Tesla customers could lose thousands in tax credits next year

Tesla's US Tax Credit Set To Come To An End | OilPrice.com

Tesla's US Tax Credit Set To Come To An End | OilPrice.com

The clock is ticking for Tesla customers looking for incentives on their auto purchase.

The phaseout was triggered when Tesla delivered its 200,000th vehicle to a customer in the USA this week.

The declining tax credit is seen as putting Tesla and GM at a disadvantage over newer entrants to the market, whose first 200,000 models will qualify for a full tax credit. From Jan. 1, 2019 until June 30, the credit will be reduced to $3,750.

The US government subsidises purchases of electric cars with tax credits of up to $7,500 (£5,700), which apply to all of Tesla's cars.

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

While tax credits have helped boost electric-vehicle demand in the USA, they remain only 1.1percent of the market.


Each manufacturer is allotted 200,000 credits before the phaseout begins. The new vehicle identification registrations come at a time when Tesla is actively pushing its deliveries for the Model 3.

Many of those same buyers who have not yet received their cars have waited for Tesla to follow through on its promise to build a auto for $35,000.

Workers at Tesla's Fremont Factory were reportedly given free Red Bull to stay awake and instructed to walk through a raw sewage spill so that Model 3 production could continue, according to Bloomberg Businessweek.

The Model 3, billed as a more affordable auto with a starting price of $35,000, is now delivered only in more expensive versions. Without the tax credit, those later buyers may get less vehicle for the same effective price.

At the end of June, Tesla, as well as GM, was said to be very close to hitting the 200,000 US delivery cap.

The automaker has now sold a total of over 200,000 electric vehicles in the US, which means that that the $7,500 federal tax credit that its cars have been eligible for will begin to phase out on January 1, 2019, when it drops to $3,750, followed by a further reduction to $1,875 on July 1 and its full elimination at the end of the year. Since the vehicle reservations exceeded the company's estimates, Tesla has embarked on an initiative to anti-sell the compact electric auto. After that, reaching the target this quarter became inevitable.

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