In case you don’t follow the news, the US government past the Inflation Reduction Act last month and one of the laws was a change to electric vehicle credits. You can still get it, but there are a lot more stipulations. Previously, they offered up to $7,500 depending on the type of car you got, plug-in hybrids and full electric were eligible with caps at the manufacturer level. Now I love Volvo and I think plug-in hybrids are more practical than full EV. However, I had my eye out for a plug-in hybrid and Volvo had a package to make it even better.
Volvo Overseas Delivery
For many years Volvo has run a program that allows you to pick up your car at the factory in Gothenburg. However, it gets better because they pay for your two roundtrip tickets, a factory tour, car insurance, and hotel stay. But wait, there’s more. They were also providing 6% discount for 2022 model and maybe a couple percent higher in previous years. However, for 2023 there is no discount.
The plan
Getting 6% off a car is fine, but you’ll still lose money when you drive it off the lot. This is where the tax credits come in. Volvo’s plug in hybrid had a $5500 credit federally. Then in 2022 they had an “extended range” model that qualified for the full $7500. Texas also has a program that offers $2,500 on certain vehicles. If one could max it out, there would be the possibility of getting $10,000 off plus 6%. On the $50,000 car that is 26% off which is amazing, plus the free trip! The plan was to do this every year and then sell at the end of the year. I calculated it would probably cover the depreciation.
Bye bye EV Credit
The plan was sadly only hypothetical as the new laws have changed the EV credit. Now cars have to be manufactured in the US, so the models I’m interested in don’t qualify. Furthermore, Texas ran out of credits for 2022, so you have to wait to see if they renew the program. Third, there is no discount on the overseas program. Finally, the trade-in value for used cars is going down. Quadruple whamy. As a result I’ll have to keep driving my car which is a good financial choice.