I was assuming the modest increase from 40% free trade minerals to 50% would not be a limiting factor for Tesla, but reading more carefully I see there is another potential challenge:
The 2-part credit is split into $3750 for "battery minerals" and/or $3750 for "battery components". Both ratios increase 10%/yr, but starting in 2024 the rule changes from "50% free trade" components to "0% Chinese" battery components. Then in 2025 it adds "0% Chinese minerals".
I think this is the first I’ve read of the 0% Chinese parts. I wonder why articles like this one don’t mention it. I thought the LFP batteries in the RWD are already 100% Chinese, and it seems they should not get the tax credit at all.
Tesla Warns Model 3 Federal Tax Credit Will "Likely" Be Reduced In 2024
There’s lots of talk of 12% extended range which seems like a lot for just aerodynamics, yet I believe there’s also talk of no changes to the batteries.
I also wonder how the 2024 Point of Sale thing will work, and the fact that Tesla isn’t really a “dealer.” Since nobody knows how much someone will make in the current year, it seems that to make a POS transfer to a dealer, that dealer is going to want to have not only the W2s from the taxpayer but perhaps a full tax return from the prior year. I bet Tesla doesn’t even play that game without a full tax return, or at all (if they even can as a dealer).
It seems like 2024 brings a lot of uncertainty to the model 3: Incentives, Range, Price, Maybe Battery changes, and build quality of a new model without kinks all worked out, and then the Lack of Stalks. But when I read about Highland, I will admit that I would prefer one. Why would anyone want the shorter range and older body style? Well, if the plan is mostly for around-town-driving, then maybe the aerodynamics won’t matter all that much for the range if the batteries really aren’t going to change.
I’m just trying to justify moving forward with buying a M3 in 2023.
It looks like inventory, and perhaps production could be down. I read that in the past few weeks Highland deliveries took place across Europe, and there’s currently no M3 inventory in any of the LHD countries. I see UK and Austrailia and Japan have some, but otherwise it appears to just be North America with inventory, and less than 1100 right now. So I’m guessing China is only pumping out enough to keep up with European demand, and zero excess.
It could be that in the US, they don’t want to mess with the production, as they know the M3 sales are going to be screwed for a few reasons in early 2024: 1) Drop in incentives due to battery change that somehow doesn’t apply to MY (maybe planning to divert battery resources to MY?),
2) POS incentives available for other low-cost EV makers (with dealers) offering POS down-payment option, and Tesla not?
3) switchover production drop due to highland change.
Notice that Tesla re-introduced the MY RWD which is only $3750-5000 more than the M3. This vehicle may bridge the gap as the low-cost vehicle readily available during the highland refresh in the US. Meanwhile building demand for highland when demand is likely to be lower as the incentives may appear non-existent being 50% of what they are now and also not available until the buyer does they taxes a year later.
So with this, Tesla will probably not be relying on M3 sales in Q1 for their numbers to impress stockholders. I will guess they will release the Highland for orders to hype it sort of like they did with Cybertruck, but on afar smaller scale. Releasing in Europe with Chinese made was probably smart to assure the kinks get worked out, so their larger US release is smoother.
So, knowing that the incentives for the M3 are getting cut in half due to the battery, they probably want to clear out all the old inventory at the end of the year. With all this info, my guess is that we will see inventory steadily decline for the M3 and possibly not even see any end-of-year inventory discounts come if she inventory gets low enough. If there are leftovers in 2024 when they probably start taking Highland orders, they can discount them in 2024. Inventory seemed to peak a few days ago at ~1150 on the Worldwide page for North American production, now closer to ~1050. I will start to monitor the country page now. I hope to see US inventory rise, but don’t have high expectations of seeing that. November will be the month to see an increase in inventory if it’s going to happen IMO, not December.
