Tesla Store to Open on Tribal Land in CT

Tesla, frustrated for years by the legislature in its attempts to obtain permission to open stores in Connecticut, is now opening an outlet where the state rules don’t apply: the Mohegan Tribal land. Tribal land exists outside state jurisdiction and is subject only to federal law.

This tactic has been previously used by Tesla in New Mexico, where it has opened 2 outlets on tribal land, and in New York, where it has announced an agreement to build on Oneida Nation land about 20 miles east of Syracuse. New York has a limited number of Tesla stores, but this came about via a negotiation with the dealerships. The franchise laws there are still in place. This limited exception arrangement applies only to Tesla (i.e. not Rivian or Lucid) and caps the store count. Tesla has been chafing at this limit for a long time. Every Tesla store or gallery in NY is in New York City, Westchester County, or Long Island. The entire upstate region has been unserved.

The new Tesla facility, to be located at a former Victoria’s Secret outlet at the Mohegan Sun Casino, will sell and deliver vehicles. Test drives will be available. Renovation of the space is set to commence imminently and should be finished at some point this fall. Deliveries will begin before the facility is completed, and we will publish an update when that information is finalized. It is not a service-center.

Mohegan Sun is located about 44 miles from Hartford, 54 miles from New Haven, and 93 miles from Stamford. Stamford is the heart of Fairfield County, which is Tesla Central. And that is the limitation of opening on tribal land – it is not near the big population centers. Nonetheless, it will make a material difference for residents of the eastern part of the state. It is our expectation that Mount Kisco will remain a delivery option for customers in western CT. We are also waiting to hear the word on whether deliveries to CT customers will be enabled at the forthcoming Chicopee, MA location (10 miles over the state line off I-91. It will be a while before that large facility is built.)

A sales and delivery facility on tribal land does not mean that the company will stop its efforts to win the right to open stores in CT (a.k.a. direct sales). This could be viewed as planting a flag by Tesla, as the legislature has not acted in the interests of its constituents, over 80% of whom support allowing direct sales. On the other hand, the facility will open and the dealers will see that the world isn’t coming to an end. (A lengthier discussion of direct sales, following the Transportation Committee’s failure to raise the direct sales bill in the 2023 legislative session, can be found here.)

The obvious follow-on question is whether Rivian and Lucid will do the same thing. A lot of people come to these tribal casinos. It is good business for both parties.

According to the Mohegan Sun press release, Tesla will work with Mohegan to incorporate Tribal members and Mohegan Sun Team Members into its workforce development program.

We look forward to a future post about the new sales center when they have the grand opening in the fall.

Photo credit: Paul Braren

Post by Barry Kresch

Tesla Patrol Car Purchase Price Now Lower Than Ford Explorer ICE Police Vehicle

In 2019, when the Westport Police purchased a Model 3 for use as a patrol car for $52,000 vs. $37,000 for the incumbent gasoline-powered Ford Explorer, it was a good deal. But it had to be proven, as some were skeptical that the savings would be significant enough to overcome the $15,000 purchase premium. In our analysis, we found that when factoring in savings in fuel, maintenance, customization, and expected vehicle life, the Model 3 is projected to save over $50,000 over a 4-year period. The purchase price differential was recouped in the first year. That detailed analysis is here. Fast forward a few years, however, and things have really changed.

The law-enforcement version of the Ford Explorer, which comes with a few augmentations, such as a heavy-duty alternator, to be able to support the customization needs of the police, is now $47,000. The Westport Police expect delivery next month of their third Tesla and second Model Y, purchased this year, for which they paid $53,000. This new Tesla is eligible for Inflation Reduction Act incentives of $7500, making the acquisition price lower than the Ford.

The IRS code section 45W, clean vehicles for fleet incentives, applies to this vehicle. In 2023, obtaining the credit is a little cumbersome because an entity that does not pay taxes must file for “direct pay” to get the funds from the Treasury. This will become easier in January when the transfer provision goes into effect. The buyer transfers the tax credit to the seller and the seller gives the incentive as a rebate, deducted off the invoice price. This article describes the process for non-taxable entities.

The department buys the same Tesla vehicles that consumers buy. The Model Y that the police bought is the lowest-priced trim level – dual motor (AWD), standard range (279 miles). With continuing price-cutting by Tesla, that model, if bought today, goes for $47,740. At that price, it would also be eligible for a CHEAPR rebate of $2250. (CHEAPR rebates for fleet purchases are expected to be implemented within the next couple of months of this writing on 6/27/23.) The net purchase price for a Model Y will be $37,990, or $9000 less than the Explorer.

The Model Y now seems to be the EV of choice for the Westport Police, rather than the Model 3 due to the extra space. At the time the Model 3 was purchased, the Model Y did not yet exist. (The only other police department in the state with an electric patrol car is Wethersfield, which has a Ford Mach-E. The Westport PD also has other EVs for non-patrol duty uses, including these new additions.) A video walk through of a fully customized Model Y and the Mach-E can be found on the Club’s YouTube channel.

Increased Expectations for Vehicle Service Life

When we did the financial analysis in 2021, after the Model 3 had been in service for a year, we built an amortization schedule based on a projected 6-year service life for the Tesla compared to the historical 4 years for the Explorers. (After 4 years, the maintenance costs for the Explorers make it not cost-effective to continue using them as patrol cars.) Three years into the use of the Model 3, the police feel it is quite possible that the 6-year projection may be too conservative. The vehicle is holding up well. Maintenance costs are as low as forecast. The battery is in good shape (and they are monitoring it with Tesla-Fi). They intend to run with it as long as they can. Let’s say, and this may also be conservative, that the 6 years turns into 8 years. That means the capital cost of acquiring patrol cars gets cut in half.

How Is This Not a No-Brainer?

• Lower acquisition cost
• Lower fuel costs
• Lower maintenance costs
• Double the service life
• Better performance

Westport Police Add Electric Utility Vehicle and Electric Motorcycle to Fleet

Both vehicles were on display at the Westport Sunrise Rotary Duck Race fund raiser on June 24th as the department display the ongoing results of its efforts to reduce carbon emissions, as well as benefit from lower EV operating costs.

The photo at the top is the all-terrain utility vehicle. It looks rather like a golf cart, though designed for heavier-duty applications, including the winch on the seen on the front. This vehicle has the life we would all like to have, spending its days at Compo Beach, where it can be used on the sand if needed.

The vehicle is powered by 6 12-volt batteries. These are not lithium-ion. A charge lasts between 8-12 hours.

Vehicle interior.

Zero Electric Motorcycle

Photo is Westport Police Chief Foti Koskinas sporting the new Zero Electric Motorcycle (before he had a chance to change into his uniform). The Zero is a recent arrival and still has to be outfitted with decals and police lights. It will be used for parking and traffic enforcement. It replaces a Harley that was retired.

This stealthy bike has a 17.3 kWh battery, rated for a range of 183 miles city and 85 miles highway. Chief Foti states that those numbers are so far achieved in real world experience.

Besides these two new vehicles, the department has 2 Tesla patrol cars with a third on order, 2 Toyota Prius Prime Plug-in Hybrid, Honda Clarity PHEV, and a BMW i3 Battery Electric Vehicle – seven plug-in vehicles in all plus a Ford Interceptor conventional hybrid patrol car.

The following is a summary of what was reported in the recent CHEAPR board meeting.

Pre-Qualification Voucher Program for Income Limited Persons

This new program soft-launched on March 29th.

There have been supplemental rebates for income-limited buyers (often short-handed as LMI) for new EV purchases, as well as rebates for used EV purchases for several years. These have gotten almost no traction. From the beginning, concerns were expressed that the criteria (participation in certain government assistance programs) were too restrictive and the post-purchase application process, whereby the purchaser had to float the cash for the incentive (as well as live in some suspense that it would come through), were just not realistic.

Those complaints, along with the empirical data, led the legislature to direct changes to the program that became law in Public Act 22-25, passed in 2022. In addition to the government assistance program participation, an income option was added, specifically that households with income of up to 3 times the federal poverty rate would be eligible regardless of program participation. Some examples of 3x poverty: $43,470 for a single person household and $90,000 for a 4-person household.

DEEP reports this has led to an encouraging early response. This is based on vouchers awarded. It doesn’t definitively mean that everyone who received a voucher has used it. That was a subject of discussion when the LMI program was first implemented. Apparently, some other states that had used vouchers had seen low conversion rates, and there was concern about how wasteful the extra admin overhead would be. As of this writing, DEEP has only updated published rebate data through April 13th, and there are no recorded LMI rebates between the end of March and April 13th, so it is too soon to have any visibility.

The next step is for there to be a marketing push. A vendor has been selected and we’ll see how fast the information gets out.

Used EV Rebate

As noted above, the LMI program includes rebates for used EVs. The CHEAPR website indicates which EVs are eligible, just as it does for new EVs. Only vehicles that previously met the criteria for eligibility when new will be eligible as a used vehicle. We thought there might be a willingness to loosen this and it is disappointing this is not the case. We think it needlessly limits the options for the consumer. There is already a gating requirement in terms of income limits. This feels needlessly restrictive.

There are some details that we await. The MSRP cap was lowered, then raised over the course of the program. Is the eligibility based on the current cap or the cap in effect at the time? What if a model has had price changes?

Fleet Incentive Program

A major addition to the program was extending the CHEAPR incentives to fleets. This applies to private fleets, municipalities, non-profits, and tribal entities. Non-profits must provide a Certificate of Legal Existence to prove good standing. According to DEEP, the launch will occur sometime in the third quarter.

The cap is 10 rebates per year and 20 lifetime. The DEEP commissioner has some flexibility to raise the cap for an organization if it is determined to be warranted.

The fleet program applies to new vehicles and the standard rebate only. The MSRP cap of $50K applies here as it does with the consumer.

E-Bike Rebate

The first phase of the e-bike program is scheduled to launch on June 28th with a point of sale voucher for brick and mortar stores. Online sales will come along later. CT residents age 18 or older can apply for a voucher that can be redeemed for an eligible e-bike at a participating retailer. Check with your preferred e-bike retailer to see if they are enrolled in the program.

The base rebate is $500. That can be augmented by an additional $1000 for LMI individuals.

There is an MSRP cap of $3000.

Eligible bikes must have either a UL 2849 or EN 15194 certification. (A pending certification does not count.) This is an important requirement to ensure safe e-bikes are purchased. Generally speaking, and unlike with automobiles, there is a paucity of regulation at this time. There is a lack of awareness that there are unsafe e-bikes out there, and with lithium-ion batteries, you are literally playing with fire.

Update: According to Bloomberg, the program was fully subscribed within 3 days of launch.

Court Rules in Favor of Rivian’s Motion to Dismiss; Plaintiffs File Motion to Reargue

Note: For those following this case, the docket number is AAN CV 22-6049137 in Superior Court, J/D of Ansonia, Milford. This is the link.

Update: Hearing scheduled for June 20 regarding plaintiffs motion.

June 20 Update: Court denies plaintiff motion for re-argument and sustains Rivian’s objection to plaintiff’s motion.

Rivian needs a license from DMV. Should they get that, and if there are no further appeals, they should then be in a position to begin renovating the site. The plaintiff has 20 days from June 20 to file an appeal if they so choose.

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Rivian seeks to open a service center in Shelton, though they also want to deliver new vehicles at the location. There would be no showroom and no sales activity. Shelton granted an approval for a facility to be located at 2 Mountain View Drive. Mario D’Addario Buick, along with TD Properties, the owner of the D’Addario property, filed a lawsuit to force the Town to rescind the approval.

On May 16, the court ruled in favor of a motion filed by Rivian to have the lawsuit dismissed. The court ruled that the plaintiffs lacked standing due to their arguments not being a zoning issue but rather a licensing issue, which is the province of the Department of Motor Vehicles. Zoning regulations are meant to protect the public interest and are not intended to address business competition. Furthermore, Rivian acknowledged that it cannot carry out any activities that may require a license until it obtains such a license.

On June 5, the plaintiffs filed a Motion for Reconsideration and Reargument. They contend that since D’Addario has a new car dealer license and Rivian does not, they are a protected class of business in this licentiate, and this amounts to illegal competition.

This is not a legal blog and we don’t know whether DMV will get involved or where this will go. This is an earlier post from when the initial lawsuit was filed. Our opinion, in general, is that the dealerships are trying to make it as difficult as possible for direct sales companies to open servicing facilities. We have seen this with Tesla in East Hartford and South Windsor, and now this episode with Rivian.

Post by Barry Kresch

The Direct Sales Morgue is Enlarged By One More Year as Bill Dies in Committee

As the legislative session inches towards its conclusion on June 7th, we have been through another year without enactment of legislation that would permit electric vehicle manufacturers using a direct sales business model to open stores in CT. These bills would permit manufacturers of exclusively battery electric vehicles (BEVs) that do not have an established dealership network (and are not majority owned by a company that does) to open company stores to sell and deliver directly to CT customers. These are companies such as Tesla, Rivian, and Lucid, with others on the horizon.

The proposed legislation would not affect the arrangements that existing dealerships have with their affiliated manufacturers. Governing the dealer/manufacturer relationship was the intent of the laws when they were passed long ago. All these dealer claims about how the franchise laws protect consumers is just smoke.

CT Insider, reporting on the current legislative session, quotes Transportation Committee Co-Chair, Sen. Christine Cohen characterizing the bill as “controversial,” that it would take up a lot of committee and floor time, and lack the votes to pass.

To quote former State Senator Will Haskell (D-Westport) when he previously raised direct sales, this bill is only controversial in Hartford. The way the bill was killed this year is the way it is always defeated – without being called for a vote. The legislators well know that their constituents support this bill. Many legislators are afraid to cross the dealerships, an entrenched and well-funded special interest. By working behind the scenes to prevent the bill from being called, they can have it both ways. They keep the dealers happy and they don’t have to go on the record opposing their voters, not to mention ding their environmental scorecard. (The CT League of Conservation Voters, the organization that publishes the scorecard, views direct sales a pro-environment measure, but the scorecard can only count votes that are cast.)

This blog wagers that a number of these behind-the-scenes “no” votes would turn to “yes” votes if taken publicly.

The CT Insider reporting also quoted Cohen as citing the actions of Tesla CEO, Elon Musk, as being a factor costing support. It is fair to acknowledge this. He is not helping matters. Direct sales used to be referred to as the “Tesla Bill,” but there are now other companies using this model. This blog sees this as a larger issue of consumer choice, EV adoption, and economics. It is the single most effective thing that can be done to accelerate EV sales.

Dealerships at times object even to their own affiliated manufacturers’ efforts to sell more EVs. For example, Ford’s new Model-e program that seeks to more aggressively position dealerships to sell EVs is moving forward, but it has engendered resistance and dealership lawsuits. The CT dealership trade association enlisted several CT federal and state elected officials to speak out publicly against the Ford plan.

Some legislators do openly support direct sales. Included among them is Rep. Keith Denning (D-Wilton), who submitted a direct sales bill this year, which was not raised by the Transportation Committee Chairs. This blog reached out to him and he provided this statement:

Delaware State Court Rules Direct Sales Does Not Violate Franchise Law

A nearby state, Delaware, now has direct sales. This came via the judiciary. A recent ruling from the Delaware Supreme Court held that the language in the franchise law applies only to existing manufacturer-dealer relationships and is not applicable to new companies that operate sans dealerships. Tesla filed the lawsuit.

For this to have a chance to happen in CT, Tesla or another manufacturer would have to file a lawsuit in state court. They are a legitimately injured party and would have the standing to proceed. The unsuccessful efforts to date in CT to legalize direct sales have only gone through the legislature. One potential downside is that if such an action were to be filed, the legislature would likely punt on dealing with it (which is basically what they’ve been doing anyway) until the process plays out. That could take some time. The Delaware case was appealed before it was taken up by the Supreme Court.

Massachusetts is another state in the region where direct sales came about via a lawsuit. However, if there is one takeaway from the Delaware ruling, it is that franchise laws are not uniform across states. The language of the CT law would have to separately be tested.

Consumers Support Direct Sales

The option of buying a vehicle via direct sales is overwhelmingly favored by consumers. When last the issue was polled in CT, 83% were in favor. Support cut across age, party affiliation and ethnicity. (The polling was fielded by public-opinion firm, GQR, with a sample of 500 likely voters and had a margin of error of +/- 4.4% at a 95% confidence interval. More detail is in the linked page.)

Testimonial Unanimity – When there was open testimony in 2021, 81 written testimonies were submitted to the Transportation Committee. If one excludes the 9 from individuals associated with the dealerships and the 3 from Tesla, Rivian, and Lucid, we are left with 69 from members of the public at large. All 69 of them were in favor of direct sales.

When Sen. Cohen remarks that the bill takes a lot of floor time (i.e. inconveniencing the legislators), the reason is that many people register to offer oral testimony. Public hearings package multiple bills into a day of hearings. When direct sales is on the agenda, it becomes a very long day indeed. In past hearings, some legislators have looked visibly annoyed, and some of them verbalized it, that they have to sit through more hearings about direct sales, where everyone but the dealers are in favor. Legislators, generally speaking, exhort the public to get involved. In this case they do, and ironically, it’s a problem for them. This was mitigated in a narrow sense in the short session of 2022, where by prearrangement, only a small number of people were permitted to testify.

Dealerships Now Seek To Block Service Centers

A more recent insidious development is that dealerships have mobilized to block direct sales manufacturers from opening service centers. They want to make getting the vehicles serviced as inconvenient as it is to buy them.

Hoffman Auto sued East Hartford when they granted a permit to Tesla to open a badly needed second service center to complement the existing one in Milford. East Hartford subsequently withdrew the permit and Tesla did not further pursue it. Dealer representatives showed up in force for a hearing in South Windsor regarding a proposed Tesla service center. More recently, Mario D’Addario Buick and TD Properties sued Shelton and Rivian after the Town granted Rivian a permit to build a service center. Rivian’s motion to dismiss is awaiting a ruling. The dealers latch on to anything they can to throw up roadblocks for these companies.

That New Tesla Service Center – It’s In Massachusetts

Tesla is building a new sales and service center in Chicopee, MA. The company was granted an approval by the Chicopee City Council on May 3rd. Chicopee is only about 10 miles north of the CT border off I-91. This location will be more convenient for customers in Hartford and points north than Milford. That sound you hear is those jobs and taxes going to MA. This will take some of the pressure off getting a Tesla serviced locally. It doesn’t change the fact that CT Tesla purchase customers have to pick up their vehicles in Mt. Kisco, NY.

Direct Sales = Greater EV Adoption

Every year there has been testimony before the legislature, the dealer representatives talk about how all-in they are for electric vehicles. Then every year, they keep not selling them, or not that many of them. When we look at the data, we see only modest growth.

Tesla has testified that an ideal scenario in its view is that Tesla becomes a smaller slice of a rapidly growing pie. That hasn’t happened. In fact, the Tesla share of registered EVs is higher now than when we began tracking it in 2017.

New Sierra Club Study

The Sierra Club recently released the third wave of its ongoing EV Shopper Study with fieldwork conducted in 2022. These studies have been fielded in 3-year intervals. Consumers visit or call dealerships to ask about EVs, see if the salespeople are able to answer basic questions, find out whether there is a charged vehicle available for a test-drive, etc. The findings of the new study are as disheartening as those of past studies.

• 66% of car dealerships did not have a single EV for sale. Keep in mind, this includes both new and used vehicles.
• To some degree, supply-chain issues persisted into 2022, but of the 66% of dealerships without EVs, 45% of them said they had no interest in selling EVs.

These numbers are exclusive of companies such as Tesla, Rivian, and Lucid that do not have dealerships, and which obviously want to sell EVs. Also, they are national numbers. The Sierra Club does break the numbers down by region, but the numbers in the Northeast were not that different from the overall profile.

Some dealers make an effort, but we are still a long way from where most or all dealers act like they actually want to sell EVs. This is consistent with what we have been seeing in our ongoing analyses of CT CHEAPR rebate data.

Atlas Public Policy – Direct Sales Would Remove an Estimated 42 Million Metric Tonnes of CO2

Atlas Public Policy builds analytical tools to help policy makers and businesses make decisions. Atlas, in conjunction with the Electrification Coalition, undertook an analysis to assess whether a state’s adoption of direct sales accelerates EV adoption. Their findings were that, indeed, it does. From the report:

• Consumers have reported poor EV buying experiences at dealerships,
• Dealers are incentivized to sell internal combustion engine vehicles rather than EVs due to the dealership revenue associated with future servicing needs,
• Dealer franchise laws add costs for consumers, and
• Giving consumers the freedom to buy via direct-to-consumer models leaves both consumers and manufacturers better off.

The report goes on to forecast what the emissions impact would be if direct sales were to be adopted country-wide. Because it is a forecast, it presents its findings as a range. The midpoint of the range would result in the removal of 42 million metric tonnes of CO2 in the period of 2023-2030.

Bloomberg Analysis

Bloomberg published an opinion piece entitled, “Car Dealership Laws Aren’t Fit for the Electric Age,” in which they looked at EV adoption in open vs. closed states. (The article is behind a paywall.) The results were quite striking with over 3X the EV adoption rates in states with uncapped direct sales, compared to those prohibiting the practice.

The legacy Automotive Industry Is Often Its Own Worst Enemy

One could be forgiven for thinking that the strategy of many of the established automotive companies has been denial.

Ford is a notable exception. They made the Model-e gambit, followed last week by the hugely consequential announcement that the company has negotiated an arrangement with Tesla to give Ford owners access to the Tesla Supercharger network, and that beginning in 2025, Ford vehicles will be manufactured with native Tesla-compatible connectors. In our view, the Supercharger arrangement is a smart move for both companies. It potentially could influence other companies to follow suit. (We understand that existing Ford EV owners will be able to get adapters. We would be interested in hearing from Ford owners who are readers of this blog about how and what Ford is communicating. Please leave a comment.)

CCS stands for Combined Charging Standard and NACS stands for North American Charging Standard. CCS is backed by most manufacturers. Where it says “Tesla” below, it is the NACS connector, which is the standard Tesla uses and has been pushing to be the universal connector, without much success until now. You be the judge of which is the more elegant design. Between Tesla and Ford (and, I suppose, I shouldn’t overlook Aptera; though they haven’t delivered any vehicles yet, they still get points), the majority of EVs on the road will have NACS.

Not all companies are moving aggressively like Ford. Stellantis is a major manufacturer, the owner of Jeep, Chrysler, Dodge, Ram, Alfa Romeo, Fiat, Maserati, and several others. And yet if we look at their profile in CT, they are nearly invisible. They have a modestly successful Jeep Wrangler PHEV and that is about it. (Stellantis represents 1553 of 30,017 EVs registered in CT as of Jan 1 – 1,200 from Jeep, 317 from Chrysler, 36 from Fiat. Only the Fiat are fully electric – BEV and they are not currently being manufactured.) Now, as they play catch-up – they announced a new EV platform – they are laying off thousands. From Yahoo Finance: “The company has about 56,000 workers in the U.S., and about 33,000 of them could get the (buyout) offers.”

Larger Environment

While we’re fighting over the right to buy an EV directly from the manufacturer, China is banning the sale of ICE vehicles that don’t meet its new, stringent emission standard (VI B) by July 1. That could send shock waves across the world as inventories of unsellable ICE vehicles grow. We are seeing states ban the sales of new ICE vehicles as of around 2035.

Closing Thoughts

How dealerships and the legacy automobile industry writ large will ultimately fare is up to them. If they innovate and compete, they’ll be fine. Some of them have embraced EVs, but judging by the data, not nearly enough. In CT, the dealership special interests have thus far been given the message that they can sit back and not worry about it, that change can happen on their timetable, negative consequences for those of us who live in the state be damned.

There are many EV Club members who own or have ordered a Tesla, Rivian or Lucid. For those of us who have made the trek to Mt. Kisco to pick up a Tesla, it stares us in the face that the jobs to build, staff, and maintain the facility are in New York, and the company pays property taxes to Mt. Kisco and a franchise registration fee to NY. Manufacturers selling directly, a large and fast growing industry, are not choosing CT to set up manufacturing facilities, despite our ports, roadways, railways, and highly educated and trained workforce. We lose twice.

Today’s headlines and accompanying disruptions in the oil and gas market punctuate the urgency of moving away from fossil fuels. Allowing direct sales will help CT meet its EV adoption objectives, create green jobs, reduce pollution, and, most importantly, it is what is right for the citizens of CT.

How Can You Help

We agree with Rep. Denning that a direct sales law is not anti-dealer; it is pro-consumer and pro-CT.

We have to ask ourselves why we’re okay with making it harder for CT residents to buy an EV, not easier. Why are legislators ignoring the will of the people and bowing to the dealerships?

Our EV Club is not a political organization (501(c)4). We do not have paid lobbyists prowling the Capitol. We can only operate as a grassroots organization evangelizing for EV adoption, promoting free competition, and being open to new and innovative ways of doing business.

You can be sure that legislators hear from the dealerships and their lobbyists whenever there is a bill. They have to hear from as many of us as possible. Even if you have emailed or called previously, every year is a new game.

The 2024 legislative session will be a short session, which happens in election years. The rules are more restrictive and there may well not be a direct sales bill introduced. But as we get into election season, that will be a good time to make your voice heard.

Mid-Price Model 3 Expected To Begin Deliveries in June

It’s a nice problem to have. Last summer, Elon Musk announced that due to too much demand, Tesla was suspending production of its long-range, non-performance variant of the Model 3. Now, it’s back.

According to the Tesla.com configurator, the vehicle now costs $47,240 before options, taxes and destination charges, or $6,000 less than the performance version. That’s today, anyway. Like the performance Model 3, it comes with dual-motor, all-wheel drive. 0 to 60 acceleration is 4.2 seconds, compared with 3.1 in the performance trim. We haven’t fully gone through the purchase funnel, but the previous version of the non-performance trim offered a post-purchase $2,000 “faster acceleration” upgrade.

Lithium Iron Phosphate (LFP) Battery

Where the new version appears to differ from the prior version is the battery. This is a shorter, long-range version at 325 miles, compared to 358 miles previously. Also, the vehicle is eligible for half of the Inflation Reduction Act (IRA) purchase incentive or $3,750. Taken together, the shorter range and lower incentive indicate that Tesla is using some variation of the Lithium Iron Phosphate (LFP) battery that it has been using in the RWD standard-range Model 3.

Based on how the IRA incentive works, the minerals for these batteries are most likely coming from Tesla’s Chinese battery partner, CATL, with battery assembly occurring in one of Tesla’s domestic plants. In a couple of years, when the “foreign entities of concern” rule phases in, which will exclude all things China, the vehicle will either lose the incentive entirely or Tesla will have to set up an IRA-compliant supply chain.

LFP batteries have some advantages, such as lower cost, no use of cobalt or nickel, and excellent durability. They are, however, less energy-dense and reportedly more subject to cold-weather range loss, but the chemistry is evolving and we have not seen any data at this point for this new vehicle. (This is the first production-version LFP battery to exceed 300 miles of range.) These batteries can be routinely charged to 100% with no consequences. So, as a practical matter, for daily use, if an owner of the prior lithium-ion long-range vehicle charged to 80%, the mileage nets to 286 miles, less than the 325 for the new battery.

We expect to see more EVs with LFP batteries. For example, Ford announced a partnership with CATL to build an LFP factory in Michigan. (The IRS rule making has not yet addressed whether a domestic battery venture with a Chinese company will be incentive-eligible. Iron has not been classified as a critical mineral, which may help.) 3 major South Korean battery companies (Samsung, LG, and SK) have been reported by Bloomberg to have LFP projects under development, including in North America. Bloomberg also reports, aside from Tesla and Ford, that Mercedes, Volkswagen, and Rivian are moving to incorporate LFP batteries.

Small Difference After Incentive

Unlike this new long-range and the standard range, the performance Model 3 is eligible for the full IRA incentive. That nets out to only a $2250 difference between the performance and long-range trim levels. We welcome the re-introduction of this intermediate trim level, but will this relatively small net difference be enough to matter?

The other thing that is orbiting is that Tesla is redesigning the Model 3. Details are few at this point but both the vehicle and the pricing could be affected.

UPDATE: This model is now eligible for the full IRA incentive, indicating that Tesla was able to make its supply-chain compliant.

Above photo by Paul Braren

Successful EV Showcase with Hotel Tours

Thanks to everyone who made this a successful event, with numerous EVs, including Lucid, Rivian, Tesla, Ford, Kia, Chevy, Polestar, and others.

The Westport Police brought their Tesla Model Y patrol car that went into service January of this year.

Tours of the hotel were given. This is the first net-zero hotel in the country, LEED Certified Platinum, Passive House Certified. The hotel has no fossil fuel connection. It is powered by solar, augmented with battery storage. Air-source high efficiency heat pumps provide the heating and cooling. The lighting is high efficiency Power over Ethernet. The elevators have regenerative braking. The kitchen uses induction. The envelope is so tight that if you are in a guest room, about one-tenth of a from I-95, it is totally quiet.

There are over 1000 solar panels on the hotel roof and the solar canopies. There is a bank of Tesla V3 Superchargers and, under the canopy, 12 level 2 chargers with J-1772 connectors. There is already in place infrastructure to install another 12. The level 2 chargers are part of the EV Connect network, though they can also be activated with a ChargePoint account.

This event was jointly produced by the EV Club of CT and the CT Tesla Owners Club. We thank the Tesla Club for its partnership.

Photo above: Ford expects its Mustang Mach-E to qualify for half the incentive; Chevy expects the same for its Bolt.

Battery Rules Issued

January 1 came and went. The new federal incentives in the Inflation Reduction Act became law but the implementing agency, the IRS, had not completed rule-making for several portions of it, most particularly how manufacturers can be in compliance with the new rules for sourcing and refining of critical minerals and battery assembly. The IRS said it needed until March. True to its word, the rules were issued on March 31 and take effect April 18th. This interim period allows manufacturers to determine which vehicles will be eligible and whether the certification will be for the full $7500 credit or only half.

Consumers have gotten a benefit from this delay as more vehicles were temporarily eligible. Many vehicles are expected to lose incentives due the rules. If you have cash burning a hole in your pocket and are in the market, you can still move fast and pick up an EV with the full incentive applied (assuming the other criteria are met). But you have to take possession of it before April 18th. The incentives are applied, in IRS speak, at the “date placed in service.”

What Rules Apply

The rule-making itself is highly technical in nature. The law requires that 40% of the sourcing and refining of critical battery minerals occur either domestically or with a free-trade partner and that 50% of battery assembly takes place in North America during 2023. Going forward, these levels escalate. So, how do you define 40%/50%? The IRS has determined that it is to be based on value. So how does one define value? What is the legal definition of a free-trade partner? (The ink is still wet on some frantic dealmaking that happened so that some friendly nations, e.g. Japan and South Korea, could officially become free trade partners.)

We’ll know on April 17th what vehicles are eligible for how much of the incentive, but it will be a continually evolving list as manufacturers wrangle supply chain logistics and as the requirements escalate. It is possible that a vehicle eligible in one year loses eligibility in a subsequent year if the supply chain has not maintained pace with the requirements. And it has to be done in an environment of (presumably) a rapid ramping up of production volume. This article from Reuters includes statements by some manufacturers regarding which vehicles stand to lose incentives. This is the Department of Energy page that lists qualifying vehicles. It will be updated on April 17th.

Making Sure the Vehicle is Incentive-Eligible

It certainly helps if a manufacturer certifies that a given vehicle is incentive-eligible. But the IRS is officially determining eligibility based on the VIN. This is a new world we’re about to enter, and with all that is being written in the press about how these incentives work, there hasn’t been much discussion of this potential for a consumer to be left in the lurch.

It is possible that two of the same make/model/model year vehicles have different incentive statuses, based on when and where the manufacturing and delivery take place. When filing for the tax credit, the VIN is required and Treasury matches it to its records. It is advisable to check the VIN before buying the vehicle. That can be a hassle, as for a made to order vehicle, the VIN isn’t available until late in the game.

The EV Club, in partnership with the Electric Vehicle Association, recommended that the IRS use make/model/model year and deal with it at the manufacturer level. Our take is that asking consumers to be in the VIN checking business is a clunky way to go. It could cause an unpleasant surprise. It definitely fosters confusion.

For readers of this blog, if you buy an EV after the new rules are in effect, we are interested in hearing about the process and if you felt protected if you were promised an incentive.

Leasing

For those who lease, none of the rules apply, not even North American final assembly. The full incentive applies. Just remember, the finance company gets the incentive. It is up to the consumer to verify it is being passed along, which is not legally required. It is called a subvented lease.

Other Rule-making

Yes, there’s more, particularly the foreign entities of concern rule and the transfer.

Foreign Entities of Concern

The foreign entities of concern rule, which will phase in during 2024 and 2025, will likely include several countries, but is really all about China, which currently dominates the battery mineral supply-chain and has a lot of battery IP. What about Chinese investments in this country? Ford recently announced a joint venture with the big Chinese battery company, CATL, to build a plant in Michigan to manufacture LFP (Lithium Iron Phosphate) batteries. Does this comport with the law? In this case, Ford is banking on the fact that it is only the IP that comes from CATL and that the plant is owned by Ford. This is an article in Politico that discusses it in some detail but stops short of making a definitive statement. Stay tuned.

Transfer Provision

The transfer provision kicks in as of Jan 1, 2024. This year, the incentive is a tax credit. There are two drawbacks to tax credits. The first is that you have to wait until you file your taxes to get the incentive. The other is that you need to have the tax liability to burn it off. The transfer provision allows the consumer to transfer the incentive to the dealer or manufacturer and take the credit as a “cash on the hood” rebate. Unlike with a lease, the law requires the dealer to transfer the full amount of the credit to the consumer. That solves the timing problem. But what about if the consumer doesn’t have $7500 of tax liability? Could there be a claw-back? That seems unlikely. The intent of the transfer provision is, in part, to be an equity measure, so people without tax liability could take advantage of the incentive.

Sandy Munro Unfiltered

Sandy Munro, famous for his willingness to express his (highly informed) opinions in a direct and unfiltered manner, joined the EV Club for a conversation on March 21st. The video has been posted on YouTube and is embedded below.

Munro clearly feels that mainstream press coverage of EV news is often ignorant and at times biased. This was his closing comment about why he holds these discussions with EV clubs and similarly interested audiences:

“My job, really, is to try and dispel as many of these silly rumors that are out there, and this is the only way to it because the normal press doesn’t want to have anything to do with the kind of discussion that we had here today.”

A few items contained in the video:

• On autonomous driving – “FSD is a myth by everybody until we move to Forward Looking Infrared. Lidar and cameras don’t reliably work. Only Forward Looking Infrared (FLIR) can see through everything.” He also mentioned that FLIR is what the military uses and that about half of the work done by his engineering firm, Munro and Associates, is defense-related.
• On batteries – Pouch design does not hold up as well as cylindrical. The expansion and contraction kicks the daylights out of them. Solid state is the holy grail and will last indefinitely.
• The press over-sensationalizes Tesla issues because Tesla doesn’t buy ads. “If you don’t give us ads, we’re going to throw you under the bus.”
• The Tesla Gigacast will produce a body that is much stronger than any sheet metal currently in use.
• What did he find when he pulled out the floor of a Mustang Mach-E frunk?
• Should you be happy to see an ABB charger?