Have been reading too many exasperating and uninformed posts regarding this and thought I would offer a perspective based on real-life experience with incentive programs from Washington. (Apologies in advance for the super-long post, but if you want to know how this will play out I think you will find it worthwhile.)
First things first: no one knows if the strategy will work. Fisker has been incredibly responsive to our feedback and proactive in doing all the logical things it is able to do to try to make the Ocean qualify under the Transition Rule in the bill which states that as long as you have "entered into a written binding contract to purchase, a new qualified plug-in electric drive motor vehicle" prior to the date of enactment then you will qualify "to treat such vehicle as having been placed in service on the day before the date of enactment of this Act." The implication of this is that vehicles which qualify under this transition rule are not affected by the battery content, domestic assembly, or income and pricing caps.
What is next? The bill will be enacted and then an actual human being (likely career civil servant) in the treasury department will be tagged to lead its implementation on the various rules to operationalize the EV Section of the legislation (quite likely this person is already known). That person will be reporting to another Treasury person (almost certainly a political appointee) who is responsible for implementing the treasury-related rules in the full legislation (too numerous to mention). It will be an insane amount of work all of which needs to be completed by year end.
The key question for our little tiny corner of the universe is the definition of "written binding contract to purchase." So Fisker (possibly along with other interested parties) will request a meeting with the Treasury person in charge of this. The meeting will be scheduled. In the room will be the OEM (probably HF himself), their lobbyists, their lawyers, the Treasury person in charge of the EV implementation, his/her boss, the lawyers for treasury, probably someone from DoT, and possibly someone from the White House along with a cast of another dozen or so people.
Fisker will explain that under the Transition Rule... (etc.) ... and that Fisker has 11,182 (making up the number but not far off) US taxpayers who have entered into binding contracts to purchase the Ocean. It will explain that these customers have all made a non-refundable downpayment, selected their model, and that pricing for the model is fixed. It will explain that customers are still able to select colors and wheels and "some other options" as they get closer to production, but the price of the base model is fixed. They will give them copies of the contracts. They will say that these vehicles will start shipping in December and should be completed by end of 2023 but it is possible that due to unforeseen production delays, some may not arrive until 2024. (The Treasury folks will wince when they hear that.) Fisker (and the others) will then make an impassioned plea that these taxpayers are counting on the tax credit, that they are a small American start-up business, etc. etc.
Fisker will propose specific language for how to define "written binding contract to purchase" (ideally in concert with other OEMs) and leave that language with Treasury following the meeting. Treasury will be keenly focused on the number of tax credits involved across all of the OEMs. If it is a couple tens of thousands it will be easier than if it is in the hundred thousand plus. So what happens with Rivian, Lucid, GM, Tesla, Hyundai, etc. will weigh on the outcome. We will know this by week's end. Smaller is better. The Treasury lawyer will say that historically a "binding contract to purchase" includes the following items... Fisker will argue (through its lobbyist) that the company's contracts meet these criteria even if one or two specifics are not the same.
If the meeting looks like it is going against Fisker, they will pivot and try to make the case that most certainly under any definition the ONE orders qualify because all options are fully known, final purchase price is fully known, etc. But they will try to avoid that. They will also draw analogies from traditional vehicle manufacturers about dealer installed options. They will say that any of these dealer vehicles that qualify could also have prices change after the fact due to extended warranties, dealer-installed accessories, etc. and Fisker is no different it just has no dealers.
The discussion will wind down - it will last about 40 minutes - they will all thank one another for taking time to discuss the issue. Some hallway conversations will ensue between Fisker and members of staff who are sympathetic to its position. There may be some specific follow-on questions.
Fisker will ask the Senators and representatives from California to send a letter / make a call to Treasury in support of their position. Then there will be a several week pause. Then the IRS will publish the rules, and we will all know.
The End.
First things first: no one knows if the strategy will work. Fisker has been incredibly responsive to our feedback and proactive in doing all the logical things it is able to do to try to make the Ocean qualify under the Transition Rule in the bill which states that as long as you have "entered into a written binding contract to purchase, a new qualified plug-in electric drive motor vehicle" prior to the date of enactment then you will qualify "to treat such vehicle as having been placed in service on the day before the date of enactment of this Act." The implication of this is that vehicles which qualify under this transition rule are not affected by the battery content, domestic assembly, or income and pricing caps.
What is next? The bill will be enacted and then an actual human being (likely career civil servant) in the treasury department will be tagged to lead its implementation on the various rules to operationalize the EV Section of the legislation (quite likely this person is already known). That person will be reporting to another Treasury person (almost certainly a political appointee) who is responsible for implementing the treasury-related rules in the full legislation (too numerous to mention). It will be an insane amount of work all of which needs to be completed by year end.
The key question for our little tiny corner of the universe is the definition of "written binding contract to purchase." So Fisker (possibly along with other interested parties) will request a meeting with the Treasury person in charge of this. The meeting will be scheduled. In the room will be the OEM (probably HF himself), their lobbyists, their lawyers, the Treasury person in charge of the EV implementation, his/her boss, the lawyers for treasury, probably someone from DoT, and possibly someone from the White House along with a cast of another dozen or so people.
Fisker will explain that under the Transition Rule... (etc.) ... and that Fisker has 11,182 (making up the number but not far off) US taxpayers who have entered into binding contracts to purchase the Ocean. It will explain that these customers have all made a non-refundable downpayment, selected their model, and that pricing for the model is fixed. It will explain that customers are still able to select colors and wheels and "some other options" as they get closer to production, but the price of the base model is fixed. They will give them copies of the contracts. They will say that these vehicles will start shipping in December and should be completed by end of 2023 but it is possible that due to unforeseen production delays, some may not arrive until 2024. (The Treasury folks will wince when they hear that.) Fisker (and the others) will then make an impassioned plea that these taxpayers are counting on the tax credit, that they are a small American start-up business, etc. etc.
Fisker will propose specific language for how to define "written binding contract to purchase" (ideally in concert with other OEMs) and leave that language with Treasury following the meeting. Treasury will be keenly focused on the number of tax credits involved across all of the OEMs. If it is a couple tens of thousands it will be easier than if it is in the hundred thousand plus. So what happens with Rivian, Lucid, GM, Tesla, Hyundai, etc. will weigh on the outcome. We will know this by week's end. Smaller is better. The Treasury lawyer will say that historically a "binding contract to purchase" includes the following items... Fisker will argue (through its lobbyist) that the company's contracts meet these criteria even if one or two specifics are not the same.
If the meeting looks like it is going against Fisker, they will pivot and try to make the case that most certainly under any definition the ONE orders qualify because all options are fully known, final purchase price is fully known, etc. But they will try to avoid that. They will also draw analogies from traditional vehicle manufacturers about dealer installed options. They will say that any of these dealer vehicles that qualify could also have prices change after the fact due to extended warranties, dealer-installed accessories, etc. and Fisker is no different it just has no dealers.
The discussion will wind down - it will last about 40 minutes - they will all thank one another for taking time to discuss the issue. Some hallway conversations will ensue between Fisker and members of staff who are sympathetic to its position. There may be some specific follow-on questions.
Fisker will ask the Senators and representatives from California to send a letter / make a call to Treasury in support of their position. Then there will be a several week pause. Then the IRS will publish the rules, and we will all know.
The End.
