[Protocol_10]

Here is a message sent from the CEO of BMW North America to US BMW dealers:

We would like to provide you with an update on the Inflation Reduction Act that will result in an immediate impact on our business once signed by President Biden. In the following, we will provide guidance on how this affects the eligibility of our product portfolio and the implications when answering customer questions.
On Friday, August 12, the United States House of Representatives followed the U.S. Senate’s lead and voted to pass the Inflation Reduction Act (IRA) of 2022 which is expected to be signed into law by President Biden this week. The new program will go into effect upon its signing and run through December 31, 2032.
A number of factors will determine whether a vehicle/customer is eligible to receive the tax credit contained in the IRA. Firstly, the “final assembly” of the vehicle must occur “within North America,” i.e., the U.S., Mexico, or Canada. In addition, new income and MSRP caps will be implemented immediately. The Average Gross Income (AGI) caps will be $150,000 for single filing, $225,000 for head-of-household and $300,000 for joint filing. MSRP caps for pickup trucks, SUVs, and vans will be $80,000, while all other vehicles will be $55,000. And also, the battery size must be greater than 7 kWh, which will impact the PHEV business.
These changes mean that our vehicles, which currently qualify for up to a $7,500 federal tax credit today, will no longer qualify as soon as the President signs this legislation. Additionally, a number of customers will not qualify, as their income exceeds the AGI caps.
We recognize that there are questions regarding customers who have reserved an EV and not yet taken delivery. The IRA includes a transition rule to address this group. It states that customers who enter into a “written binding contract to purchase” a qualified electric vehicle with their dealer prior to President Biden signing the IRA into law, would still have the ability to claim the credit – even if they take delivery of the vehicle after the signing of the law. This also means that customers with non-binding vehicle orders would lose their ability to claim the EV tax credit. We are working to understand the details of what constitutes a “written binding contract to purchase” and what is required to ensure that customers can qualify.
You will have noted that the volume cap of 200k units per manufacturer that applies under the current set of rules will be eliminated with the new criteria upon signature of the Bill.
Beyond the rules stated above, supply chain criteria relating to critical minerals and battery production will increasingly apply over the coming years and add further hurdles in qualifying for the EV credit.
We understand that you may have received inquiries from customers looking to ensure their ability to claim the credit on current vehicle orders. We appreciate all that you are doing to support customers in understanding the changes and in their decision-making. As the President is expected to sign the IRA into law early this week, we encourage you to work with your customers to convert vehicle orders into binding sales as quickly as possible.
This issue has moved through Congress at an unprecedented pace, and we can expect further detailing of the rules going forwards. We will provide regular updates on progress and implications for our mutual business. We appreciate your patience as we have worked to understand the implications of the Act and kindly ask that you remain patient as we work through the steps that lie ahead – in Washington D.C. and across the nation – in the full implementation of the Bill.

Sebastian Mackensen
President & CEO
BMW NA

[scarletfever]

How does a dealer convert a 047 order into a binding sale?

[TurtleBoy]

Originally Posted by scarletfever

How does a dealer convert a 047 order into a binding sale?

Easiest way is to give their client a purchase agreement/bill of sale/etc. that has the words binding contract on it. Unfortunately that isn't happening too often. Many are trying to get them to take a small non-refundable deposit and hopefully that along with any order documentation/correspondence will suffice.

[scLA]

Originally Posted by TurtleBoy

Easiest way is to give their client a purchase agreement/bill of sale/etc. that has the words binding contract on it. Unfortunately that isn't happening too often. Many are trying to get them to take a small non-refundable deposit and hopefully that along with any order documentation/correspondence will suffice.

So BMW encourages dealers to convert orders to binding but doesn't give guidance on how to do that…

[Protocol_10]

Originally Posted by TurtleBoy

Easiest way is to give their client a purchase agreement/bill of sale/etc. that has the words binding contract on it. Unfortunately that isn't happening too often. Many are trying to get them to take a small non-refundable deposit and hopefully that along with any order documentation/correspondence will suffice.

What he said ^

[scLA]

Originally Posted by jtrock97

What he said ^

Bill signing is tomorrow. Chance of dealers pulling this paperwork together between now and then is unfortunately small.

[Technic]

Originally Posted by slazLA

So BMW encourages dealers to convert orders to binding but doesn't give guidance on how to do that…

That has been their game plan since the beginning of all this. Just observe and look busy.

[techwhiz1]

Originally Posted by slazLA

So BMW encourages dealers to convert orders to binding but doesn't give guidance on how to do that…

In some states it's just not possible. (Ca and Wa)
In states that have binding auto contracts dealers know how to write them

[WABIM66]

Originally Posted by techwhiz1

In some states it's just not possible. (Ca and Wa)
In states that have binding auto contracts dealers know how to write them

[Kenny C]

Just got back from the dealer. They said BMW lawyers are trying to figure out what a binding contract means. They were hopeful it would work out. On the positive side they said they would fight for me to get the 1.9% financing from BMW.

[TurtleBoy]

Originally Posted by Kenny C

Just got back from the dealer. They said BMW lawyers are trying to figure out what a binding contract means. They were hopeful it would work out. On the positive side they said they would fight for me to get the 1.9% financing from BMW.

Unlikely since they have to be obtained today. Hope you get the low finance rate.

[Technic]

Originally Posted by Kenny C

Just got back from the dealer. They said BMW lawyers are trying to figure out what a binding contract means. They were hopeful it would work out. On the positive side they said they would fight for me to get the 1.9% financing from BMW.

If you have a preorder then the 1.9% APR, and price protection, are yours without any “fight”.

[scLA]

Originally Posted by Technic

If you have a preorder then the 1.9% APR, and price protection, are yours without any "fight".

The irony of this all is I bet over the next couple weeks a bunch of i4s are going to come available at dealers when people go to pick up their cars and are told by dealers the car will no qualifier for the tax credit. Maybe we'll at least see the mark up craziness ease then.

[Kenny C]

If wet lose the tax credit fight think BMW is willing to at least split the loss with us? Say $3750 price reduction? I doubt it but worth a try?

[jayp98]

Can you keep us updated if BMWNA sends out an update to dealers

[scLA]

Originally Posted by Kenny C

If wet lose the tax credit fight think BMW is willing to at least split the loss with us? Say $3750 price reduction? I doubt it but worth a try?

Zero chance this happens in my opinion

[TurtleBoy]

Originally Posted by jayp98

Can you keep us updated if BMWNA sends out an update to dealers

Doubt they will and wouldn't matter if they did, the deadline for the binding contract was today. Now it is up to each person to determine if they consider what they have to be something that will fulfill the requirements of the Transition rule. Even if it is not something that can be considered binding until the traditional definition it may be something they will want to use and take a chance of getting by an audit.

[pharding]

What I had assumed to be a deposit, was labeled "Down Payment" on the order receipt from my BMW dealer for my 2023 i4 M50. I take that to be a binding contract. BMW NA was hopelessly late with its lame attempt to help out its loyal customers by encouraging dealers to offer binding contracts to those with BEV's on order.

I also have a Fisker Ocean Extreme on order. Last Friday Fisker rushed out a new document to those of us with a Fisker Ocean that clearly articulated that the order was a firm commitment. Kudos to Fisker. Boos to BMW NA.

[scLA]

I was reading the text of the Inflation Reduction Act again and here's an interesting tidbit…

The transition rule applies to written biding contracts from "after December 31, 2021 and before the date of enactment of this Act". Assuming the enactment date is the same as tomorrow's signing date, this means any written contract needs to be from today or prior to qualify.

The requirement that the vehicle have its final assembly in the US begins the day AFTER enactment of the bill.

So if you happen to have an i4 delivered tomorrow, it still qualifies.

[mtech8]

So even if a car is built and delivered in 2022. With the signing of the new bill. It no longer qualifies for the tax credit? Did the binding contract need to be signed yesterday or is today still valid?

[Technic]

Originally Posted by mtech8

So even if a car is built and delivered in 2022. With the signing of the new bill. It no longer qualifies for the tax credit? Did the binding contract need to be signed yesterday or is today still valid?

Car must have been delivered, or customer have a written binding contract signed to buy an EV between January 1 and August 15 2022, if law is signed today August 16.

[Ultbruin]

Law has been signed.