Gas Prices Are Headed Back Up in February

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Gas Prices Are Headed Back Up in February

The average national gas price was $3.50 on January 27, up more than ten cents over the prior week and forty cents over the end of December.

The trend of falling prices is over.

Steadily decreasing gas prices this fall boosted some segments of the used car market. 

We’ve seen a great deal of rising demand for larger vehicles in the past two months after several months of abysmal large truck and SUV sales. 

That may no longer be the case as gas prices are climbing again.

The average national gas price hovered around $3.50 on January 27, up more than ten cents over the prior week and forty cents compared to the end of December. 

Here’s what AAA spokesperson Andrew Gross said:

“The recent rising temperatures led to rising pump prices. And with the cost of oil hitting $80 a barrel, there is a lot of upward pressure on gas prices at the moment.”

If this trend continues, we may see lower interest in larger trucks and SUVs, which means you’ll probably make less when you sell. 

And gas prices will only go up as people begin to travel in the spring. So if you’re considering selling a gas guzzler, this may be the time to do it.

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Used Car Prices Are Back on the Decline

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Used Car Prices Are Back on the Decline

Used car prices feel so low, but last month the average used car list price was about $7,000 more than it was in the spring of 2021.

Here are the pros and cons of selling a used car this month:

Table of Contents

Pros

  • New cars are too expensive for many buyers. 
  • Prices are higher than they were in 2021.
  • Buyers have renewed interest in bigger vehicles (but not for long).
  • Prices will likely continue to trend down. 

Cons

  • Prices are lower than they were this summer.
  • If you wait too long, manufacturers may discount new car prices.
  • If you sell right now, you may have to buy a new car while they’re expensive.

The average list price for used vehicles in December was $27,143, down from $27,156 in November and $28,193 a year before. 

It feels like prices keep going lower, but last month, the average used car list price was about $7,000 more than it was in the spring of 2021. 

Even lower prices aren’t stimulating demand for used cars. 

Here’s What Cox Automotive Chief Economist Jonathan Smoke said. 

“As the supply of new vehicles improves – and it is improving rapidly – demand for used vehicles is declining.”

But It’s not all bad news. 

The Manheim Used Car index was up 20 points in mid-January compared to the start of the month but still down 10 points compared with December. That may not mean more cash in your pocket when you sell this month, but the smaller up and downshifts in the index show a little more stability than we’ve seen in the past six months. 

New Vehicle Prices Are Still High, Meaning many buyers will have to consider used cars.

New car prices are at an all-time high right now, with the average transaction price coming in at just under $50,000. 

That’s an East Texas middle-class home in the 1980s.

Wild.

Since new vehicle prices are still high, folks who need a car are more likely to consider used options. This interest is good news for anyone trying to sell.

New Car Sales Are Mostly Stagnant 

Those record prices are not without consequence. Dealerships and Auto manufacturers aren’t seeing their sales numbers improve.

Part of the reason new vehicles are in high supply is that they aren’t selling very well. 

This could be because of record new vehicle pricing. 

Vehicles were in such high demand last year that manufacturers didn’t need to run sales promotions, but that luck may be running out. 

If manufacturers introduce incentives, that could drive down the demand for used cars. Less demand means less money when you sell. 

Gas Prices Headed Back Up 

Steadily decreasing gas prices this fall boosted some segments of the used car market. 

We’ve seen a great deal of rising demand for larger vehicles in the past two months after several months of abysmal large truck and SUV sales. 

That may no longer be the case as gas prices are climbing again.

The average national gas price hovered around $3.50 on January 27, up more than ten cents over the prior week and forty cents compared to the end of December. 

Here’s what AAA spokesperson Andrew Gross said:

“The recent rising temperatures led to rising pump prices. And with the cost of oil hitting $80 a barrel, there is a lot of upward pressure on gas prices at the moment.”

If this trend continues, we may see lower interest in larger trucks and SUVs, which means you’ll probably make less when you sell. 

And gas prices will only go up as people begin to travel in the spring. So if you’re considering selling a gas guzzler, this may be the time to do it.

What’s the Verdict?

Probably not the best month to buy a new car. Personally, I’d wait until they introduce some discounts and promotions.

Not a bad month to buy a used car, though. Prices are still higher than they historically should be but much lower than they were for the past nine months or so.

And if you’re selling, things are better than they have historically been, not as good as they were six months ago, but probably better than they’re going to be in the next six or so months. 

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5 Best Cars to Sell in February

best cars to sell in october

5 Best Cars to Sell in February

Carmigo is bringing you the best-selling used cars for February (or at least our prediction). We’ve analyzed trends on our marketplace as well as the general car market and compared those with U.S. economic trends to help you decide if this is the month to sell your car, or if you should consider waiting.

Used Car Prices Droppings (Some)

The average list price for used vehicles in December was $27,143, down from $27,156 in November and $28,193 a year before. 

It feels like prices keep going lower, but last month, the average used car list price was about $7,000 more than it was in the spring of 2021. 

If you’re selling, things are better than they have historically been, not as good as they were six months ago, but probably better than they’re going to be in the next six or so months.

Best Cars to Sell in February

green light chat box

You've Got the Green-Light

Sporty cars like this Dodge Charger are some of the best selling cars in February.

For the first time since June, Sporty Cars moved back into positive territory with an increase of +0.03% according to Black Book. On average, sporty cars also received more offers than any other body type on the Carmigo marketplace in the past three months. They aren’t selling for collector prices by any means, but they’re moving. 

It’s hard to tell which of the many sub-genres of crossover will sell best in the coming month. But we can say with confidence that crossovers have sold in significantly higher volume than other body types for the past three months, and most listings receive plenty of offers. 

SUVs like this 2021 hyundai Palisade are some of the best cars to sell in January
Toyota Camry best cars to sell in october, best cars to sell in february

Black Book showed that full-size cars were the body type to lose the least value this month (other than sports cars, which gained value).  But on the Carmigo marketplace, we’re still selling fewer full-size cars while seeing plenty of interest in mid-size cars like the Toyota Camry.

We are selling a decent number of Silverados, and they’re getting lots of offers on average. It’s not just Silverados either, it’s most standard-size trucks — the kind you see a contractor driving around.

Standard size trucks like this Silverado are some of the best cars to sell in February
Vans like this Sienna are some of the best selling cars in February

We don’t see many people trying to sell vans, but when we do they receive more offers than most other body types. In the past three months, full–size vans have averaged 21 offers per listing. It’s always a good time to sell a fan (but not compact vans).

Worst Selling Used Cars

red light chat box

You've Got the Red Light

Photo depicting each of the Tesla models on offer, from left to right a silver Model S, a red Model 3, a white Model X, and a blue Model Y.

Used Luxury Performance cars aren’t selling well, buy mostly used Teslas are bringing that market down. Tesla slashed new car prices in January to an extent that is undercutting some used car sales so we don’t expect them to sell any better in the near term.

People are buying SUVs, and they’re starting to buy big vehicles again, but big luxury vehicles aren’t getting any love. It’s not a great time to try to sell a used Escalade. It could simply be that comfort at scale is much more affordable than it’s ever been. 

Crossovers, like this Ford EcoSport are some of the best selling used cars going into August.

For the last year, small crossovers and SUVs have dominated the market, combining comfort, capability, and fuel economy. But as gas prices continue to stabilize, people are ditching the smaller SUVs.

The only reason this came across my radar is because someone tried to sell one on the Carmigo Marketplace and it barely got any offers. But this isn’t much of a surprise since KBB declared the compact van dead last year.

Ford Maverick

The truck market is a certified Goldilocks market right now. Maverick, Dakota, Colorado — they aren’t selling well used. This is partially because folks are just opting for the Silverados and F150s, and partly because smaller trucks are one of the few affordable new vehicles on the market. So folks shopping for a small truck can actually get a decent price on a new one. 

The Best Way to Sell Your Green-Light Car

Shameless Plug: A lot of these price trends are based on the Carmigo Marketplace data. Carmigo is a one-of-a-kind platform that lets private car owners sell their used cars to dealerships.

Note: These predictions are simply that: predictions. We cannot tell the future. They are based on trends we’ve seen in the marketplace but are not a guarantee of future market outcomes. 

Everything You Need to Know about Taxes When You Buy and Sell a Car

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Everything You Need to Know about Taxes When You Buy and Sell a Car

Should I report my new car on my taxes? You don’t have to, but you probably want to because the IRS will let you deduct your car's sales tax.

What do you report, and what deductions can you take?

Table of Contents

Do I have to report my new car on my taxes?

You don’t have to, but you probably want to. That’s because the IRS will allow you to deduct the sales tax you paid on the vehicle.

Your sales tax should be listed on your title and registration paperwork, so keep it somewhere safe until tax time. If you can’t find it, the deduction might be worth a trip to the courthouse to get another copy. 

 Do I have to tell the IRS about the car I sold?

If you sold your car for less than you paid, you don’t have to report it on your taxes. However, a car sold at a profit must be declared as a capital gain

If you sold a car sometime in mid-to-late-2022, you actually might have to file your vehicle sale as a capital gain since a lot of y’all sold cars at a profit. But, most years, this isn’t the case because cars are typically depreciating assets. 

I lost money when I sold my car. Can I deduct that?

No. Unless it’s a business vehicle. 

For sole proprietors, you can deduct that loss from your overall profits and reduce your tax liability. 

And there are more implications for larger businesses, but if you have a larger business, you are hopefully receiving higher-level tax information. 

What is the EV Tax Credit?

The US government began incentivizing the purchase of EVs in the 2010s. And the most recent package of incentives in the 2022 Inflation Reduction Act is the most lucrative yet. 

Simply put, if you bought an EV or plugin hybrid in 2022, you are likely eligible for up to $7,500 in tax credits. We say likely because there are a few stipulations based on your income and the make/model. 

This tax credit is also good for 2023, meaning it’s not too late to reap the tax benefits of an EV purchase. If you purchase a qualifying EV this year, you can file for the EV tax credit next year. And starting in 2023, you can also qualify for up to $4,000 in tax credit for the purchase of a used EV.

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Get $7,500 When You Buy a New EV with the EV Tax Credit

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Get $7,500 When You Buy a New EV with the EV Tax Credit

If you bought an EV in 2022-23, you are likely eligible for up to $7,500 in EV tax credit. And this year you can get credit for used EVs too.

Do you qualify for these new EV Tax Credits?

Table of Contents

If you bought an EV or plugin hybrid in 2022, you are likely eligible for up to $7,500 in tax credits. We say likely because there are a few stipulations based on your income and the make/model. 

This tax credit is also good for 2023, meaning it’s not too late to reap the tax benefits of an EV purchase. If you purchase a qualifying EV this year, you can file for the EV tax credit next year. And starting in 2023, you can also qualify for up to $4,500 in tax credit for the purchase of a used EV.

A consumer reports survey from last year showed that more than 50% of buyers are more likely to buy an electric vehicle if it comes with a hefty tax credit. 

The US government began incentivizing the purchase of EVs in the 2010s. And the most recent package of incentives in the 2022 Inflation Reduction Act is the most lucrative yet. 

How Do I Get the EV Tax Credit?

Navigating the bureaucracy of the EV tax credit might seem a little confusing on the surface. But with a little research, the help of a good car salesman, and some patience during tax season, you could get up to $7,500 back on your federal taxes. 

It’s honestly easier than it seems.

The tax credit is an extension of a previously existing credit, but the most significant change is that all new qualifying vehicles must be assembled in North America. That means many foreign manufacturers aren’t capable of making qualifying vehicles right now (though most are working to remedy this).

After purchasing a qualifying vehicle, be sure to keep your documents in a safe place until tax season. When you fill out your taxes, remember to let your accountant, tax filer, or TurboTax know about your purchase.

New EV Tax Credit Requirements at a Glance

  • Income less than $300,000 family.
  • Income less than $150,000 individual.
  • Vehicle purchase price under $55,000 (cars)
  • Purchase price under $80,000 (larger vehicles)
  • Vehicle underwent final assembly/inspection in North America

Which Vehicles Qualify

You can find out if the car you’re thinking of purchasing was assembled in North America using this VIN Decoder from the US Department of Transportation. 

We also compiled a handy list of all the vehicles currently listed by the IRS as qualifying.

The tax credit also comes with income stipulations and is only available to US families who make less than $300,000 per year (or $150,000 married filing jointly). But that includes something like 90% of US households. 

 

Get EV Credits on Used Cars Too

The new Used Clean Vehicle Credit extends savings to Americans purchasing used EVs.

Any household that makes less than $150,000 or an individual who makes under $75,000 qualifies for a tax credit equal to $4,000 or 30 percent of the sale price (depending on which is lower). 

The Congressional Budget Office has reported nearly 25,000 used EVs will qualify for up to $4,000 in tax credits in 2023.

Used EV purchasers don’t have to worry about the North American assembly requirement but will have to purchase the EV from a dealership to qualify. 

Used Clean Vehicle Credit Requirements at a Glance

    • Income under $150,000 (household)
    • Income un $75,000 (individual)
    • Must be purchased from a dealership
    • Not the original owner
    • Not filing as a dependent
    • Have a sale price of $25,000 or less
    • Have a model year at least 2 years earlier than the calendar year when you buy it. 
    • Dealer must report required information to you and IRS at time of sale.

Check Our Used Clean Vehicle List

 

Make the Switch and Save

If you’ve been on the fence about an EV purchase, now is the time to take advantage of federal funds. You will start saving on gas immediately, and up to $7,500 will be added to your final tax return (or subtracted from your bill) when you file. You can put that toward anything, but if you put it toward your car you’ll be looking at lower monthly payments and reduced maintenance and fuel costs.

When you decide to make the switch, list your car on Carmigo. 

It’s the easiest way to sell your car, and you can do it all from the comfort of your phone without ever leaving your home. We legit had two people list their cars while pumping gas last week. 

List your car in as few as 15 minutes, and sell it in as little as one business day. 

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Complete List of 2023 Used EV Tax Credit Eligible Vehicles

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Complete List of 2023 Used EV Tax Credit Eligible Vehicles

Thinking about buying a used EV? Check Carmigo's definitive list to see which cars qualify for the IRS's 2023 EV Tax Credit.

These Are the Veihcles that Qualify for the 2023 Used EV Tax Credit

Table of Contents

What Is the Used EV Tax Credit?

The Used EV Tax Credit (technically the Used Clean Vehicle Credit) extends $4,000 in tax credits to anyone who purchases a qualifying used EV in 2023. 

Do I Qualify for the Used EV Tax Credit?

The qualifications for the Used EV Tax Credit are pretty straightforward. 

First, you’ve got to purchase a qualifying Used EV (you can find a list of qualifying EVs below).

Then you must meet some income requirements.

Any household that makes less than $150,000 or an individual who makes under $75,000 qualifies for a tax credit equal to $4,000 or 30 percent of the sale price (depending on which is lower). 

Which Vehicles Qualify for the Used EV Tax Credit

Make Model Year
Audi
A3 e-tron
2016-2018
Audi
A3 e-tron ultra
2016
Audi
A7 55 TFSI e Quattro
2021
Audi
A7 TFSI e Quattro
2022
Audi
A8 L 60 TFSI e Quattro
2021
Audi
A8L PHEV
2020
Audi
e-tron
2019-2022
Audi
e-tron GT (e-tron GT/RS e-tron GT models)
2022-2023
Audi
e-tron S (standard and Sportback models)
2022
Audi
e-tron Sportback
2020-2022
Audi
Q4 50 e-tron Quattro (standard and Sportback models)
2022
Audi
Q5 55 TFSI e Quattro
2021
Audi
Q5 PHEV
2020
Audi
Q5 TFSI e Quattro
2022-2023
Bently
Bentayga Hybrid SUV
2020-2021
Bently
Flying Spur Hybrid
2022
BMW
i3 Sedan
2014-2021
BMW
i3 Sedan with Range Extender
2014-2021
BMW
i3 (60Ah) Sedan
2017
BMW
i3s Sedan
2018-2021
BMW
i3s Sedan with Range Extender
2018-2021
BMW
i8
2014-2017
BMW
i8 Coupe
2019-2020
BMW
i8 Roadster
2019-2020
BMW
X3 xDrive30e
2020-2021
BMW
X5 xDrive40e
2016-2018
BMW
X5 xDrive45e
2021
BMW
330e
2016-2021
BMW
330e xDrive
2021-2023
BMW
530e
2018-2021
BMW
530e xDrive
2018-2021
BMW
740e
2017
BMW
740e xDrive
2018-2019
BMW
745e xDrive
2020-2021
Cadillac
ELR
2014-2016
Chevrolet
Bolt
2017-2021
Chevrolet
Volt
2011-2019
Chevrolet
Spark EV
2014-2016
Chrysler
Pacifica
2017-2021
Fiat
500e
2013-2019
Ford
C-Max Energi
2013-2017
Ford
Escape Plug-In Hybrid
2020-2021
Ford
Focus Electric
2012-2018
Ford
Fusion Energi
2013-2020
Ford
Mustang Mach-E
2021
Hyundai
Ioniq Electric Battery Vehicle
2017-2019
Hyundai
Ioniq Plug-In Hybrid Electric Vehicle
2018-2021
Hyundai
Kona Electric Vehicle
2019-2021
Hyundai
Sonata Plug-In Hybrid Vehicle
2016-2019
Hyundai
Nexo Fuel Cell Vehicle
2019-2021
Hyundai
Nexo Blue Fuel Cell Vehicle
2019-2021
Jeep
Wrangler 4xe
2021
Lincoln
Aviator Grand Touring
2020-2021
Lincoln
Corsair Grand Touring
2020-2021
Mercedes-Benz
B-Class EV
2014-2017
Mercedes-Benz
S550e PHEV
2015-2017
Mercedes-Benz
GLE550e 4m PHEV
2016-2018
Mercedes-Benz
GLC350e 4M PHEV
2018-2019
Mercedes-Benz
GLC350e 4M EQ
2020
Mercedes-Benz
S560e EQ PHEV
2020
Mercedes-Benz
smart Coupe EV
2013-2018
Mercedes-Benz
smart EQ Fortwo Coupe
2019
Mercedes-Benz
smart Cabrio EV
2013-2015, 2017-2018
Mercedes-Benz
smart EQ Fortwo Cabrio
2019
MINI
Cooper S E Countryman ALL4
2018-2021
MINI
Cooper S E Hardtop
2020-2021
Mitsubishi
i-MiEV [Electric Vehicle]
2012-2017
Mitsubishi
Outlander PHEV
2018-2021
Nissan
Leaf S
2013-2021
Nissan
Leaf S Plus
2019-2021
Nissan
Leaf SL
2011-2019
Nissan
Leaf SL Plus
2019-2021
Nissan
Leaf SV
2011-2021
Nissan
Leaf SV Plus
2019-2021
Toyota
Prius Prime Plug-In Hybrid
2017-2021
Toyota
RAV4 EV
2012-2014
Toyota
RAV4 Plug-In Hybrid
2021
Volkswagen
e-Golf
2015-2019
Volkswagen
ID.4 (First Edition, Pro, Pro S, AWD Pro, AWD Pro S models)
2021
Volkswagen
ID.4 (Pro, Pro S, AWD Models)
2022-2023
Volkswagen
ID.4 Pro (Pro, Pro S, RWD Models)
2022
Volkswagen
Volkswagen ID.4 (RWD, S RWD Models)
2023
Volvo
S60
2023
2019-2021
Volvo
S90
2018-2021
Volvo
V60
2020-2021
Volvo
XC40 Recharge
2021
Volvo
XC60
2018-2021
Volvo
XC90
2016-2021
Volvo
XC90 Excellence
2018-2019

Why Don’t Some Manufacturers Qualify for the Used EV Tax Credit?

To qualify for the Used EV Tax Credit, vehicles have to meet certain requirements. 

While most manufacturers are working to meet this requirement by adapting their capabilities. 

The following companies have registered with the IRS as qualified manufacturers but have not submitted a list of vehicles that meet the new requirements. 

  • Honda
  • Jaguar Land Rover Ltd.
  • Kia America Inc.
  • Mazda Motor of America Inc.
  • Polestar Automotive USA Inc
  • Porsche Cars North America, Inc.
  • Proterra Operating Company Inc.
  • Subaru of America Inc.
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Complete List of 2023 EV Tax Credit Eligible Vehicles

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Complete List of 2023 EV Tax Credit Eligible Vehicles

Thinking about buying a new EV? Check this list to see which cars qualify for the 2023 EV Tax Credit.

These Are the Veihcles that Qualify for the 2023 EV Tax Credit

Table of Contents

What Is the EV Tax Credit?

This EV Tax Credit passed in the 2022 Inflation Reduction Act extends tax credits on new EVs purchased through 2023 and beyond, meaning it’s not too late to reap the tax benefits of an EV purchase.

If you purchase a qualifying EV this year, you can file for up to $7,500 in tax credit next year.

Do I Qualify for the EV Tax Credit?

The qualifications for the EV Tax Credit are pretty straightforward. 

First, you’ve got to purchase a qualifying EV (you can find a list of qualifying EVs below). To qualify, cars must be assembled in North America and meet pricing requirements. 

After purchasing a qualifying vehicle, be sure to keep your documents in a safe place until tax season. When you fill out your taxes, remember to let your accountant, tax filer, or TurboTax know about your purchase.

Which Vehicles Qualify for the EV Tax Credit

Make Model Year Price
Audi
Q5 TFSI e Quattro
2023
$80,000
BMW
330e
2021-2023
$55,000
BMW
BMW X5 xDrive45e
2021-2023
$80,000
Cadillac
Lyriq
2022-2023
$55,000
Chevrolet
Bolt
2022-2023
$55,000
Chevrolet
Bolt EUV
2022-2023
$55,000
Chrysler
Pacifica
2022-2023
$80,000
Ford
Escape Plug-In Hybrid
2022-2023
$55,000
Ford
E-Transit
2022-2023
$80,000
Ford
F-150 Lightning
2022-2023
$80,000
Ford
Mustang Mach-E
2022-2023
$55,000
Jeep
Grand Cherokee 4xe
2022-2023
$80,000
Jeep
Wrangler 4xe
2022-2023
$80,000
Lincoln
Aviator Grand Touring
2022-2023
$80,000
Lincoln
Corsair Grand Touring
2022-2023
$55,000
Nissan
Leaf S
2021-2023
$55,000
Nissan
Leaf S Plus
2021-2022
$55,000
Nissan
Leaf SL Plus
2021-2022
$55,000
Nissan
Leaf SV
2021-2022
$55,000
Nissan
Leaf SV Plus
2021-2023
$55,000
Rivian
R1S
2022-2023
$80,000
Rivian
R1T
2022-2023
$80,000
Tesla
Model 3 Rear Wheel Drive
2022-2023
$55,000
Tesla
Model 3 Long Range
2022-2023
$55,000
Tesla
Model Y All-Wheel Drive - 7 seat variant (3-rows)
2022-2023
$80,000
Tesla
Model Y Long Range - 7 seat variant (3-rows)
2022-2023
$80,000
Tesla
Model Y Performance - 7 seat variant (3-rows)
2022-2023
$80,000
Tesla
Model Y All-Wheel Drive - 5 seat variant (2-rows)
2022-2023
$55,000
Tesla
Tesla Model Y Long Range - 5 seat variant (2-rows)
2022-2023
$55,000
Tesla
Tesla Model Y Performance - 5 seat variant (2-rows)
2022-2023
$55,000
Volkswagen
ID.4
$55,000
2023
Volkswagen
Pro
2023
$55,000
Volkswagen
ID.4 Pro S
2023
$55,000
Volkswagen
ID.4 S
2023
$55,000
Volkswagen
ID.4 AWD Pro
2023
$80,000
Volkswagen
ID.4 AWD Pro S
2023
$80,000
Volvo
S60 T8 Recharge (Extended Range)
2023
$55,000
Volvo
S60 Extended Range
2023
$55,000
Volvo
S60
2023
$55,000

Why Don’t Some Manufacturers Qualify for the EV Tax Credit?

To qualify for the EV Tax Credit, vehicles have to undergo final assembly and inspection in the US, as well as a few other requirements. 

While most manufacturers are working to meet this requirement by opening and adapting facilities (or, in Tesla’s case, by significantly reducing prices), many don’t yet qualify. 

The following companies have registered with the IRS as qualified manufacturers but have not submitted a list of vehicles that meet the new requirements. 

  • Honda
  • Hyundai Motor America
  • Jaguar Land Rover Ltd.
  • Kia America Inc.
  • Mazda Motor of America Inc.
  • Mercedes-Benz USA, LLC
  • Mitsubishi Motors North America, Inc.
  • Polestar Automotive USA Inc
  • Porsche Cars North America, Inc.
  • Proterra Operating Company Inc.
  • Subaru of America Inc.
  • Toyota Motor Sales, U.S.A., Inc.
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Tesla Price Drop Saves Buyers $20,000

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Tesla Price Drop Saves Buyers $20,000

Can you get paid to buy a Tesla in 2023? Well, kind of. The recent price drops mean up to $13,000 in savings plus up to $7,500 back on your tax return.

Tesla Drops Prices Drastically to Qualify for Tax Credit

Table of Contents

Tesla just dropped the Model Y price by $13,000, which means it now qualifies for the $7,500 EV Tax Credit.

Teslas Are Now Cheaper Than Ever Before

Last year people were making money flipping Teslas like they were on HGTV, but this Tesla price drop has made the car more affordable than ever.

Tesla prices after the tesla price drop

Here’s the kicker, the Tesla price drop means three models qualify for up to $7,500 in EV Tax Credits. 

The Tesla Model Y, which cost more than $65,000 just a few weeks ago, now costs $52,990. And the reduced price comes with up to $7,500 in tax credit which translates to more than $20,000 in total savings. 

Current Owners are Bummed about the Tesla Price Drop

Bloomberg talked to several recent buyers about the Tesla price drop, and they were unhappy. 

Imagine paying $65,000 on a Tesla Model Y earlier this month. That means no savings and no tax credit. 

Or, imagine you were trying to sell your lightly used Tesla just to be undercut by the manufacturer. 

How the EV Tax Credit Works

To qualify for the EV tax credit, you must buy a qualifying  EV that costs less than $55,000 (or $80,000 for trucks and vans). You must also make less than $150,000 individually or under $300,000 married filing jointly. 

Not all EVs under $55,000 qualify because of additional manufacturing requirements written into the law, but you can find the details on the IRS’s EV Tax Credit webpage.

Tesla Price Drop Response to Losing Market Share

The company gave no specific reason for the Tesla price drop, but most analysts point to two factors. 

  1. Falling Market Share

Tesla’s EV market share dropped from 72% to 65%. And while those problems can be attributed to several internal factors (PR problems, vehicle performance issues, price), it’s largely the result of more manufacturers making EVs. This year is the first year that most auto manufacturers in the US offer an array of EV options. So the price drop is a move to boost sales. 

  1. To qualify for the EV Tax Credit

They may not have announced this intention, but the Tesla price drop situated three Tesla models just within the price cutoff to qualify for the EV Tax Credit. By qualifying for additional savings, Tesla gives potential buyers one more reason to choose Tesla. 

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Gas Prices Rise Following Holiday Travel

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Gas Prices Rise Following Holiday Travel

After gas prices spiked due to holiday travel, prices seem to be on the way back down, with Wednesday's average lower than last year.

But Falling Demand has Halted Price Spikes

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Holiday travel caused a spike in gas prices to close the year, but price hikes have stalled. 

According to AAA, gas prices will continue to dip but probably won’t reach Christmas Eve lows. 

“As we head toward February, pump prices will likely dip, barring any jolt in the global oil market,” said Andrew Gross, AAA spokesperson. “But it is likely that the national average prices we saw heading into Christmas may have been the lows for this winter.”

Holiday Demand Drives Gas Prices Up

A half-million barrel-per-day spike in domestic gas demand partly spurred the two-week rise in prices that began on Christmas.

That demand has since dropped by nearly two million barrels per day, explaining the current dip.

Current Price Lower Than Last Month and Last Year

As of Wednesday, the average national unleaded gasoline price was $3.26 — down one cent from Tuesday and level with last Wednesday’s average. 

Despite wild fluctuations in the gas market of the past year, today’s average national unleaded gasoline price is one cent less than it was a month ago and three cents less than it was one year ago. 

So while gas is higher than it was on Christmas Eve when the average national price was $3.09, it’s certainly lower than it was a year ago and much lower than it was this summer when it set all-time records. 

Gas Prices and the Used Car Market

The small blip in gas prices over the holiday didn’t have a noticeable effect on larger used vehicle sales on the Carmigo marketplace, though it’s too early to tell with the larger market. 

Likely this week’s halt in raises will be enough to continue to give consumers confidence in larger vehicle purchases.

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Used Car Prices Stabilizing Going into the New Year

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Used Car Prices Stabilizing Going into the New Year

The Manheim Used Car Index increased for two consecutive months for the first time since Winter 2021. It's a miracle if you're selling, because it signifies stabilizing used car prices.

January 2023 Market Watch

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Rising Used Car Prices Are Nice for Sellers, But Not Here to Stay

The Manheim Used Car Index has increased for two consecutive months for the first time since Winter 2021. 

It’s a Christmas Miracle if you’re trying to sell a car. 

Used car price drops have been hard on sellers this year, Partially because the drops have been so steep and partially because the human brain assigns more emotional weight to losses than to gains. It’s literally the reason money doesn’t make people happy. 

While the two months of stability have been a welcome change, we don’t expect used car prices to continue rising. We do, however, expect the rate of decrease to slow down in 2023. 

Total used car sales are also down — 13% compared with this time last year. But we’ve also seen used car list prices coming down some, too, finally dropping below this time last year. This could signal buyers adjusting their expectations to the market conditions, which could ultimately lead to more sales going into the new year. 

New Car Prices Helping Used Car Prices

One reason we’re seeing used car prices level out is the fact that new car prices haven’t as much. Sure, buyers were paying well over list-price for new cars during last year’s supply-chain disruptions, but even as the market has normalized, we’re seeing fewer and fewer manufacturer discounts and promotions. 

So as shoppers see the holiday season pass them by without a discount opportunity on the new car they want, they are turning to the used car market. Even with new car inventory on its way back up, the lack of purchasing incentives will likely drive some buyers to used vehicles. 

Used Car Prices are Still Unprecedented 

In a December report on auto loans, Cox Automotive Chief Economist Jonathan Smoke reminded readers, “And yes, despite a period in 2020 and 2021 when used vehicles were INCREASING in value, automobiles are depreciated assets. Over time, they always have been and always will be depreciating assets. Negative equity in an auto loan is not some exotic thing – it is a very normal and planned-for occurrence.”

This is still unprecedented territory for the used car industry. Never before has the average seller expected to be able to resell a used car at a profit. But after a few months of an outrageous market, many current sellers are feeling left out.

And it’s perfectly understandable to be sad about less money. Less money is almost always worse than more money. 

You Probably Won’t Make More Money Later

The truth is, used car prices are still way higher than they’ve historically been. That means we can expect the current prices to keep dropping back to normal sooner or later. So if you’re thinking about selling, don’t wait too long. 

Since the market is still much higher than its historic trajectory, we can expect it to continue to drop well into 2023. 

So unless you’re not planning on selling until the back half of 2023, you may want to sell in January or February.

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