Post #1829: Other low-end used EVs, and the biggest issue with the used EV tax credit.

Posted on July 29, 2023

 

I’m probably going to buy a used Leaf on Monday, assuming the battery capacity checks out as-stated and there’s nothing obviously wrong with the car.


Competition?

Meanwhile, I decided to see what else I could get, as a used EV, for under (say) $12K.  In this case, I’m using the same Edmunds.com website that I used to find a used Leaf, for a 25-mile radius around my ZIP code.

The market for low-end used EVs shapes up as shown below.  My choice is the top line, a high-mileage 2016 Leaf, where the reported battery capacity is near the original EPA rating.

Only a handful of models offered me more than one car to buy, in this price range.  Of those, they all had lower original EPA-rated electric range, were smaller, and were more expensive than the Leaf I have my eye on.  The only thing that stands out is that the Ford Focus had a better crash rating.

Near as I can tell, all of these qualify for a used EV tax credit equal to 30% of the sales price.  So, in theory, a $10K sales price (plus fees, of course) works out to be a final out-of-pocket cost of $7K.

More on the messy situation with that tax credit, below.

If I were to bump up the price range a bit, I’d have run into a whole swarm of VW e-Golfs priced around $14K.  I can only assume that they have a good reputation for battery life, as the e-Golf is both smaller than a Leaf and has lower original range than the Leaf SV (30 KWH battery option).

In any case, there’s nothing available around here to give me pause.  The Leaf is about as good as it gets for that generation of EVs, other than Tesla.  And the cheapest used Tesla in this area starts above $20K.  Politics aside, that’s more car than I need.


Quadruple-checking battery health:  The huge practical advantage of a used Leaf.

Source:  Edmunds.com

Edit:  Nope, see next post.  The Recurrent.com battery range estimate appears to be all-but-useless.

Leaf and BMW seem to be the only two makes that can give you some third-party estimate of battery health, on-line.  Above, that’s the report on the battery health of the car I’m looking at, by Recurrent.  And, just to make sure there’s no funny business, you go directly to the Recurrent website and plug in the car’s VIN.  They swear that, as of May 19, 2023, that was the state of health of the battery, of the car I’m considering buying.

Not every Leaf for sale had a battery rating.  But most did.  And, as you might expect, if you take a Leaf that didn’t report its battery status, and check it out on Recurrent.com, you typically find that the battery isn’t in such great shape.  Thus, for the Leaf, I feel confident in taking the absence of battery health information as a red flag for probable poor battery health.

For other makes, you’re on your own.  I don’t know whether there’s something unique about Leafs.  Of the other makes, the only one I spotted with that Recurrent battery health information was a BMW.  That means you either have to go look at the car, or trust the information provided over the phone by the used car dealer.

But in addition ….

A second check on battery health is given by the Leaf’s own gauges.  You can get it to display both the nominal state-of-charge (what % of battery is left), and match that against the nominal remaining range, in miles.  You can also display how hard the car was driven, to generate that mileage figure.  For a car with a putative 100-mile range, those two figures — miles left, and percent-of-battery left — should very nearly match, as 100% of the battery should equate to 100 miles.

A third check comes from the Leaf’s range gauge — the thing that replaces the gas gauge in a gas car.  This, via YouTube.  When new, the gauge should have 12 bars total — two red, ten white.  As the battery capacity falls, you lose some of the white bars.  Best guess, if you get down to eight bars, you’ve lost about 30% of original capacity, though I have not been able to verify that.

Finally, drive it.  In this case, the driving check is pretty straightforward.  Set the trip odometer.  Note the state-of-charge.  Drive enough to drop the state of charge by five percent.  If the battery really has a 100-mile range, you ought to get somewhere near five miles.  Note, however, that as with gas mileage, there’s a huge variation in range depending on how the car is driven.  My wife’s Prius Prime has an EPA electric range of 25, but I typically get around 35.  That’s not a miracle, that’s from feather-footed driving on low-speed suburban streets.


The sloppy situation for the used EV tax credit:  No IRS forms or reporting system yet.

Near as I can tell, I don’t think the used EV market has fully grasped the presence of a big used-EV tax credit.  For example, the dealer I’ve spoken to said he couldn’t say one way or the other, whether “my” Leaf qualified.  He is in the used car business, and he didn’t know the details of how this works.

I think that’s due, in part, to the complexity of the current situation.

Before the sale, to see whether or not you can claim the 30% (maximum $4K) tax credit for a used EV, you have to check to see if both you and the car are eligible.  You can start with this IRS pageAt the time of sale, the dealer must provide you with certain information, as specified on that web page.  After the sale, by the time you file your taxes, both you and the dealer have to file paperwork with the IRS.  Unfortunately, that paperwork doesn’t exist yet.

First check:  Is your income low enough?  For whatever reason, there is a knife-edge cutoff,  For married filing jointly, the rebate disappears at $150K in federal adjusted gross income.  Under that, you get the full credit.  Over that, you get nothing.

Second check:  Does this car’s manufacturer qualify?  You can easily get lists of which used EVs qualify for the 30% (up to $4K max) used EV tax credit.  That’s the easy part.  Near as I can tell, this is by manufacturer, per this IRS page.  You can easily find other lists that give both manufacturer and model, if you want to double-check.

Third check:  Is the car at least two years old, meaning, 2021 model year or older, in 2023? Then it is eligible for the credit.

Fourth check:  Is it cheap enough?  Has to sell for under $25K to qualify.

Fifth check:  Was the car sold to a private individual any time after mid-August, 2022?  If so, that car is not eligible for the tax credit.  I think that’s to prevent double-dipping.  There’s only one credit available for the used lifetime of the car.  It’s fine if it was sold to a dealer, because dealers can’t claim the credit.  Short of a title search, the best source I found to get a plausible check on that was vehiclehistory.com, where you can typically find out if that was sold through a dealer during that time period.

Now for the sloppy part:  The dealer has to file information about that car sale with the IRS.  But there’s no way for the dealer to do that yet.

I wish I were making that up.  But I’m not.  That’s what’s shown at the top of this section, from this IRS web page.

My makeshift solution is to ask the dealer to sign a piece of paper stating that he will file that form, for my transaction, when the IRS comes up with the form and the filing mechanism.  More or less make that an addendum to the sales contract.  Then hawk the IRS website, and email the guy when the IRS finally gets its act together.

Better yet, the form to which the IRS directs the buyer does not appear to have been updated to deal with the used vehicle credit.  I wish I were making that up, too.  But I’ve been doing fairly complicated taxes for decades (I owned my own small business), and I see no way to use the form listed on this IRS page, to file for the used EV tax credit.  The instructions are pretty explicit about only applying to new vehicles:

Source:  Instructions for IRS form 8936, revision January 2023.

It’s possible I’m just missing something, but as far as I can tell, the form to which the IRS itself points you, that you must file for this transaction, can’t be filed to claim credit for a used EV.

In short, the availability of the used EV tax credit boils down to faith in the IRS’s ability to get the forms and reporting system straight before April 15, 2024.


Conclusion:  Due diligence done.  Shopping for a used Leaf is a lot easier than shopping for a comparable gas car.

I’ve bought my share of used cars, mostly from individuals. Some worked out well.  Others, not so much.

It’s never a pleasant task.  It always involves a lot of uncertainty.  And, typically, a wad of cash.

With that as background, I judge that the market for used Leafs is about as good as a used car market can get. 

Every used car has wear-and-tear items.  Tires, brakes, and so on.  At some point, the seals on the AC system will start leaking.  There will be rust.  And so on.

Used cars also have problems that are car-killers.  Blown head gasket.  Cracked block.  Stuck piston ring.  Failing automatic transmission.  For low-end used cars, problems like that can be the death of the car.  They can cost more to fix than the car is worth.  Those of us who have driven a car or two to the junkyard know, first-hand, the many, many ways in which a gas car can fail beyond cost-effective repair.

Near as I can tell, for EVs, barring extreme bad luck, the only car-killer is the battery.  Other than Tesla, I don’t think an EV manufacturer has had frequent failures or recalls of the motor.  The very earliest Leafs had a battery recall, and other models have had sporadic issues with battery recalls.  Avoid them, and I think you’ve avoided any extreme known issues.  In terms of having a car that will function, as long as battery, motor, and associated electronics work … more or less anything else ought to be fixable.  And with the Leaf, I get multiple, simple checks that assure me of the health of that battery.

If I were sinking my life savings into the car, or if I needed it in order to keep my job (say), I’d do a more careful assessment of the battery.  There are analyzers that will check the individual cells or banks of cells, to provide a more fine-grained assessment of battery health.

But for me, for a car that I’m going to use to run errands around town, I think the existing “quadruple-check” of Leaf battery health ought to be sufficient.

Any old used car is a gamble.  If you’re not ready to lose that gamble once in a while, you probably shouldn’t be buying used.  But with a used Leaf, my sense is that my risk of total loss is far, far less than other low-end used cars I’ve bought.

At this point, I’ve done my due diligence.  Modes of local transportation that generate less C02 than this all suffer from considerable inconveniences.  As cars go, this is not quite as clean as it gets, but it’s close.  If all suns shine, next week I’m going to sink a net … $7500 or so — into thoroughly obsolete 7-year-old EV technology. 

Should I take it to a mechanic before I buy it, and get a complete battery scan, and blah blah blah?  Yep, sure should.  Am I going to?  Nope.  I’m going to trust my own judgment.

Fingers crossed.


Addendum:  Per Gencraft.com

By eye, the Gencraft AI associates “junk car” with nothing more recent than roughly the 1975 model year.  And for whatever reason, it seems to have a fixation with GM products, particularly Cadillac.  At any rate, here’s “junk car” by Gencraft.com, in eight different styles.