Model 3 Federal Tax Credit

[Jayjs20]

This is pretty important to me because I'm using it to plan out the next few years of my life.

I don't know my exact place in line, but I was among the first to order a model 3 online as it went up. I know it's not much to go off of, but when would be a good educated guess that my actual purchase will go through? Basically, I need the tax credit to apply in the fiscal year of 2018, so the purchase needs to be after April 2018. I know Elon Musk plans to push out about 100k or so M3s late 2017. If I get it late 2017, then the credit will go towards my 2017 taxes, which will be pretty bad for me.

Given that I'm probably within the first 150k people in line, is it possible that my purchase won't actually go through until April of 2018? If not, is Tesla willing and able to put a hold on your reservation for a few months?

Thank you.

 

[CoastalCruiser]

Assuming all goes according to plan -which in my humble opinion is a sizable assumption- It seems early California reservers could easily take delivery in 2018. The one thing you want to keep in mind is that [according to reports I've seen] you can re-schedule your delivery date one time. This is based upon how rules for other model deliveries have worked, but if it holds you've got yourself a get-out-of-taking-delivery-before-April card.

 

[Chopr147]

BUT, if you delay delivery and there are any FED tax credits left you may miss out on them. IDK anyone will really know until the 3 gets off the assembly line. I would be VERY surprised if 100,000 were delivered in 2017 but I am rooting for them

 

[TaoJones]

I recently posted a scenario in which, if Tesla really wanted, not 200,000, not 300,000, but 400,000 - count 'em, 400,000 domestic units could qualify for the FULL tax credit.

Short version is to produce domestic unit #200,000 at minute 1 of day 1 of Q1. All of subsequent Q1 and Q2 production, presuming 100% domestic units, or a full half-year's production, then qualifies for the full federal tax credit.

Will this happen? Not completely. It implies the complete neglect of international orders for 6 months, and implies that Tesla will produce at the rate of 8,000 cars/week. Now, while Elon has forecast production at the rate of 10,000 cars/week, and while the factory has indeed produced at that rate in the past (see GM/Toyota alliance), there is still the matter of international orders with which to contend.

It's easy to envision that more than 200,000 cars qualify for the full tax credit, in any case - it's just a matter of how many more and for how long. Not to mention that for a $35,000 car, another bunch of domestic owners getting a half tax credit in Q3 will certainly be appreciated as well.

 

[Alketi]

Lets remember that Musk said during the event that the reservations were 115K(?) [too lazy to look up the number, but it was in the low 100Ks]. So, if you ordered before the event, your number is likely to be 100K or less. Couple this with the fact that (I believe) this was a world-wide number, and your odds get better and better of getting the tax break...

Food for thought.

 

[Chopr147]

All possible if Tesla does it's best to maximize the credit. They have stated as much. I'm not sure when (what year) the credit started but Tesla VIN#'s are past 150,000 right now. Even at a slower pace than expected (sales have been lower than expected many times) let's say 2500 a week , that's 130,000 more Tesla's before the 3 hits the street next July/August(best case) We're already near 300,000 before the 3. W/O going over all these numbers again I am hoping for a half credit on my Model

 

[Jayjs20]

Much appreciated for the advice.

 

[zambono]

This is pretty important to me because I'm using it to plan out the next few years of my life.

I don't know my exact place in line, but I was among the first to order a model 3 online as it went up. I know it's not much to go off of, but when would be a good educated guess that my actual purchase will go through? Basically, I need the tax credit to apply in the fiscal year of 2018, so the purchase needs to be after April 2018. I know Elon Musk plans to push out about 100k or so M3s late 2017. If I get it late 2017, then the credit will go towards my 2017 taxes, which will be pretty bad for me.

Given that I'm probably within the first 150k people in line, is it possible that my purchase won't actually go through until April of 2018? If not, is Tesla willing and able to put a hold on your reservation for a few months?

Thank you.

Once it is your time to order you can pick a delivery time frame. That delivery time frame is what will count towards the purchase date. I doubt it highly you will see the full credit if you wait till 2018 though.

 

[Chickenlittle]

All possible if Tesla does it's best to maximize the credit. They have stated as much. I'm not sure when (what year) the credit started but Tesla VIN#'s are past 150,000 right now. Even at a slower pace than expected (sales have been lower than expected many times) let's say 2500 a week , that's 130,000 more Tesla's before the 3 hits the street next July/August(best case) We're already near 300,000 before the 3. W/O going over all these numbers again I am hoping for a half credit on my Model

Your wrong. Only cars delivered in USA count for the limit they have not deliver that number in USA . You need to recalculate

 

[flamingoezz]

There is no way in hell that happens. Even if things went according to Elon's best case scenario, they can't hit that number.

I recently posted a scenario in which, if Tesla really wanted, not 200,000, not 300,000, but 400,000 - count 'em, 400,000 domestic units could qualify for the FULL tax credit.

 

[TaoJones]

There is no way in hell that happens. Even if things went according to Elon's best case scenario, they can't hit that number.

Did you not read the 2nd, 3rd, and 4th paragraphs?

 

[FlatSix911]

This is pretty important to me because I'm using it to plan out the next few years of my life. I don't know my exact place in line, but I was among the first to order a model 3 online as it went up. I know it's not much to go off of, but when would be a good educated guess that my actual purchase will go through? Basically, I need the tax credit to apply in the fiscal year of 2018, so the purchase needs to be after April 2018. I know Elon Musk plans to push out about 100k or so M3s late 2017. If I get it late 2017, then the credit will go towards my 2017 taxes, which will be pretty bad for me.

Given that I'm probably within the first 150k people in line, is it possible that my purchase won't actually go through until April of 2018? If not, is Tesla willing and able to put a hold on your reservation for a few months?
Thank you.

Take a look at this article for a good estimate ...
An early Tesla Model 3 reservation could determine if you get the $7,500 US tax credit or not

 

[flamingoezz]

Yes.

but Elon plans on 500K total cars in 2018. I think the current build total for S & X is around 90K/year (correct me if I'm wrong). So for sake of modest ramping up and round numbers, lets say that in 2018 he builds 100K total S & X Models. That leaves 400K M3's for the year. Even if they start phase out Q1, day 1 -- that would mean only people who take delivery of their car by July 1 get a full credit. If they intend on 400K M3's for a full year, lets assume 200K for Q1 & Q2.

OK, so what about 2017? Elon plans to build 100-200K M3's. Well, if he delivered even 100K M3's to the US in 2017, the phase out would start before Q1 2018. So unless Elon plans to store 100K+ M3's for Q4 and deliver in Q1 2018, it's mathematically impossible.

This is all assuming that Elon hits astronomical numbers that nobody expects him to do, given his history. If 250K people got a full credit, I would be shocked. I'm around number 350K (based in USA) on the list, and I am concerned that I may not realistically get my car in 2018 and am going to be on the cusp of my rebate dropping to $1875.

I appreciate your ethusiasm, but let's get real...the guy can't even hit a deadline on writing a 4-5 paragraph blog article. if you think he's going to go from 0 to 400K cars in 9 months, you're nuts.

Did you not read the 2nd, 3rd, and 4th paragraphs?

 

[godkane]

What I read from Elon's plan is that by the end of 2018, he will produce at 500K per year rate. So until December of 2018, I would expect the rate to be ramping up. In December I would think he would be about 42K cars that month, which is 500K rate. Based on the first model 3 car being delivered Oct 1, 2017 (Building of cars start July 1 2017) and being at a rate of 500K cars per month in December off 2018. I would expect about 50K model 3s in 2017 and another 300K model 3s in 2018. Hope is that he will hit the 200K car in the US at the start of Q2 of 2018, so the full rebate will be thru September of 2018 and the half rebate will be available thru March of 2019. Quarter rebate would than be thru September of 2019.

 

[Winston Wolf]

Take a look at this article for a good estimate ...
An early Tesla Model 3 reservation could determine if you get the $7,500 US tax credit or not
View attachment 186052

That article isn't correct and is certainly out of date with the new rate of production of the MS.

That said, I think a LOT of us (in the US) who ordered in the first few days will get the full tax credit. The tax credit begins it's phase out period after the 200,000th unit is DELIVERED, not manufactured, to a US customer. Tesla could easily manipulate this to maximize things for US consumers, but whether they will remains to be seen. Anyone who takes delivery of their vehicle in the quarter that the 200,000th vehicle is delivered OR the quarter AFTER the 200,000th vehicle is delivered will receive the FULL federal tax credit. (not sure about individual states). No restrictions on the number of cars which could fall into this phase. The following two quarters would yield a 1/2 credit, and the two quarters following those would be a 1/4 credit. So if Tesla plays this right, US consumers could see an additional 18 months of full or partial tax credits with no volume limits after the 200,000 car is delivered. It'll be interesting to see how this gets communicated out.

Internal Revenue Bulletin - November 30, 2009 - Notice 2009-89

 

[Winston Wolf]

This is pretty important to me because I'm using it to plan out the next few years of my life.

I don't know my exact place in line, but I was among the first to order a model 3 online as it went up. I know it's not much to go off of, but when would be a good educated guess that my actual purchase will go through? Basically, I need the tax credit to apply in the fiscal year of 2018, so the purchase needs to be after April 2018. I know Elon Musk plans to push out about 100k or so M3s late 2017. If I get it late 2017, then the credit will go towards my 2017 taxes, which will be pretty bad for me.

Given that I'm probably within the first 150k people in line, is it possible that my purchase won't actually go through until April of 2018? If not, is Tesla willing and able to put a hold on your reservation for a few months?

Thank you.

If you get it in 2017, you could always use the option to pre-fund your 2018 taxes. The Government would be more than happy to hold on to your your money.

 

[FlatSix911]

That said, I think a LOT of us (in the US) who ordered in the first few days will get the full tax credit. The tax credit begins it's phase out period after the 200,000th unit is DELIVERED, not manufactured, to a US customer. Tesla could easily manipulate this to maximize things for US consumers, but whether they will remains to be seen. Anyone who takes delivery of their vehicle in the quarter that the 200,000th vehicle is delivered OR the quarter AFTER the 200,000th vehicle is delivered will receive the FULL federal tax credit. (not sure about individual states). No restrictions on the number of cars which could fall into this phase. The following two quarters would yield a 1/2 credit, and the two quarters following those would be a 1/4 credit. So if Tesla plays this right, US consumers could see an additional 18 months of full or partial tax credits with no volume limits after the 200,000 car is delivered. It'll be interesting to see how this gets communicated out.
Internal Revenue Bulletin - November 30, 2009 - Notice 2009-89

An early Tesla Model 3 reservation could determine if you get the $7,500 US tax credit or not

The US Law states that after 200,000 is reached, customers will receive $3,750 for the following 6 months with no apparent limit on units. The following 6 months after that, only $1,875 will be awarded to car buyers. That means that for most of 2019 Tesla buyers won’t likely have much federal incentive to buy cars. By 2020, the Federal Subsidy will have run out.

 

[Winston Wolf]

An early Tesla Model 3 reservation could determine if you get the $7,500 US tax credit or not

Right. That quote isn't accurate. The full subsidy does not end as soon as 200,000 is reached. There is a two quarter sunset before the 1/2 subsidy kicks in ($3750)

Exact verbiage from the IRS:
The new qualified plug-in electric drive motor vehicle credit phases out for a manufacturer’s vehicles over the one-year period beginning with the second calendar quarter after the calendar quarter in which at least 200,000 qualifying vehicles manufactured by that manufacturer have been sold for use in the United States (determined on a cumulative basis for sales after December 31, 2009) (“phase-out period”). Qualifying vehicles manufactured by that manufacturer are eligible for 50 percent of the credit if acquired in the first two quarters of the phase-out period and 25 percent of the credit if acquired in the third or fourth quarter of the phase-out period.

 

[FlatSix911]

I am afraid that you guys are spreading false hope for the majority of Model 3 reservations holders.
With 500K early reservations to date, there is no way everyone is going to get the full $7,500 tax credit.

Keep in mind that with 100K Model S/X vehicles already produced by 2016, only another +100K will get the full credit before phase out begins.
BTW, I have 2 very early Model 3 reservations with owner/geographic priority and do not expect the credit...although it would be nice. YMMV

That article isn't correct and is certainly out of date with the new rate of production of the MS. That said, I think a LOT of us (in the US) who ordered in the first few days will get the full tax credit. The tax credit begins it's phase out period after the 200,000th unit is DELIVERED, not manufactured, to a US customer. Tesla could easily manipulate this to maximize things for US consumers, but whether they will remains to be seen. Anyone who takes delivery of their vehicle in the quarter that the 200,000th vehicle is delivered OR the quarter AFTER the 200,000th vehicle is delivered will receive the FULL federal tax credit. (not sure about individual states). No restrictions on the number of cars which could fall into this phase. The following two quarters would yield a 1/2 credit, and the two quarters following those would be a 1/4 credit. So if Tesla plays this right, US consumers could see an additional 18 months of full or partial tax credits with no volume limits after the 200,000 car is delivered. It'll be interesting to see how this gets communicated out.
Internal Revenue Bulletin - November 30, 2009 - Notice 2009-89

Right. That quote isn't accurate. The full subsidy does not end as soon as 200,000 is reached. There is a two quarter sunset before the 1/2 subsidy kicks in ($3750) Exact verbiage from the IRS:
The new qualified plug-in electric drive motor vehicle credit phases out for a manufacturer’s vehicles over the one-year period beginning with the second calendar quarter after the calendar quarter in which at least 200,000 qualifying vehicles manufactured by that manufacturer have been sold for use in the United States (determined on a cumulative basis for sales after December 31, 2009) (“phase-out period”). Qualifying vehicles manufactured by that manufacturer are eligible for 50 percent of the credit if acquired in the first two quarters of the phase-out period and 25 percent of the credit if acquired in the third or fourth quarter of the phase-out period.

 

[alseTrick]

Once it is your time to order you can pick a delivery time frame. That delivery time frame is what will count towards the purchase date. I doubt it highly you will see the full credit if you wait till 2018 though.

I would be shocked if the full credit wasn't available for at least the first quarter of 2018.