I think the main reason is that depreciation would make it difficult to sell for $8,000 less than the sticker price after a year, so your $3,000 loss spread over 12 months could easily be significantly more than that.
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Why not buy, take the Tax Credit, and sell the following year and repeat?
Hi Folks, I'm new to this forum and to EV car shopping in general. I tried searching for this answer before posting.
This vehicle is to replace my wife's Tiguan at end of lease. We test drove the ID.4 and loved it, and reserved one.
Considering if buying or leasing is better.
My question is, is there any reason, besides fast depreciation in the first year, that would make buying and selling an ID.4 every year a bad idea?
If I buy, take the 7500 dollar Tax Credit, and sell the car off for let's say, 8000 dollars less than the Sticker price, I'm only out the finance and dealer fees and taxes plus 500 bucks.
Perhaps a 3000 dollar loss, spread across 12 months.
I then buy another new ID.4 and repeat the process until the Tax Credit for VW begins to sunset away.
Is anyone else doing this, or considering doing this ?
Thanks, DTTL.
This vehicle is to replace my wife's Tiguan at end of lease. We test drove the ID.4 and loved it, and reserved one.
Considering if buying or leasing is better.
My question is, is there any reason, besides fast depreciation in the first year, that would make buying and selling an ID.4 every year a bad idea?
If I buy, take the 7500 dollar Tax Credit, and sell the car off for let's say, 8000 dollars less than the Sticker price, I'm only out the finance and dealer fees and taxes plus 500 bucks.
Perhaps a 3000 dollar loss, spread across 12 months.
I then buy another new ID.4 and repeat the process until the Tax Credit for VW begins to sunset away.
Is anyone else doing this, or considering doing this ?
Thanks, DTTL.
1 - 20 of 37 Posts
I don't really see the benefit of doing that. You just really want to always be driving a car that's less than 1 year old? Seems kind of ridiculous imo.
You won't be able to sell for 8000 off msrp - at that price, they could buy new.Hi Folks, I'm new to this forum and to EV car shopping in general. I tried searching for this answer before posting.
This vehicle is to replace my wife's Tiguan at end of lease. We test drove the ID.4 and loved it, and reserved one.
Considering if buying or leasing is better.
My question is, is there any reason, besides fast depreciation in the first year, that would make buying and selling an ID.4 every year a bad idea?
If I buy, take the 7500 dollar Tax Credit, and sell the car off for let's say, 8000 dollars less than the Sticker price, I'm only out the finance and dealer fees and taxes plus 500 bucks.
Perhaps a 3000 dollar loss, spread across 12 months.
I then buy another new ID.4 and repeat the process until the Tax Credit for VW begins to sunset away.
Is anyone else doing this, or considering doing this ?
Thanks, DTTL.
Buyers would expect to pay someyhing like 15000 off msrp.
I'd agree with ericy. The cars are currently selling for list price, which is not uncommon for a hot new model. However, that won't last. So, next year, someone would likely being looking for a new car, somewhat below list, along with expecting the tax credit. That will certainly affect the value of the ID4 on the used market as those buyers aren't eligible for the tax credit from the government, but everyone knows the original buyer got it. The market will put pressure on the used car market to take that into account.
Also the person buying an ev would know that you took your tax credit and would negotiate based on what you actually paid.
The thing is, not everyone is eligible for the Tax Credit. I'm not sure what the percentage is, but given that there is a portion of the population that does not qualify, it means they WOULD have to pay the entire price of a brand new ID.4 and perhaps an 8k to 10k discount off Sticker after 1 year may be attractive to them.
But not everyone qualifies for the Credit.Also the person buying an ev would know that you took your tax credit and would negotiate based on what you actually paid.
Also, on the last year of credits, the following year would NOT have it (assuming a fast sunset).
Hmm, but if their income is too high to qualify, they probably wouldn't be shopping for a used ID.4, and if their income is too low to not be able to take advantage of the full deduction, there's a good chance what you're selling would be out of their price range.The thing is, not everyone is eligible for the Tax Credit. I'm not sure what the percentage is, but given that there is a portion of the population that does not qualify, it means they WOULD have to pay the entire price of a brand new ID.4 and perhaps an 8k to 10k discount off Sticker after 1 year may be attractive to them.
You know what though? Weirder things have happened, so perhaps in a year you'll be explaining to us all why we were all thinking about it wrong. Maybe my expectation of high depreciation is misguided.
Not sure if you mean the benefit of this with or without the assumption of an equivalent payment of perhaps 300 a month.I don't really see the benefit of doing that. You just really want to always be driving a car that's less than 1 year old? Seems kind of ridiculous imo.
It should be obvious that that sort of monthly price is beneficial, even WITHOUT regard for having a new car every year.
Not only for the fact that it's new, but for its incremental technological improvements.
I actually wasn't aware there was an upper limit of income to qualify. Hmmmm.Hmm, but if their income is too high to qualify, they probably wouldn't be shopping for a used ID.4, and if their income is too low to not be able to take advantage of the full deduction, there's a good chance what you're selling would be out of their price range.
So this would purely be aimed at people who can't take advantage of the tax credit.But not everyone qualifies for the Credit.
Also, on the last year of credits, the following year would NOT have it (assuming a fast sunset).
Oh, I may be confusing the cap with some of our state incentives.I actually wasn't aware there was an upper limit of income to qualify. Hmmmm.
Not that it's aimed at them, just that because they exist, there is an effect on market price. The concept of "people know you got a credit" doesn't make sense to me. They would be willing to pay what it's worth to them. If they can get a credit, they'd insist only at least several thousand dollars beyond their own 7500. Perhaps 10k? 12k? I don't know.So this would purely be aimed at people who can't take advantage of the tax credit.
For example, not sure how much a 12 month old Tesla sold for on the used market while the credits were still in full effect.
The market will adjust for what you paid and not MSRP. If people know you got a chance for the credit, they will assume you did and bargain based on that.Not that it's aimed at them, just that because they exist, there is an effect on market price. The concept of "people know you got a credit" doesn't make sense to me. They would be willing to pay what it's worth to them. If they can get a credit, they'd insist only at least several thousand dollars beyond their own 7500. Perhaps 10k? 12k? I don't know.
For example, not sure how much a 12 month old Tesla sold for on the used market while the credits were still in full effect.
They might not have enough taxable income. I guess thats one way they might not be eligible. But those people might lease instead.The thing is, not everyone is eligible for the Tax Credit. I'm not sure what the percentage is, but given that there is a portion of the population that does not qualify, it means they WOULD have to pay the entire price of a brand new ID.4 and perhaps an 8k to 10k discount off Sticker after 1 year may be attractive to them.
I agree. And that would force the "value" of the 12 month old car to a REALLY heavily depreciated amount compared to non-EVs. Just don't know how much.They might not have enough taxable income. I guess thats one way they might not be eligible. But those people might lease instead.
terasain hit the nail on the head -- it is general market conditions that will set the retail, wholesale and trade-in market values of a used vehicle, not the odd situation of a few individuals. Why would people pay top dollar for a used car, with no tax credit, when they can buy a brand new one for $7,500 off? That will remain the case in the US until VW sells their 200,000 new EV units. That also assumes the gov't does nothing to extend the credit, and there is already talk of that in Congress as part of the "green initiative" proposed by the current administration.
In fact, the OP makes the case for this -- he wants a new car every year as long as the tax credit is available. His mistake is in thinking that the net pricing of the new car market has no impact on the value of used cars.
In fact, the OP makes the case for this -- he wants a new car every year as long as the tax credit is available. His mistake is in thinking that the net pricing of the new car market has no impact on the value of used cars.
You can but you'll pay a fortune in sales tax and all other fees that aren't captured by the resale value.
I agree with most, this is a lose lose proposition. Volvo dealers are already taking $3000-$3500 off the XC40 Recharge. With all the new EVs coming later this year, discounts will start quickly.
1 - 20 of 37 Posts
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