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Tesla to begin phasing out federal tax credit in 2019

13 July, 2018, 16:54 | Author: Rafael Roberts
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Tesla's vehicle purchase incentives web page on Thursday morning reported that the wind-down of incentives for buyers of its cars has begun.

The announcement was first discovered by Jalopnik. After the full year, the company's customers are no longer eligible for that tax credit. After that point, the credit halves for six months, and then halves again for a final six months.

But two calendar quarters after a company sells its 200,000th electric vehicle in the United States, the tax credit begins to phase out.

Tesla has also started changing its strategy for the Model 3.

In March, GM Chief Executive Mary Barra called on Congress to expand the consumer tax credit for electric vehicles as the company boosted production of the Bolt in response to strong demand.


The current tax incentive system, created to encourage drivers to purchase electric or electrified vehicles, offers a $7,500 tax credit on new cars, but only up to a limit. The incentives have certainly helped the automaker - as they have other manufacturers producing electric cars - to gain traction, but those advantages have begun to shrink a little as Tesla adoption picks up.

With more than 400,000 customers holding deposits on the Tesla Model 3, many of those customers will likely not receive any federal tax credit.

For the first time since it started taking reservations for its new "affordable" Model 3, Tesla has opened up the car's configurator to the public. So far, the company is only building high-end versions of the Model 3 for significantly higher prices. Without the tax credit, those later buyers may get less vehicle for the same effective price. Bloomberg's Model 3 production tracker has become more accurate over the past few months, with the system only being 2% off its estimates for Tesla's Q2 figures for the compact electric auto.

Sales reports show that the company pulled out all the stops to avoid selling its 200,000th vehicle in the US until after July 1, to maintain the full tax credit for one extra quarter, by pushing more sales to Canada among other things.

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