushevs.com/2018/04/05/samsu...pecifications/
[2] https://www.statista.com/statistics/...-ion-batteries
[3] https://www.samsungsdi.com/upload/do...rt_English.pdf
[4] https://www.supplychainbrain.com/art...-batteries-too
[5] https://news.metal.com/newscontent/1...ickel-per-year
[6] https://www.electrive.com/2019/10/28...-sdi-with-nmc/
[7] https://www.samsungsdi.com/about-sdi...l-network.html

Yes, as others have said both the Critical Minerals Requirement ($3,750) and Battery Components Requirement ($3,750) applicable percentages are based on the value of the components.

Critical Minerals ($3,750) - must be extracted or processed in the US or countries US has a free trade agreement with -or- they can be from a recycled source from North America. 40% requirement when the guidance is issued by the Secretary (speculated to be around March 31, 2023 now).

Battery Components ($3,750) - value of the battery components manufactured in North America. Not a free trade country. Effectively this means that the battery cells themselves must be made in North America since the cells make up ~60% of the cost of the battery pack, the rest being the module assembly and pack assembly costs. 50% requirement when the guidance is issued by the Secretary (speculated to be around March 31, 2023 now).

The MSRP and MAGI requirements kick in on January 1, 2023. Yes from our research before, the X5 45e would likely be getting a $0 tax credit under the new law but possibility $3,750. This will be finalized once the Secretary of Treasury issues the guidance which is speculated to be around March 31, 2023 now.

[zico_lloyd]

Originally Posted by TurtleBoy

That is correct, the MSRP and Income limits are effective 1/1/23.

2023 x5 45e is also eligible for tax credit as well as long as it delivered by 12/31/2022 right??

I took mine this week just making sure since it is ‘2023’ not 2022 x5

[AbleDanger]

Originally Posted by zico_lloyd

2023 x5 45e is also eligible for tax credit as well as long as it delivered by 12/31/2022 right??

I took mine this week just making sure since it is ‘2023’ not 2022 x5

You should be good!

[TurtleBoy]

Originally Posted by zico_lloyd

2023 x5 45e is also eligible for tax credit as well as long as it delivered by 12/31/2022 right??

I took mine this week just making sure since it is ‘2023’ not 2022 x5

As mentioned above, it is eligible.

[TurtleBoy]

Originally Posted by nZtiZia

the model year assignment differs from country to country. heck, it could be a 2024 model, but it still qualifies because it was purchased by 12/31/2022

The caveat to that is that the IRS/DOE does qualify/list each model by model year for the credit since things can change between model years.

[nZtiZia]

Originally Posted by TurtleBoy

The caveat to that is that the IRS/DOE does qualify/list each model by model year for the credit since things can change between model years.

oh yeah, you're right. model year must match their list. that was "d'uh" on my part lol

[Desh]

Since the battery guidance is not out yet and has been deferred to March 2023, wouldn't early deliveries in Jan, possibly even in Feb 2023 qualify for the tax credit?

[TurtleBoy]

Originally Posted by Desh

Since the battery guidance is not out yet and has been deferred to March 2023, wouldn't early deliveries in Jan, possibly even in Feb 2023 qualify for the tax credit?

Yes, it will qualify until the day after the requirements are issued but keep in mind the income and MSRP limits start 1/1/23.

[Peter Irving]

Originally Posted by TurtleBoy

Yes, it will qualify until the day after the requirements are issued but keep in mind the income and MSRP limits start 1/1/23.

80K MSRP and 300K income as filing jointly? I guess pretty many guys still qualify for it.

[TurtleBoy]

Originally Posted by Peter Irving

80K MSRP and 300K income as filing jointly? I guess pretty many guys still qualify for it.

That is correct.



Yes, a few years ago the average income for BMW owners is around 125k so I would imagine the large majority of X5 buyers would be under 300k.

[es1]

Can we still receive $7,500 credit if purchasing it in 2023 (considering income and MSRP requirements were met)?

[TurtleBoy]

Originally Posted by es1

Can we still receive $7,500 credit if purchasing it in 2023 (considering income and MSRP requirements were met)?

Okay Dude, I will try and lay it on you real easy like. (Didn't say what decade of high school. ) The issuance of the battery requirements has been delayed until March. That means that as of 1/1/23 the only changes that have gone into effect are the NA final assembly requirement (45e meets that), the MSRP limit of $80k (depends on the build if the 45e meets that, and the income limits (as described above) so the 45e will be eligible through the end of March.

[cptcolo]

All,
The IRS has issued some guidance on what vehicles will qualify beginning on January 1, 2023. Here is the link, this was updated today:
https://www.irs.gov/credits-deductio...-2023-or-after

The BMW X5 45e is on the list! It does have the $80,000 MSRP cap, as expected:

[lmj8088]

Originally Posted by cptcolo

All,
The IRS has issued some guidance on what vehicles will qualify beginning on January 1, 2023. Here is the link, this was updated today:
https://www.irs.gov/credits-deductio...-2023-or-after

The BMW X5 45e is on the list! It does have the $80,000 MSRP cap, as expected:

That's really good news for me. My 45e kept getting delay...

[Desh]

This is good news.

What if the contract was signed in December 2022 and delivery sometime in early 2023? Do the MSRP and income limits apply in that scenario?

I custom ordered with a total MSRP (including destination) of $79,845 and had to let go of the Harman Kardon audio system and the rear heated seats (swapped climate control with 4 zone and heated front seats steering and armrests) to keep it below $80k. If the MSRP does not apply for a 2022 order delivered in 2023 then I would like to modify my order to include the additional options.

[TurtleBoy]

Originally Posted by Desh

This is good news.

What if the contract was signed in December 2022 and delivery sometime in early 2023? Do the MSRP and income limits apply in that scenario?

A contract prior to the sale has no meaning for the credit, it is when the vehicle is purchased/delivered. The only time a binding contract is involved is the Transition rule which was for vehicles ordered prior to Aug 16th.

Edit: In regards to your edit, make sure the options you are giving up is worth the amount of the credit. If the stereo bothers you every time you drive the vehicle then giving it up for the credit may. not be worth it.

[AbleDanger]

I feel like we need a sticky at the top of the forum with the explanation to save folks from asking about the tax incentives over and over.

[TurtleBoy]

Originally Posted by AbleDanger

I feel like we need a sticky at the top of the forum with the explanation to save folks from asking about the tax incentives over and over.

They would ignore it anyways. I have answered the same questions over and over and over again since August when this was announced even though the information is there. Oh well, keeps my fingers in shape.

[Desh]

Originally Posted by TurtleBoy

A contract prior to the sale has no meaning for the credit, it is when the vehicle is purchased/delivered. The only time a binding contract is involved is the Transition rule which was for vehicles ordered prior to Aug 16th.

Edit: In regards to your edit, make sure the options you are giving up is worth the amount of the credit. If the stereo bothers you every time you drive the vehicle then giving it up for the credit may. not be worth it.

It's fully loaded otherwise with the exception of rear heated, harman kardon, and wireless. I don't care about the wireless as there are likely good aftermarket options. The missing heated rear seats I can live with. Upgraded audio is the only feature I will definitely miss as I listen critically, but I am hoping I can get some good aftermarket speakers and likely good audio processors as well for an upgrade it if necessary.

[Henry2020]

I find it a bit shocking that people below the income cap limit are willing to pay MSRP for the 45e.