The Inflation Reduction Act (IRA) had more than just the $7,500 tax credit for new battery electric vehicles (BEVs). Advocates of these cars also celebrated the $4,000 tax credit for used BEVs that cost up to $25,000: it would promote clean mobility. Some others recently cherished that Tesla now appears among the brands that are eligible for this incentive. However, a more detailed look at the limits established by the US government reveals that those shopping for a used Tesla risk spending around $20,000 on a new battery pack.
It was inevitable to remember that all Model S that are currently facing the BMS_u029 and BMS_u018 error codes cost around $25,000. If you have not heard about these messages, they basically declare that the battery pack is toast and that you'll need a new one. For cars still under warranty – which do not cost $25,000 – that's something Tesla has to worry about. For all other owners, the cheapest units available are remanufactured and cost $15,000 (service and taxes included). However, most of those who have to pay for the repair prefer to get a new battery pack, a correction that costs around $20,000. It is not difficult to understand why.
Remanufactured battery packs are those that presented issues in the past, such as the BMS_u029 or BMS_u018, and were allegedly fixed by Tesla. A quick search on the internet will reveal customers who doubt the repairs address the root causes of the failures: they say only sensors are replaced, not defective cells. Jason Hughes also said Tesla doesn't "seem to always correct the underlying issue on their refurbished batteries that they sell to customers." Supposing Tesla properly fixes these battery packs, the older ones still have six major failure possibilities, as the Tesla Hacker explained when I started reporting on water-ingress cases. Only high-voltage accumulators made after 2015 are not affected by these problems, so Tesla should only work with replacements posterior to the design correction, right? Well, that's not what the company does.
Tesla often puts an older battery pack in the vehicle, especially if the replacement occurs under warranty. All the company commits to doing is giving the BEV a battery pack equivalent to the one being replaced. Too bad that Tesla is the one determining how the previous component was. As I have already discussed here, battery packs die of use and also of old age. The Tesla that belongs to Bob Atkins' mother-in-law is a good example: the pristine 2014 Model S 85 she bought new and clocked up only 43,280 miles got the BMS_u029 error code.
Photo: Bob Atkins
Atkins had to fight to get her a new battery pack: Tesla wanted to install a refurbished one produced in 2012. Considering how crucial of a component it is, the price difference between a new battery pack ($20,375.83 in Atkins' case) and a remanufactured one ($15,000 with taxes) was certainly worth it. He even managed to get her a discount, which is not something most customers enjoy: a fair share ends up with a remanufactured battery pack.
Just to confirm my first impression, I checked KBB. The only Tesla that currently qualifies for the used BEV tax credit is the Model S. The oldest Model 3 was built in 2017, and it starts at $29,649. You may find some units cheaper than that, but they will probably have some issues to justify the discount. Regarding the Model S, you may buy very early 2012 units – which start at $23,965 – and eventually find a 2014 unit that bears a lower price tag than the one reading $25,828 that KBB said to be fair for these BEVs. Again, these are the vehicles that are getting the battery pack replacement codes I just talked about.
So let's get this straight: the used BEV incentive is supposed to help people who can't afford a new one. The price limit was established to stimulate customers to buy new cars: a new Chevrolet Bolt EV starts at $26,500 and is eligible for the $7,500 tax credit. That alone makes buying the Model S a bad financial deal. It will only make sense for those in need of a bigger BEV. Even in that case, the risk of a battery pack failure should keep car shoppers away from that possibility.
Photo: Chevrolet
On top of that, the used BEV credit is either $4,000 or 30% of the vehicle's value: whatever is lower. Customers willing to really seize it must buy a BEV or a plug-in hybrid that does not cost more than $13,500. For that kind of money, you can get a 2017 Hyundai IONIQ Electric, a 2019 Nissan LEAF, or a 2016 Kia Soul EV among BEVs, all still under warranty. If you consider PHEVs – which are also included in the incentive's rules – a 2017 Hyundai Sonata or a 2017 Kia Optima are also on the table. Even a 2016 BMW 3 Series may do the trick. For a BEV with a $25,000 price tag, 30% would represent $7,500, the same amount a new BEV buyer gets. Yet, the limit is $4,000. A new Chevrolet Bolt EV is once again a better deal.
Don't fall for the hype: all those celebrating that Teslas are now included in the IRA-used-BEV incentives ignore or do not care about the potential battery pack failure, which can cost between $15,000 and $20,000. Independent shops may help these owners spend less than that and keep their BEVs running, but how many will have between $5,000 and $10,000 to spare all of a sudden? What is the point of saving $4,000 when you may spend $5,000 to $20,000 more on that vehicle?
Photo: Bob Atkins
Anyone seriously considering a Tesla as a used car to get the incentive should first join the BMS_u029 Facebook group, which now has 711 members and keeps growing. After talking to people who faced the error codes there, they would be able to make a more founded decision. Those who skip that may join the group after the error codes show up in their used BEVs' dashboards. Eventually, that will increase BEV adoption resistance instead of promoting them. It already exists and is accelerating: inventories in the US are higher than ever. Even Tesla is failing to deliver all the BEVs it said it would sell. It now has close to 100,000 unsold units worldwide, a number that has been growing since last year.
In the end, the used BEV incentive conceived to increase electric car adoption may end up hurting it if more people have the experience the BMS_u029 group members are getting. Instead of celebrating Tesla's presence in the list, BEV advocates should urge used car buyers to stick with those still under warranty. Even impeccable old BEVs may surprise owners in a bad way: batteries age, and no tech currently available can stop that. Acknowledging that before jumping on the used Tesla bandwagon may save you from falling from it in a financially disastrous fashion. Just ask some of those who already did.
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