Chances are Tesla Model 3 owners won’t get a full $7,500 government tax rebate.
It’s a question that’s been on most future Tesla Model 3 owners’ minds: whether or not they’ll qualify for the $7,500 federal tax credit for purchasing an electric vehicle. The answer, unfortunately, isn’t a definite yes or no because Tesla hasn’t really disclosed (accurately) how quickly it will be producing the Model 3. Even if a buyer knew their exact spot in line, they have to take into account that Tesla sells two other vehicles that will affect whether a Model 3 owner will get the full tax incentive.
That’s because the phase-out period after an automaker sells its 200,000th plug-in hybrid or fully-electric vehicle in the U.S. Alan Baum of Baum & Associates, which forecasts and tracks the sales of electrified vehicles, estimates Tesla will reach the 200,000 mark in the first quarter of 2018. But the phase out doesn’t go immediately into effect which gives future Model 3 owners time. Two calendar quarters later, buyers are still able to claim 50 percent of the credit ($3,750) for two quarters. After that, it becomes 25 percent ($1,875) for another two quarters.
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That means in the most likely scenario based on Tesla’s sales and anticipated production figures, those taking delivery of their Model 3 before September 2018 have a good chance of qualifying for the full $7,500 amount. It would then switch to a $3,750 credit for two quarters, before dropping to $1,875 sometime in 2019.
Now keep in mind the phase-out period affects only the automaker that reaches 200,000 units. Nissan Leaf buyers, for example, need not worry for now since the automaker has sold around 110,000 Leafs. GM is closest with 145,820 qualifying electrified vehicles sold to date, but it will still likely lag behind Tesla in reaching the mark for the phase-out period. It’s something to keep in mind if the $7,500 plays a major role in your purchasing decision, especially if you aren’t absolutely in love with the Model 3.
The big question remains is how Tesla is going to prioritize deliveries of the Model 3. The company has said employees and current Model S and Model X owners will be first to receive their vehicles, and has suggested residents in California will be next on the list as shipments will begin on the West Coast before moving to the rest of the country. It’s just unclear whether someone that has placed a deposit in New York will see their car before everyone in California gets theirs. For now, those that have placed a deposit can get an estimate by logging into the Tesla website and selecting which model they intend to purchase. Based on that estimate, buyers can get a better idea of what to expect when it comes to the federal tax incentive.
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