Electric automaker Tesla has hit a production threshold that will phase out a key tax credit for new vehicle owners.
On Tesla’s website, under its electric vehicle incentives page, it shows that as of Jan. 1, the federal tax credit for anyone who purchases a new Model S, X or 3 will be reduced to $3,750 from $7,500. As of July 1, the credit will be reduced even further to $1,875. As of 2020, the incentive will be entirely phased out.
The full credit is only available while a manufacturer maintains sales below 200,000—which means Tesla hit that sales threshold this month.
The announcement was first discovered by Jalopnik.
Hundreds of customers are on the waiting list for the lower-priced Model 3 sedan, which becomes available in 2019, and the reduction of the tax credit could impact some buyers’ ability to afford the vehicle.
At the end of the second quarter, Tesla ramped up production and announced it reached its goal of delivering 5,000 Model 3 sedans per week.