A Utah-based electric vehicle dealer has revealed how some dealerships allegedly circumvent federal used EV tax credit rules to mislead customers. In a viral video, Alex Lawrence shared a customer's account of a scheme involving artificial price separations for add-ons. The incident highlights questionable practices in the used Tesla market before the credit expired.
On June 11, Alex Lawrence, who runs EV Auto Alex in Utah with over 163,000 subscribers, posted a 2-minute, 54-second video that has since garnered 979,000 views. The video features a phone call with a TikTok follower who visited a large dealer group in Utah the previous day to buy a used Tesla Model 3 qualifying for the federal used EV tax credit.
The customer sought a vehicle priced at $25,000 or less to claim up to $4,000 in credit, which applied to purchases from licensed dealers for vehicles at least two years old, meeting buyer income requirements. The salesperson presented a $28,500 Model 3 but proposed a workaround: charging $24,500 'on paper' for the Tesla and $4,000 separately for a charger.
Lawrence explained that IRS guidance includes all dealer-imposed costs in the sale price, excluding only taxes, title, and registration fees. Mandatory add-ons like accessories or documentation fees count toward the $25,000 limit, making the scheme non-compliant.
Challenging the staff with one of Lawrence's educational videos, the customer heard the finance manager dismiss concerns, saying, 'no, man, that's totally fine. We've done this a bunch of times. It's all good.' When pressed for a written guarantee to cover a denied credit, the manager refused and suggested a separate $2,000 transaction the next day for 'TIPS,' which Lawrence called 'so illegal' as it could constitute tax fraud.
The federal credit, known as the previously owned clean vehicle credit, ended on September 30 but was eliminated earlier by the One Big Beautiful Bill Act passed on July 4. Viewers shared similar experiences in comments, with some naming dealerships and recounting attempts to bribe for positive reviews, like offering $100 to remove a one-star rating.
Lawrence, aware of three such dealerships, plans to contact owners directly. The customer ultimately bought a qualifying vehicle from EV Auto Alex, receiving $1,000 off for 'doing the right thing.' Dealership employees and professionals praised the video for educating on proper practices.