Q&A: How to profit from electric vehicle credits?

This transcript was generated from the episode audio and may contain minor errors.

[Music]

Let's talk today about electric vehicle credits. Isn't that the sexiest topic? Well, hey, listen, if you were tuning in to Sada Sol School, you may or may not care about electric vehicles, but hopefully you care about finding opportunities to profit. That's what it's all about. We're trying to help people spot opportunities, find a way to create personal freedom for themselves without quitting their job, without going into debt, and by using a skill they already have.

Or perhaps in some cases, adapting that skill or learning to spot opportunities as mentioned, okay? So a number of years ago, when electric vehicles were very new, this is going back pre-Tesla, there was an opportunity for Oklahomans, people living in Oklahoma, to purchase a Chinese-made electric vehicle called the Candy Cocoa. And the manufacturer's suggested retail price was $10,599. But the net cost to the consumer, the people who were able to purchase these at least, was just $865 because of all the tax credits. Now you may have seen the cocoa in the Tiger King with Joe Exotic, he was one of those guys who got in on the deal.

Sadly, that deal is no longer available in Oklahoma or anywhere, but large incentives for buying electric vehicles remain. Electric vehicle, also known as EV. Now the federal government offers a $7,500 tax credit for most EV purchases, not all, most, and many states offer additional credits as well, but it's a confusing process. If you've been listening for a while, you know that where there's confusion, there's often a way for someone to profit by reducing some of that confusion and making it simpler and easier to understand. That's what today's caller is wondering about.

He's got a couple different ideas, he's trying to narrow it down and figure out which one might be best. So quick shout out to our sponsor here, and then we'll talk about how to profit from electric vehicle credits. [Music]

Hey, Chris, this is Carl from Massachusetts, and I've got a question. Well, an idea regarding EVs that I'd love your feedback on. If you purchase an electric vehicle in the US, you get a $7,500 rebate on your taxes, but only for certain models.

Teslas are now excluded and other manufacturers will also be excluded once they reach the cap of 200,000 vehicles sold per manufacturer. Still, there are many other automakers making electric cars, and on top of that, the federal rebate, many states offer additional incentives as well. It's awesome, but also confusing, which tells me there's some way to profit from this knowledge. I'm thinking of two options, either buying and reselling cars themselves, maybe through some kind of pre-order system, or just creating an electrical product to sell to people who are interested in getting the rebates. Which idea do you think is better, and how should I get started?

Thanks. [Music]

Hey, Carl, thanks so much for listening, ma'am. Thank you for the question as well. And just a quick note, I think when Carl says electrical product here in his second idea, I think he actually means educational product. So let's talk about these two ideas, which one is better.

The first one is some sort of pre-order system, basically trying to buy and resell the electric vehicles himself, or the not electrical product, the educational product, that is helping people understand the rebate system. And I actually think the educational idea is better for sure, unless I'm missing something I don't know about. And that's because my understanding of the incentives is that they are only for the original buyers. So if you resell the car, the incentive doesn't transfer. Also, if you lease a car, the incentive goes to the dealer, not to the buyer.

And presumably it's factored into the price of the lease somehow, but the point is it's not transferable. So I'm not quite sure how to make that arbitrage thing work, but I also think, well, somebody might figure that out. So if you do find some way to arbitrage the EV credits, you are well ahead of me, and you'll probably be famous on Reddit for a while. So let me know if that works out. Otherwise, let's look at the second option.

Yes, the system is confusing. You've got this large federal tax credit, $7,500, that applies to most electric vehicles, but only the first 200,000 that are sold per manufacturer, which is why it's no longer available for Teslas. And then on top of that federal incentive, lots of different states are also providing tax credits and rebates and so on. This is also happening in Canada. And from what I can tell, it appears to be about as confusing there as it is in the States, because every state, every province has their own policies for this, and the amounts vary quite a bit.

So how does someone learn about the best way to reduce their cost when buying an electric vehicle, get the best possible rebate? That definitely is an opportunity. Being confused is painful. If you can clear up that confusion for someone, you are providing a solution and relieving pain, that's valuable. And you're also directly helping people save money.

So you've definitely cleared those first hurdles. Is there a way to buy an electric vehicle in another state or province different from your own and still earn the incentive? Can you earn a higher incentive by doing something like that? Or are there restrictions about that? What do you need to look out for or be aware of?

For example, in some States like California, there's an income cap for the incentives. Whereas in others, it doesn't matter. It doesn't matter what your income is, you get the rebate or the incentive no matter what. Whereas in some States, that's restricted. So there are a few different ways to compile and share that information.

Could be some kind of information product, could be a series of short consultations, et cetera. That's the next part of the process to figure out. We could spend a lot of time talking about how to develop that, but hopefully we have got it narrowed down to the second of Carl's two proposed options. I do think there's value in helping to decipher a complicated process, especially one that involves money, which is exactly what we're looking at here. Good luck, Carl and listeners.

If you have a question, come to sidehustleschool.com/questions. We'll continue to feature them throughout the year, along with updates from other listeners as they launch their projects. Thank you so much for tuning in today. I hope you will follow, subscribe, and come back tomorrow. My name is Chris Guillebeau, this is "Side Hustle School." [Music]

from the Onward Project.