Buying? - Ask Us First

[JoeS]

I took my i-MiEV to the local EAA meeting today. A lady (who frequents our meetings) came up to me proudly telling me that she had just bought a used i-MiEV with only 750 miles on the odometer for $14K. She said that she "got a good deal" from the dealer because it is a Salvage car. She finally did get the dealer to throw in the Mitsu EVSE, but there was no manual nor Remote with the car, which is an SE model with no CHAdeMO.

Despite the car looking spotless (it had evidently 'only' been rear-ended, so has a new rear bumper assembly), I was simply left shaking my head:

1. IIRC a Salvage title means no warranty(?).
2. This car has been sitting in the hot Sacramento area for who-knows-how-long at who-knows-what-SoC.

Wish she had asked me first before buying it, as I would have not only pointed out those drawbacks but also done the math with her comparing to a brand-new i-MiEV. After coming home I realized that I could have plugged in Canion and done a quick battery balance check on her car.

Anyway, for anyone contemplating buying an i-MiEV, feel free to ask questions on this forum for things to look for, as there are plenty of knowledgeable people who can help answer them.

 

[OldGeek]

Agreed.

Just to be clear for those new to the site and the car:

A new iMiev costs $12,180*.

* This was computed assuming:

• Starting cost of $22000
• Less Fed rebate of $7500
• Less Colorado State credit of $2320

If you buy a used iMiev, you do not get the Fed or State tax incentives or the new car warranty.

 

[JoeS]

If you buy a used iMiev, you do not get the Fed or State tax incentives or the new car warranty.

Thanks OldGeek; however, I believe the warranty is transferable but not if the vehicle has been totaled and subsequently has a Salvage title. Anyone with experience in this?

 

[Don]

A new iMiev costs $12,180*.

If you buy a used iMiev, you do not get the Fed or State tax incentives or the new car warranty.

Some states (most of them actually) don't give the buyer of a new EV any state tax incentives and also, many people wouldn't be able to take advantage of much, if any, of the Federal tax incentives, so for them, a new iMiEV actually costs upwards of $22K by the time they include tax, license and financing fees. For those people a good used one for $12K to $15K is often times a better deal all around

Also, why doesn't the new car warranty (whatever is left of it) transfer to the new owner when they buy the car used??

Don

 

[OldGeek]

also, many people wouldn't be able to take advantage of much, if any, of the Federal tax incentives

I was in the middle of responding to the contrary when I decided to research what I thought I knew...
Found this:
http://www.marketplace.org/topics/your-money/getting-personal/tax-credit-and-tax-rebate

So, If someone's income tax due to the fed is less than $7500 they will not get the full benefit of the fed tax credit. If their fed tax due at the end of the year is over $7500, they will. Right?

 

[Don]

Correct. If someone has zero Federal tax liability, which these days is about 50% of the population, they won't get one penny of the Fed's $7500 tax credit. To get the entire $7500, I think the average family of four would need to be pretty close to the $100K per year income bracket

Unfortunately, the concept of the tax credit benefits the wealthy much more than it does an 'average' US citizen who could really use a cheap transportation alternative like a BEV and that makes them a much harder sell than they otherwise should be - If your wealthy next door neighbor can buy one $7500 cheaper than you can, you're not going to be making a rush to the dealership to take advantage of the great deal he got, are you? A tax rebate would benefit everyone equally, regardless of their income or tax liability, but unfortunately, the laws aren't necessarily written to benefit everyone equally

Don

 

[Vike]

I don't want to get too far off in the weeds on terminology, but if folks want to contact their elected representatives on this issue, it's helpful to be consistent in messaging. The fact that the $7500 federal subsidy is in the form of a tax credit is not the main problem (a deduction would be a lot worse, though a credit is still a problem for reasons I'll mention below). The main problem is that the credit is limited to one's federal income tax liability, so is at best partially available for most people. If the credit resulted in your getting a tax refund check for $7500 from the government even if you owed no income taxes, this would be a lot fairer. The current scheme's consequence of wealthier households getting bigger subsidies is just perverse.

But the problem of any tax credit, limited or not, is that it requires buyers to "float" the value of the credit until tax refund time. This isn't too bad if you buy a car in December (so just a couple of months if you file early enough). But if you buy your EV in January, you effectively have to loan the federal government $7500 for an entire year. Most households can't afford to do that, so are likely to have to finance the full price of the vehicle, leading to a higher monthly payment. It's little wonder EV leases have been so popular.

As for a "tax rebate", I'm not sure what that means. Let's drop the word "tax" from that and just call it a direct federal subsidy for purchases of electric vehicles, payable directly to the dealer (whether it should be usable as a down payment is an implementation detail). This would make the i-MiEV a straight up $16k proposition for everybody, no different from buying a Corolla or Sentra. I think that could make a difference in the i-MiEV's marketability (assuming that Mitsubishi would actually be able/willing to meet demand, which I'd have to admit is an open question).

To address my own pet peeve, I'd add a proviso that the subsidy be reduced by $1 for every dollar paid over MSRP. The subsidy should go to benefit buyers and manufacturers as intended, not to facilitate gouging by parasitic middlemen. If you're willing to pay over MSRP to get your car, you obviously don't need the encouragement of a full subsidy.

 

[Don]

But the problem of any tax credit, limited or not, is that it requires buyers to "float" the value of the credit until tax refund time. This isn't too bad if you buy a car in December (so just a couple of months if you file early enough). But if you buy your EV in January, you effectively have to loan the federal government $7500 for an entire year. Most households can't afford to do that, so are likely to have to finance the full price of the vehicle, leading to a higher monthly payment.

Yes, it's unfortunate that if you qualify for the $7500 you might have to wait a year or more to get it, but the bigger problem by far is those who won't get a dime of it, EVER. Plus, if this really bothered you, you could just arrange to buy your new EV on December 31st

The biggest problem is the law was written so it doesn't apply to everyone equally - Many of us would be willing to wait 6 months or a year and effectively 'loan' the $7500 to the government, if we knew come tax time we'd be getting it back

Don

 

[Vike]

Don, I don't think we're much in disagreement. As I said in the portion omitted from your quote, yes, the MAIN problem is that the tax credit is limited to your federal income tax liability, so unavailable to households without enough taxable income to incur such a liability. That wasn't really much of an issue when we were talking about $40k Volts, but a couple years down the road now it's a BIG issue when we're talking about a new EV that WOULD be < $16k IF your household could get the full tax credit. That's the BIG problem - providing subsidies to higher-income buyers that are denied to lower-income buyers.

That said, of course a subsidy payable at signing time and directly affecting financing, down payment, etc., would be even more broadly helpful than any form of tax credit - I'm not sure why that observation would be controversial. The tax credit approach entails quite a bit more than the mere inconvenience you imply, especially for households with incomes low enough that the tax credit isn't fully available to them.

I think we can agree that if the federal government is going to subsidize EV purchases, those subsidies should be available to all buyers, not just the more prosperous ones.