Hacker News Reader

Comment by Alex3917 | Hacker News Reader

Even that phaseout will probably result in a lot of cancellations from people who have been on the waiting list for several months already but who haven't taken delivery by the end of the year. Especially for the orders at the lower end of the price spectrum, which haven't even started shipping yet.

Loss aversion is real, and people aren't going to be happy about being asked to suddenly pay ~20% more for the exact same car. Since the base models haven't started shipping yet, it stands to reason that after the end of the year that will be mostly what's left on the waiting list. So if they lose a lot of those reservations, they're stuck with huge capital expenses and a potentially very significant decrease in orders.

View on HN

> Loss aversion is real, and people aren't going to be happy about being asked to suddenly pay ~20% more for the exact same car.

It's 10% more at most, and they are making it pretty clear now that the Short Range model will not be available before January 2019. Even then, many people can't even realize the entirety of a $7,500 tax credit. A single person needs $60k in income to generate $7,500 in taxes due after the standard deduction, and a married couple needs $80k to reach that point. Most people who are holding out for the $35k Tesla because that's all they can afford are also going to have a Tax due of less than the $7,500 credit.

Do people in those income brackets purchase vehicles that are that expensive? It doesn't seem wise to spend nearly half your pre-tax family income on a single vehicle. I've been assuming the average income of purchasers of the model 3 was in the $120k range, and even that seems on the low side for the price.

Is 50% of annual income a typical price point for car purchases?

The median household income in the U.S. was $57,617 in 2016. The average transaction price for a new car in the U.S. was estimated at $36,270 in January '18.

So, for new car purchases at least, American buyers spend more than half the median yearly household income.

New car purchases are likely made disproportionately by people who earn more than the median income, so we can't probably can't say much from those 2 numbers alone.

"The average new car buyer is now 51.7 years old and earns about $80,000 per year" [1]

In a study from 2003 the new car buyer income was $69,875 [2] which is $96,905.51 in 2018 dollars [3]

[1] http://www.autonews.com/article/20150804/RETAIL03/150809938/...

[2] https://www.bls.gov/cex/anthology/csxanth8.pdf

[3] https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=69%2C875&year1...

7500/35,000 = 21.4%

It's a 21% price increase, assuming the buyer would have been fully eligible for the credit.

Yeah, that's definitely going to change the math for a lot of prospective buyers. A basic Model 3 isn't worth $35,000 cash compared to other similarly priced EVs, especially not when those competitors will still qualify for the rebate.

>It's a 21% price increase, assuming the buyer would have been fully eligible for the credit.

True, but not until 2020. In H1 2019 there is still a credit of $3750, and in H2 2019, there's a credit of $1875, so it doesn't fall off a cliff.

Tesla alone decides if the slot in the queue is tradeable. before it can be held to be a net loss of sale, They have the option to say "oh, ok then, its transferrable" and not have the hypothetical hole to fill.

well the phase out will cost the least able to afford the car the most. I can still order a LR and get it sooner than the two people I work with who are awaiting the standard edition. Now I haven't asked them if they will continue to wait but even if I did order; I am not; its a random two to four months for me, which means I doubt any standard model would even ship before end of year

The information regarding the subsidy limit being hit soon was freely available to depositors.

Sure, and it's fully refundable. So there is no reason not to put down the deposit and then cancel if you don't take delivery by the time the incentive starts to phase out.

Well, except that 1000$ invested a couple years ago in a standard SP500 ETF would give you a ~1350$ payout today [1].

So basically, you are paying ~350$ of opportunity cost to take that decision.

[1] April 2016 (deposit date) VOO price was ~190$. Today it is 258$.

"Soon" is not the same as "already hit". Some likely gambled on beating the deadline and may cancel now.

Reply on news.ycombinator.com