Tesla customers to lose key tax credit next month
Tesla customers will lose out on a key federal tax credit on vehicles delivered after Monday.
As of Tuesday, the federal tax credit for anyone who purchases a new Model S, X or 3 will be reduced to $3,750 from $7,500. The full credit is only available while a manufacturer maintains sales below 200,000— a threshold Tesla surpassed over the summer.
Tesla CEO Elon Musk has taken to Twitter throughout recent days to encourage customers to purchase a vehicle before the phase out begins.
As of July 1, the credit will be reduced even further to $1,875. As of 2020, the incentive will be entirely phased out.
There are concerns the reduction of the tax credit could impact some buyers’ ability to afford the vehicles.
The Model 3 was intended as a way to bring the luxury electric vehicle to the average consumer. Musk promised to deliver a $35,000 version of the car, but the entrepreneur acknowledged that isn’t possible for Tesla just yet. In October, Musk announced a $45,000 Model 3.
Musk said on Twitter in May that if the company had shipped the $35,000 version right away, Tesla would “lose money [and] die.”
During the first three quarters of the year, Tesla delivered more than 150,000 vehicles. An uptick in Model 3 production in the third quarter drove the company to profitability for the first time since 2016.