Would you still buy 2020 Clarity Plug In or Something else?

Say my used accord of 16k becomes 10k by 2025. And my new Clarity, drops to 15k approx. by 2025.

Although the new car lost its value more, but I end up paying only 8k(price drop from ~23k Considering the tax incentives) for the Clarity and 6k for the Accord after 5 years of owning + maintenance.

In this case, doesn’t the tax credits cover for the significant drop of new car?

What is the best metric? Isn’t it the cost of ownership rather than value of the car itself? Am I missing any point here.?

 

I would say your better off with a clarity than an accord. Especially when you factor in the EV fuel savings. You gat a new car and the Clarity gives you the experience of a full EV much of the time.
It’s by far the best PHEV on the market. Federal rebates offset part of the first year depreciation of a new car.
I still say get the Tesla but if it’s between new Clarity and used accord Clarity wins hands down.
Good luck!


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I thought a lot about getting a Tesla before, but right now without much savings and no tax incentives, even a used Tesla is north of 40K. I guess I have to wait couple more years, hopefully get a better Tesla than ones in the market now.

 

@cyberteen: Have you confirmed that you have an annual tax burden of at least $7,500? Understand that the tax credit is limited to your tax burden.

 

If you can afford a new Tesla, its implied that you are generating the kind of income that yields a sizable tax liability.

 

Well, my payroll shows 458$ of Federal taxes withheld bi-weekly. So thats like 10,992$ for federal in minimum I guess. Is that enough to confirm?

I already have my 401k and HSA contributions maxed out. So I can't re-adjust that to save taxes I guess.

 

That's half of the equation. If (before the EV tax credit) you would then qualify for a refund of more than $3,492 then that would eat away at the $7,500 credit.

Maxing out your 401k and HSA contributions serves to reduce your tax burden. Fundamentally, this is a good thing to do though.

 

Anyway to know how much refund I could get? I have never been in this company for one whole year to have an idea how much refund I would get.

 

This is the part where I advise that you consult a tax professional .

Try the IRS's estimated tax form to get a rough idea of how it would work out: https://www.irs.gov/pub/irs-pdf/f1040es.pdf

 

Cool. Thanks for all the info

 

Using this hypothetical situation, you’re down $2000.

I’ll be impressed if you can get a base model for a net cost of $23K, but let’s go with that figure.

You’ve already factored in the tax credits, and then some dealer discounts to get the net cost down to $23K. The base model is ~$34K.

The cost to own the $16K used Accord for 5 years, using your numbers will be $6000 in depreciation plus interest on a loan and some maintenance. A $16K loan for 5 years at 3.9% will have a payment of ~$290/mo and interest of ~$1600.

The cost to own a new Clarity for five years, using your numbers will be $8000 in depreciation plus interest on a loan and some maintenance. A $23K loan for 5 years at 3.9% will have a payment of ~$420/mo and interest of ~$2400. This assumes a ~$9000 down payment on a negotiated OTD price of $32K (Federal credit and state rebate) which will need to be returned to your bank account, bi-weekly or monthly, via addition net income from a W-4 modification or after a large tax return and receipt of the state rebate.

The new car will have monthly payments that are $130 higher than the used car for 60 months. It will also be likely to have higher insurance premiums and possibly higher license and registration fees.

This brings the total to:
$2000 in depreciation
$6800 in higher monthly payments
$800 in addition interest, or,
$9600 plus any additional amounts for higher insurance, etc.

It could be all wrong, but that’s the metric I’d use and it puts you ~$10K in the hole compared to the used option.

 

Good assessment but I would adjust a couple of things:

• A 4 year old Honda Accord EX does appear to be worth about $16.5K to purchase, but a 9 year old version of the same car has a value of $6.8K, so I think the depreciation would be closer to $9-10K - I know those were his estimates, not yours.
• My OTD price for the Clarity PHEV in 2018 minus the tax credit and rebate is within ~$1000 of it's current kbb value (Private sale) after 2 years. Obviously the tax and dealer incentives play a major part of that. It is anyone's guess what the depreciation will be like in another 3 years.
• I'm not sure what the loan rates are like, but my financing was offered at 0.9% APR. Probably depends a lot of the local market situation, dealer or Honda specials, and credit score, etc.
• I would also include maintenance costs which could be significant for an Accord that is 6-9 years old. Certainly just the routine scheduled maintenance can result in a difference.

All that totaled up would not probably change the fact that a Clarity would be more expensive, but I think the difference may be quite a bit less.

For fun I am attaching a TCO comparison of ICE cars vs a BMW i3. But it is easy to poke holes in a lot of their assumptions (plus it is Europe-based, so petrol cars will obviously be at a disadvantage), but it is interesting to parse through their methods and results.

 

If I may offer some advice: if you haven’t driven one, get an app called Turo and rent one for a week.
I would actually do this for any car you’re considering. It’s relatively cheap compared to the cost of ownership and it lets you actually experience the car for a few days instead of for just a few minutes.
If you do decide to buy the clarity just be prepared, it is a bit quirky. It’s probably one of the cheapest new cars to drive. My favorite thing about the car is the EV mode around town. It’s ultra smooth and quiet.


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I just learned this credit was limited by your tax burden. Keep in mind you can lease the car and the dealer gets the credit. You can keep your payment low without any money down and without refinancing after tax time. I didn’t even think about the tax burden issue when I got mine.
I plan on excercising my buyout after 36 months. It’ll work out to about $370/mo for 6 years with $0 down.

 

That’s a good idea. But I can’t find any clarity near by my place, sadly.


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Thanks for the detailed explanation

 

Let’s not forget that fuel savings are pretty much non-existent in EV at today’s fuel prices. This varies by geographical location, and the source of your charge, but I know I’m within 10 cents/gallon of break even right now here in Indiana with being able to buy gasoline at $1.88/gallon...and dropping. In many other places with higher electricity prices, EVs are Now more expensive to operate than efficient ICE vehicles.

If the debate is simply which vehicle will save Cyberteen more money? The used car. By a notable margin.

 

There are definitely an number of variables and unknowns. Many of us who bought 2018-19 models benefited from Honda incentives of $4000-6000 in addition to federal and state/local incentives. In some cases there were also additional dealer discounts offered.

If all of those incentives are not available on 2020 models, a buyer today may be looking at a ~$34K base model plus tax and registration. In CA that will top $3K. So potentially $37K less a down payment. Subtract $9K for fed and State CA? incentives and the net cost is now $28K. A number like that changes the loan amount and could significantly alter the estimated depreciation figure.

 

As someone who was in Iowa for 2 years and had a 05' Camry, I can understand the fuel situation in and around Midwest. But I have moved to California now, the gas price is like 3.8-4$ and I get free charging at work. My commute is 4 miles round-trip now, but that could change to 5 miles one-way tomorrow? Its because of these factors I considered an EV

 

Oh, that definitely changes my situation if I have to pay above MSRP price.

I see a lot of 2019s still in California and I have got quotes with dealers giving 6-7k off the MSRP( because of the 4k Manufacturer incentive?). Thats the main reason I started giving Clarity a look. I am a frugal person myself (Someone who tracks every single expense via an app).

Simply, my thoughts were, If I am able to utilize the tax incentives fully and the free charging from work and I get a price ultimately close to a nice used car, why not?