Tesla Hit the 200,000 Car Mark, Triggering Reduced Tax Credit

Tesla said Thursday that it has now delivered 200,000 vehicles, which means tax credits for consumers buying the electric cars will begin to phase out.

A tax law passed last year by congress gradually eliminates tax credits to be used towards the purchase of an EV after the manufacturer has delivered 200,000 vehicles. Starting in January, the $7,500 tax credit will drop to $3,750, then to $1,875 in July.

Tesla is the first electric carmaker to reach the 200,000 car mark, with GM expected to hit the mark next year. Some industry watchers believe it could put the companies at a disadvantage, as other carmakers like Audi, BMW and Mercedes are entering the EV market. Consumers looking to take advantage of the significant tax incentive may opt for those models.

While hitting the milestone is positive sign for Tesla sales, it means that more than 400,000 people on a waiting list for the Model 3 could be disappointed. In particular, those waiting for the $35,000 base model expected to go into production next year will miss out on some savings.

 

[Tiger]

The (original) title is/as (please fix it asap) incorrect and/or misleading. The effect of the triggering occurs at the beginning of 2019 whilst the (original) title implies the effect to begin immediately.

Tax credits are full until end of 2018 and decline thereafter by halving in two 3 month segments.

 

[dknieriemen]

Way to go, Tiger. Let's keep them all honest.

 

[bhzmark]

Agreed. Add "in 2019" to the end of the headline.

 

[JPWhite]

The tax law was passed in 2007 by the Bush administration, not last year. Trump admin decided not to cancel it last year.

 

[roblab]

So, if one finds they're not going to be eligible for the 7500 tax break because they won't get the SR battery they wanted until late 2019, it would seem that one might as well buy the LR battery now and enjoy it since it will cost nearly the same. I was at the end of the list if I wanted the SR. With LR, I got pulled up to the top and got the tax credit and state rebates, totaling $10K. I know, I know, but you gotta plan. We owned only one car for six years so we would have money to buy the 3 when it came out.

 

[dgpcolorado]

The tax law was passed in 2007 by the Bush administration, not last year. Trump admin decided not to cancel it last year.

My recollection is that the House deleted the EV tax credit from the tax bill last year and the Senate added it back in. Nothing to do with the President, save that he signed the bill he received.

 

[to-mars]

I stood in line for several hours on the first day to put my deposit down. I have left my deposit with Tesla through all the delays and while everyone who has more money has jumped the line on me. I will be very disappointed if Tesla does not release the $35k model before the tax credit expires, and Tesla will lose a customer for life.

 

[MattMatt]

I stood in line for several hours on the first day to put my deposit down...Tesla will lose a customer for life.

@to-mars Welcome to the Forum, and I guess good-bye? Not sure what you expect the company to do, it's not like they are sitting on their hands doing nothing? They are literally trying to juggle going from a tiny Luxury Car Manufacture to multiplying their operations by orders of magnitude while consistently being in the red financially.
Yet you somehow think they should make lower margin cars right now because you put your name down with a deposit? From my point of view it certainly seems that they are doing everything they can to handle running the business, making cars in California, rapidly expanding, and trying to make as many people as possible happy by delivering as many cars as possible before the tax credit expires. And guess what the goal of a business is? to make money! Yes they ran into delays, yes the tax credit situation sucks, but welcome to the real world things don't always go perfect...

 

[Shaggy]

I stood in line for several hours on the first day to put my deposit down. I have left my deposit with Tesla through all the delays and while everyone who has more money has jumped the line on me. I will be very disappointed if Tesla does not release the $35k model before the tax credit expires, and Tesla will lose a customer for life.

We're sorry. Remember the incentive is to buy EV over gas, so yes, the tax incentive to buy the Tesla brand will go away, but not for any other EV, until (as noted above) Chevy Bolt/Volt sells enough. I'm surprised the Leaf isn't going to get there first.

I guess it could be said that you shouldn't have the tax credit be the way you afford the car, but a reward for buying it. As another person mentions, it wasn't Tesla's fault, in fact you could argue they got 3 more months by delaying shipping into this quarter.

In order for Tesla to be able to make your car, they have to be in business. To be in business, they have to make money. To make money they need the revenue per car to be as high as possible, so unfortunately if you are unable to get the car with only half or a quarter of the tax rebate (the year AFTER you buy the car), then we'll miss you as you'll need to get the Bolt, Leaf '19, or other Focus (while they make 'em) if you still want an EV. Make sure you ask for your $1000 back before Tesla goes under.

 

[ItsNotAboutTheMoney]

I stood in line for several hours on the first day to put my deposit down. I have left my deposit with Tesla through all the delays and while everyone who has more money has jumped the line on me. I will be very disappointed if Tesla does not release the $35k model before the tax credit expires, and Tesla will lose a customer for life.

How about this deal:
You pay $35k+ $1k shipping for your black base SR Model 3.
But you get no warranty, no Supercharger access and no parts support, because Tesla is bankrupt.

 

[to-mars]

@to-mars ...Not sure what you expect the company to do...

I don't really expect the company to do anything but deliver the car they promised two years ago, a $35K Tesla. Of course, right on cue: Tesla drops $35,000 price from Model 3 page—insists plans haven’t changed.

In the original announcement, there was no mention of them building a $50k car and then SOMEDAY building an affordable one:

"...In terms of range it will be an EPA rating of at least 215 miles.... ...all model 3’s will come standard with Autopilot software and Autopilot will come in with every option, you won’t need to pay extra, the Autopilot features will always be there.... And then in terms of price, it will be $35,000. And I want to emphasize that even if you buy no options at all, this will still be an amazing car. You will not be able to buy a better car at $35,000 or even close even if you get no options. So it’s a really good car even with no options."

Of course they don't give a flying fart what I think. And that's fine. If they only want to sell luxury cars, that's fine too. But I am disappointed that they promised something they might not deliver before the tax credit expires. Why didn't they just iterate the Model S and save the Model 3 for when they could build the car they promised?

I'm just disappointed that the ways things are trending, I probably won't be able to get this car. I am a Tesla and Elon fan. I was so happy to hear about, I stood in line for it. On my birthday. And 27 months later, all that hope and delight is dwindling. That's what I'm expressing here.

 

[to-mars]

We're sorry. Remember the incentive is to buy EV over gas, so yes, the tax incentive to buy the Tesla brand will go away, but not for any other EV, until (as noted above) Chevy Bolt/Volt sells enough. I'm surprised the Leaf isn't going to get there first.

I guess it could be said that you shouldn't have the tax credit be the way you afford the car, but a reward for buying it. As another person mentions, it wasn't Tesla's fault, in fact you could argue they got 3 more months by delaying shipping into this quarter.

In order for Tesla to be able to make your car, they have to be in business. To be in business, they have to make money. To make money they need the revenue per car to be as high as possible, so unfortunately if you are unable to get the car with only half or a quarter of the tax rebate (the year AFTER you buy the car), then we'll miss you as you'll need to get the Bolt, Leaf '19, or other Focus (while they make 'em) if you still want an EV. Make sure you ask for your $1000 back before Tesla goes under.

Yup, all makes sense. I certainly hope Tesla doesn't go under. I haven't pulled my deposit. Yet. If I can't get the car Elon Musk promised me before the tax credit expires, then I'll withdraw my deposit.

Although, come to think of it...I suppose I might just as well do it now since it may not matter anymore that I and others made an effort to get in the queue early. Something to think about.

 

[to-mars]

How about this deal:
You pay $35k+ $1k shipping for your black base SR Model 3.
But you get no warranty, no Supercharger access and no parts support, because Tesla is bankrupt.

Probably $36k for the silver + shipping tax destination etc, for me. I have a black car in LA now...not the best.

 

[Super_Popular]

So if I have an X on it's way and it's delivered to me next month will I not get the tax credit?

 

[to-mars]

So if I have an X on it's way and it's delivered to me next month will I not get the tax credit?

If it's delivered before 2019, you get the tax credit.

 

[Super_Popular]

If it's delivered before 2019, you get the tax credit.

Perfect, thanks.

 

[SW2Fiddler]

It was GM, 100% GM, that trumpeted a "$30,000 price after Federal Tax Credit" all over their Bolt marketing materials and it was parroted in bought-and-paid-for-by-advertising articles. So they could pretend to be less than the "$35,000 Tesla." Tesla continued on the high road and maintained to quote base price before any taxery witchery.
And Tesla did put some effort into getting us three more months of each tier of tax credit than we would have had ...and succeeded!

I stood in line on your birthday too, put $1000 on a reservation, which they still have because I was gambling on the Model Y being surprise-revealed at the same time. I wasn't promised a Model Y nor was I promised a tax credit. My plans are all on me.
I'm thinking the GM credits will phase out sooner than everyone expects, too, since "Sales to Dealers" count toward the 200K.

 

[SW2Fiddler]

If it's delivered before 2019, you get the tax credit.

Or any time IN 2019. It phases out over one year, does not disappear immediately to $0.

 

[Super_Popular]

Or any time IN 2019. It phases out over one year, does not disappear immediately to $0.

From the Tesla website:

Electric Vehicle Incentives



The following federal income tax credits are available to anyone who purchases a new Tesla Model S, Model X or Model 3:

Federal Tax Credit For Vehicles Delivered

$7,500 On or before December 31, 2018
$3,750 January 1 to June 30, 2019
$1,875 July 1 to December 31, 2019

Several states and local utilities offer additional electric vehicle incentives for customers, often taking the form of a rebate. Rebates can be claimed immediately after purchase, while tax credits are claimed when filing income taxes.

Many states also offer non-cash incentives, such as carpool lane access in California and free municipal parking.