Infrastructure Bill passed. I don’t think this is good.

[Jhenson29]

@Bella I am right. Thank you

also consider this, which I posted just above that persons comment regarding whether or not people on the forum are canceling their orders:

Perhaps not, but we also don’t know how many of those people’s initial interest was influenced by the credit, whether or not they cancel if the credit is removed.

It’s also a small subset of buyers that are possibly more enthusiastic than the general population of Taycan buyers since they joined and participated in a Taycan forum.

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[gnop1950]

I love when folks seemingly boastfully highlight that they pay cash when interest rates are at an all time low. If you were to leverage credit by borrowing 90% of the funds to purchase your Taycan and placing the “unused cash” into the simplest index fund - let’s say an S&P tracking ETF - you would likely net much higher gains over the duration of that financing term. Further, it would be smart to stretch the term to as long as the bank will allow for a sub 3% rate - perhaps 84 months at your local CU.

Credit is an important building block of wealth accumulation and should be leveraged as much as it makes sense. Currently, it makes sense. Further, no matter how “wealthy” we seemingly are, many of us are that way because we take advantage of free money. I will take $7500 in exchange for something I was going to buy anyway. That’s a next Omega or part of a great family trip. I wish folks would stop this cash thing when the current rates vs inflation screams leverage debt as much as possible to build wealth.

Why is it a "boast"? I never buy anything on credit when I can pay cash, especially a non-essential luxury item. All my retirement funds are in index funds, including the portion that are bonds. I've basically followed Warren Buffet's advice on that. I call it the Ron Popeil "Set it and Forget it" investment methodology.

The only time I've tried to finance a car I ended up paying it off in 6 months. I absolutely hate owing money. I'm not wealthy, at least I don't feel wealthy, but my wife and I are comfortable. At our age, we have zero debt and sufficient funds to maintain our lifestyle. We've both worked hard all of our lives and the last thing I'm interested in at this point is *working* to try and accumulate more wealth. As it is we'll probably end up leaving our heirs a decent amount. Note: If I could we'd plan it so our funds hit zero when we do ;-)

So, I'm not sure why it should offend you that not all of us are interested in leveraging debt or *working* to accumulate more wealth. And no, I'm not from a wealthy family, 20 years in the Army, 30 Years as a Data Scientist. If leveraging debt is your thing, go for it, but it is pretty rude to denigrate those of us that simply aren't interested.

 

[Prit]

Why is it a "boast"? I never buy anything on credit when I can pay cash, especially a non-essential luxury item. All my retirement funds are in index funds, including the portion that are bonds. I've basically followed Warren Buffet's advice on that. I call it the Ron Popeil "Set it and Forget it" investment methodology.

The only time I've tried to finance a car I ended up paying it off in 6 months. I absolutely hate owing money. I'm not wealthy, at least I don't feel wealthy, but my wife and I are comfortable. At our age, we have zero debt and sufficient funds to maintain our lifestyle. We've both worked hard all of our lives and the last thing I'm interested in at this point is *working* to try and accumulate more wealth. As it is we'll probably end up leaving our heirs a decent amount. Note: If I could we'd plan it so our funds hit zero when we do ;-)

So, I'm not sure why it should offend you that not all of us are interested in leveraging debt or *working* to accumulate more wealth. And no, I'm not from a wealthy family, 20 years in the Army, 30 Years as a Data Scientist. If leveraging debt is your thing, go for it, but it is pretty rude to denigrate those of us that simply aren't interested.

Please accept my apologies if I was rude or offended. It certainly wasn’t my intent and I could have been more passive with my comments - for that, I am sorry.

The idea here is that interest rates are so low that you should not give up $200k in “growth power” to buy a car (or any depreciating asset) when you can put those funds in investments that have historically earned more than double of current interest rates. In other words, borrow $150k at 3% or any lesser rate, and put your $150k into investments that make sense for your risk tolerance given it sounds like you’re at least “Moderate” risk tolerance. You will make the spread (difference) between the cost of the loan and the return on your investment. It has nothing to do with “one should never use debt” and everything to do with its more advantageous to “borrow low and invest high”.

However, to your other point, perhaps growth is no longer your goal and the notion of using cash and depleting your accumulated wealth is ok - using off what you’ve worked so hard to accumulate rather than simply leaving it to your heirs. In nah case, thanks for your military service and congrats on where you currently are financially and spiritually in life. I’m hoping for that too.

 

[gnop1950]

Please accept my apologies if I was rude or offended. It certainly wasn’t my intent and I could have been more passive with my comments - for that, I am sorry.

The idea here is that interest rates are so low that you should not give up $200k in “growth power” to buy a car (or any depreciating asset) when you can put those funds in investments that have historically earned more than double of current interest rates. In other words, borrow $150k at 3% or any lesser rate, and put your $150k into investments that make sense for your risk tolerance given it sounds like you’re at least “Moderate” risk tolerance. You will make the spread (difference) between the cost of the loan and the return on your investment. It has nothing to do with “one should never use debt” and everything to do with its more advantageous to “borrow low and invest high”.

However, to your other point, perhaps growth is no longer your goal and the notion of using cash and depleting your accumulated wealth is ok - using off what you’ve worked so hard to accumulate rather than simply leaving it to your heirs. In nah case, thanks for your military service and congrats on where you currently are financially and spiritually in life. I’m hoping for that too.

Apology accepted, I'm probably not as subtle as I should be from time to time myself. I sometimes forget that there can be very very wide differences in life experience and where we each are in our journey. I'm probably just over-excited about my new car. This is the most extravagant thing we've ever done. Until now my "big" expenditures have mostly been for new computers.

Your advice is good for those that are in the early, mid-stages of life, and don't have my particular hangups about debt. My Mom and Dad grew up during the depression and so I probably learned my debt aversion from them.

At any rate, if I overreact in my excitement I'll apologize ahead of time here. My wife says I'm just an old fool, but she has been saying that for 51 years ;-)

P.S. And I am at the point where I have to start taking out my RMD from my retirement funds and that will cover a good portion of this purchase. I'm really really looking forward to some short/medium trips in the new car. I've lived in Arizona for over 40 years and never been to the Grand Canyon. That will likely be one of our first excursions.

 

[Prit]

Apology accepted, I'm probably not as subtle as I should be from time to time myself. I sometimes forget that there can be very very wide differences in life experience and where we each are in our journey. I'm probably just over-excited about my new car. This is the most extravagant thing we've ever done. Until now my "big" expenditures have mostly been for new computers.

Your advice is good for those that are in the early, mid-stages of life, and don't have my particular hangups about debt. My Mom and Dad grew up during the depression and so I probably learned my debt aversion from them.

At any rate, if I overreact in my excitement I'll apologize ahead of time here. My wife says I'm just an old fool, but she has been saying that for 51 years ;-)

I totally agree with you. Haha. I just turned 40 on November 3rd so I’m definitely a neophyte and have much to learn. I’m excited too. It’s the most I’ve spent on a car yet. My previously most expensive car was a BMW X3M Competition so this is ultra exciting for me. I’m very much looking forward.

 

[gnop1950]

I totally agree with you. Haha. I just turned 40 on November 3rd so I’m definitely a neophyte and have much to learn. I’m excited too. It’s the most I’ve spent on a car yet. My previously most expensive car was a BMW X3M Competition so this is ultra exciting for me. I’m very much looking forward.

We will have to compare notes once our cars arrive, still an estimated 151 days for me. I've been having to meditate so I can get to sleep.

 

[Prit]

We will have to compare notes once our cars arrive, still an estimated 151 days for me. I've been having to meditate so I can get to sleep.

Wow. Why so long? Mine is due in early Jan.

 

[gnop1950]

Wow. Why so long? Mine is due in early Jan.

I ordered it in late September. The original estimate was mid-march, but after a few configuration changes, it was pushed to the first week in April. When I contacted my dealer I believe that was the first 2022 Taycan allocation (March) they still had available.

 

[whitex]

Maybe it is a generational thing. The only thing I've ever bought on credit is my home. Everything else I pay for upfront.

Hmm.... I said nothing about buying on credit or cash. But talking about buying everything in cash and being very proud of it does sound like something a couple of my parents old friends would say, so perhaps it is generational.

Since you brought it up however, whether it's worth financing a car, leasing, or paying cash depends on many factors, anything from interest rates which may be much less than your mortgage rate for example, your tax situation (possible lease write-off), to residual values which help offset your risk. I make my decisions based purely on numbers. I've paid cash, leased, and financed cars depending on what made most sense at the time. For example I once leased a car with $1 residual value after 4 years, which the dealer had an amazingly hard time understanding why I would do that, though I was able to explain it to their main accountant how the promotional interest rate on the lease of 0.1% made it worth while vs. financing interest rate (don't remember exactly, but IIRC it was around 4%). Funny thing, when I tried something like this a couple of cars later, evidently Toyota Motor Credit added a minimum residual value to their special offers - maybe I was the one who motivated them, who knows?

My out-the-door, license/tax/insurance, current estimate is about $180k so I set aside $200k. If my final price were to exceed that I'd have to reevaluate.

Obviously you would not care if the price went up on you by 10% between order and delivery ($180K + 10% = $198K, since it is under what you are willing to pay). I on the other hand would have an issue with that, and would walk away from the deal if I found the price went up by that much, even though my out the door price will be slightly higher than yours.

Bottom line, I'm excited about my new car, and it would take something pretty significant for me to cancel, postpone my order

As you should be. Taycans are exciting cars. There are people who gladly pay $25K over sticker to get their cars sooner nowadays. While I'm just not one of them, and I suspect there are others who prefer to wait rather than pay $25K over sticker, I completely understand people who do think getting the car sooner is worth paying $25K (or more) extra.

 

[Kingske]

I love when folks seemingly boastfully highlight that they pay cash when interest rates are at an all time low. If you were to leverage credit by borrowing 90% of the funds to purchase your Taycan and placing the “unused cash” into the simplest index fund - let’s say an S&P tracking ETF - you would likely net much higher gains over the duration of that financing term. Further, it would be smart to stretch the term to as long as the bank will allow for a sub 3% rate - perhaps 84 months at your local CU.

Credit is an important building block of wealth accumulation and should be leveraged as much as it makes sense. Currently, it makes sense. Further, no matter how “wealthy” we seemingly are, many of us are that way because we take advantage of free money. I will take $7500 in exchange for something I was going to buy anyway. That’s a next Omega or part of a great family trip. I wish folks would stop this cash thing when the current rates vs inflation screams leverage debt as much as possible to build wealth.

That assumes that such index fund will keep on increasing its value from now over the next three or four years…

 

[gnop1950]

Obviously you would not care if the price went up on you by 10% between order and delivery ($180K + 10% = $198K, since it is under what you are willing to pay). I on the other hand would have an issue with that, and would walk away from the deal if I found the price went up by that much, even though my out the door price will be slightly higher than yours.

A lot would depend on why the price goes up. If the dealer decided to simply add a market markup, after telling me they wouldn't, I'd likely change my plans and look for a different dealer/car even if it cost a bit more. If the price just goes up for everyone, taxes or loss of a rebate, it wouldn't affect my decision. Luckily, I can't find any more options I'm interested in or the price would continue to climb until my freeze date ;-)

 

[gnop1950]

There are no guarantees that an investment in an investment of any kind will continue to appreciate, there is an advantage to remaining liquid rather than tying $$$ up in a car. I remember in late 1979 the prime rate was near 21% topping off in late 1980. During the 1980's CD rates were 15% - 18% APY. Sadly, some of the younger folks may soon make their own memories about inflation, high interest rates and stagflation to post on some forum 40 years later.

I remember when I bought my first home in the 80's and was able to find a smoking deal on a 15-year mortgage, 10.5%.

 

[Bella]

I remember when I bought my first home in the 80's and was able to find a smoking deal on a 15-year mortgage, 10.5%.

I had a 14% Mortgage in 1981. But the home was only worth 1/6th of its current value so it’s all relative.

 

[kwrudy123]

If the BBB legislation passes and the domestic and union EV credit remain as currently written, I suspect there will be foreign OEM retaliation, if a carve out cannot be negotiated. GM, Ford and Tesla will be slapped with some kind of tariff to level the playing field. It could be very difficult to consider a foreign made EV when you pay $12,500 more from the "get go".

Another interesting point is the BBB provides a non truck or van credit with an MSRP at or below $55,000. One wonders if the OEM will not lower the MSRP causing dealers sell for what the market will bear. The OEM could then lower various dealer incentives to compensate for the difference. More money is made by the dealer on factory rebates and incentives than on the gross per unit.

This is all speculation but when government policy interferes with markets, one has to think outside the box.

There are no changes to the current EV tax credit in the new infrastructure bill that was passed by both houses and will be signed into law by Biden. Any of the changes being contemplated in this forum thread are all now pushed to the Build Back Better proposed legislation, which is certainly not close to being a done deal. And if the BBB deal did pass as currently written, the EV tax credit would be raised from the current $7,500 to $12,500, with the incremental $5,000 being available to manufacturers using union labor, while the underlying $7,500 would still be available for all other manufacturers, regardless of union or not or foreign or not. Moreover, the 200,000 cars sold limit that is in the current EV tax credit legislation (which Tesla has now exceeded and is not longer able to get for their customers) would be lifted, helping Tesla and GM, who has also exceeded the 200,000 car limit for their EV models.

So I don't know what everyone in this thread is complaining about with regard to the "union requirement". Even if it does survive the BBB final form, there would still be the same $7,500 credit for all other manufacturers. See the following summary:

• Federal tax credit for EVs jumps from $7,500 to $12,500
  • Keep the $7,500 incentive for new electric cars for 5 years
  • Add an additional $4,500 for EVs assembled in the US using union labor
  • Another $500 for EVs using battery packs with 50% of components (including cells) made in the US

here is a link that explains this in more detail: https://electrek.co/2021/11/06/cong...ill-12500-ev-tax-credit-still-awaits-passage/

 

[Bella]

There are no changes to the current EV tax credit in the new infrastructure bill that was passed by both houses and will be signed into law by Biden. Any of the changes being contemplated in this forum thread are all now pushed to the Build Back Better proposed legislation, which is certainly not close to being a done deal. And if the BBB deal did pass as currently written, the EV tax credit would be raised from the current $7,500 to $12,500, with the incremental $5,000 being available to manufacturers using union labor, while the underlying $7,500 would still be available for all other manufacturers, regardless of union or not or foreign or not. Moreover, the 200,000 cars sold limit that is in the current EV tax credit legislation (which Tesla has now exceeded and is not longer able to get for their customers) would be lifted, helping Tesla and GM, who has also exceeded the 200,000 car limit for their EV models.

So I don't know what everyone in this thread is complaining about with regard to the "union requirement". Even if it does survive the BBB final form, there would still be the same $7,500 credit for all other manufacturers. See the following summary:

• Federal tax credit for EVs jumps from $7,500 to $12,500
  • Keep the $7,500 incentive for new electric cars for 5 years
  • Add an additional $4,500 for EVs assembled in the US using union labor
  • Another $500 for EVs using battery packs with 50% of components (including cells) made in the US

here is a link that explains this in more detail: https://electrek.co/2021/11/06/cong...ill-12500-ev-tax-credit-still-awaits-passage/

What about the part dealing with the price of the Car? I’m not aware of any Taycan under $82,700 with no options.

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