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.

 

[SW2Fiddler]

OK so just an FYI, that is not what Tesla is telling me. I was told, like above that it has to be delivered by 12/31/18.

Then you can take up to $7500 federal tax credit (depending on your own tax situation, consult your tax pro) when filing in 2019. If delivered in 1st or 2nd quarter 2019, you could take up to $3750 when filing in 2020. 3rd and 4th quarter 2019 delivery will entitle you to up to $1875 credit on 2019 taxes filed in 2020. It phases out over the period of a year and a half.

 

[to-mars]

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.

Good clarification. I just wanted Plan B to know they were getting the full tax credit.

 

[SO16]

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.

Tesla NEVER stated that the 35k car would get the tax credit (at least that I have seen). Tesla has ALWAYS started with the more expensive versions first. But go ahead and cancel. Your loss.

 

[whitex]

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.

That is if one can afford the LR or SR with no incentive. A number of those putting down the deposit counted on $28.5K car, not $41.5K car (price of cheapest LR today after rebate). That is a significant gap (46% increase in price). For those who can't close that gap, the argument is more like "might as well buy an ICE for $28.5K" or maybe "might as well buy the Bolt", and not "might as well buy the LR".

 

[whitex]

@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...

I don't think people are saying they should lose money, only that they feel mislead when they put down the deposit as Elon made it seem like the $35K will be available by the end of 2017. But that said, at least the deposit is refundable. Those poor folks who paid for FSD won't get their money back after Elon delivers some gimmick instead of FSD. Think Elon's promise of AP1 finding you anywhere on private property, delivering instead summon which will drive up to 40 feet straight while you hold your finger on a button watching to make sure it doesn't hit anything - FSD will be similarly underwhelming when compared to Elons "you can summon it across the country", or "you can sleep on the back seat while the car drives you home". Not the only thing Elon didn't deliver, there is a train of grand promises and underwhelming deliveries (or no deliveries).

 

[whitex]

Given this, and the fact that Tesla pretty much got rid of reservations, why would people waiting for $35K Model 3 not just take their deposit back? As Elon said, they won't make the base until they are in full swing of production, which means no line even for those without a deposit (just like now pretty much anyone can order the LR, AWD or P - deliveries depend on geography mostly, not whether you have put down the deposit).

 

[TrevTremaine]

So, the question of the day is this going into 2019: How competitive will Tesla be under the circumstances when you're looking at it from a customer's perspective?

Given that Tesla is losing the incentive, the competition will have an added leg up to compete because they will have the incentive to work with. With Jaguar, Audi/Porsche and others it'll take a while to get to the 200K mark.

I love the Tesla I'm driving, but I can also see that the competition can undercut the price of the Tesla by thousands for the next few years. I'll stay loyal, but it's still going to be a matter of getting more people to buy Teslas in order to keep going.

 

[SO16]

So, the question of the day is this going into 2019: How competitive will Tesla be under the circumstances when you're looking at it from a customer's perspective?

Given that Tesla is losing the incentive, the competition will have an added leg up to compete because they will have the incentive to work with. With Jaguar, Audi/Porsche and others it'll take a while to get to the 200K mark.

I love the Tesla I'm driving, but I can also see that the competition can undercut the price of the Tesla by thousands for the next few years. I'll stay loyal, but it's still going to be a matter of getting more people to buy Teslas in order to keep going.

Only in America (which is of course their biggest market but in a few years that title will go to China.)

 

[SO16]

Given this, and the fact that Tesla pretty much got rid of reservations, why would people waiting for $35K Model 3 not just take their deposit back? As Elon said, they won't make the base until they are in full swing of production, which means no line even for those without a deposit (just like now pretty much anyone can order the LR, AWD or P - deliveries depend on geography mostly, not whether you have put down the deposit).

It seems many people are getting the long range now because of the tax credit situation. So rather than asking for the tax credit back, they are ordering sooner. Will thousands cancel because of the tax credit? Probably. But based on the enthusiasm around the Model 3, it looks like it will still be a great seller even after the tax credit totally expires for Tesla. (Which isn’t for another year.)

 

[TrevTremaine]

Only in America (which is of course their biggest market but in a few years that title will go to China.)

Not only. Here in Ontario Canada, our provincial leader has killed EV incentives across the board, but from what I've heard only Tesla sales will be immediately impacted. The problem with China is that they literally copy ever single car made, and will probably continue to give an added boost to Chinese manufacturers.

 

[SO16]

Not only. Here in Ontario Canada, our provincial leader has killed EV incentives across the board, but from what I've heard only Tesla sales will be immediately impacted. The problem with China is that they literally copy ever single car made, and will probably continue to give an added boost to Chinese manufacturers.

Many of us realize that EVs are better than ICE vehicles in every metric that matters to us. Once more catch on to that fact, the incentives will hopefully no longer be necessary.

 

[whitex]

Many of us realize that EVs are better than ICE vehicles in every metric that matters to us. Once more catch on to that fact, the incentives will hopefully no longer be necessary.

Everything has its value. All those metrics which matter to you won't matter if they cost too much. EV's are still more expensive than ICE. Rebate helps close the price gap. Most people shopping for a Subaru WRX would probably agree that Porsche 911 is better in all the metrics that matter to them, but they still buy the WRX.

Another way to look at it - price is also a metric that matters to people, I suspect even you.

 

[SO16]

Everything has its value. All those metrics which matter to you won't matter if they cost too much. EV's are still more expensive than ICE. Rebate helps close the price gap. Most people shopping for a Subaru WRX would probably agree that Porsche 911 is better in all the metrics that matter to them, but they still buy the WRX.

Another way to look at it - price is also a metric that matters to people, I suspect even you.

Of course it matters. It just depends what one values more. When I bought my MS, the price was one of the lower factors. If it was the most important factor, I wouldn’t have purchased it. Of course not every situation is the same. But if the 35k Tesla Model 3 is still quite good and people do quite a bit of driving, the economics could very well be in the EV’s favor.

 

[whitex]

Of course it matters. It just depends what one values more. When I bought my MS, the price was one of the lower factors. If it was the most important factor, I wouldn’t have purchased it. Of course not every situation is the same. But if the 35k Tesla Model 3 is still quite good and people do quite a bit of driving, the economics could very well be in the EV’s favor.

I don't think it's always the matter of price being most important - if that is the case you go with something like a Toyota Corolla. To some, the price is the limiting factor, they simply cannot afford the 46% higher priced car ($41.5K LR instead of $28.5K SR), no matter how much they love it. Given your low ranking of price as a deciding factor, would have still bought your Tesla if it costed 46% more? If you said yes and most people agree with you, it sounds like Tesla should be adjusting their prices to make the badly needed profitability happen.

 

[brianman]

That is if one can afford the LR or SR with no incentive. A number of those putting down the deposit counted on $28.5K car, not $41.5K car (price of cheapest LR today after rebate). That is a significant gap (46% increase in price). For those who can't close that gap, the argument is more like "might as well buy an ICE for $28.5K" or maybe "might as well buy the Bolt", and not "might as well buy the LR".

I'm confused by your hypothetical buyer math here. I'm guessing it comes from customers that are lured by the "big savings!" sale signs on stores where they end up paying more than at the non-sale stores.

Buyer puts down reservation for SR hoping to qualify for the 7500 -- expected net price (tax aside): 28.5k (=35-7.5)
Tax credit 1/2 expires -- actual net price: 31.25k (=35-3.75), 9.6% higher than expected
Tax credit 3/4 expires -- actual net price: 33.125k (=35-1.875), 16.2% higher than expected
Tax credit fully expires -- actual net price: 35k, 25% higher than expected

Your 46% number comes from choosing a different vehicle configuration entirely.

 

[whitex]

I'm confused by your hypothetical buyer math here. I'm guessing it comes from customers that are lured by the "big savings!" sale signs on stores where they end up paying more than at the non-sale stores.

Buyer puts down reservation for SR hoping to qualify for the 7500 -- expected net price (tax aside): 28.5k (=35-7.5)
Tax credit 1/2 expires -- actual net price: 31.25k (=35-3.75), 9.6% higher than expected
Tax credit 3/4 expires -- actual net price: 33.125k (=35-1.875), 16.2% higher than expected
Tax credit fully expires -- actual net price: 35k, 25% higher than expected

Your 46% number comes from choosing a different vehicle configuration entirely.

I was replying to the suggestion that with the tax rebate expiring, people should just buy the LR model today. LR today, with full rebate, is 46% more expensive than 35K-full rebate, which is what some people expected to buy when putting down the deposit.

 

[brianman]

I was replying to the suggestion that with the tax rebate expiring, people should just buy the LR model today. LR today, with full rebate, is 46% more expensive than 35K-full rebate, which is what some people expected to buy when putting down the deposit.

Fair enough. I think it's a tail wagging the dog situation, but context noted.

 

[SO16]

I don't think it's always the matter of price being most important - if that is the case you go with something like a Toyota Corolla. To some, the price is the limiting factor, they simply cannot afford the 46% higher priced car ($41.5K LR instead of $28.5K SR), no matter how much they love it. Given your low ranking of price as a deciding factor, would have still bought your Tesla if it costed 46% more? If you said yes and most people agree with you, it sounds like Tesla should be adjusting their prices to make the badly needed profitability happen.

No I wouldn’t have bought it at that price. I came close to buying the P100D but couldn’t justify the markup.

Don’t worry about Tesla. They’ll survive.

 

[ItsNotAboutTheMoney]

So, the question of the day is this going into 2019: How competitive will Tesla be under the circumstances when you're looking at it from a customer's perspective?

Given that Tesla is losing the incentive, the competition will have an added leg up to compete because they will have the incentive to work with. With Jaguar, Audi/Porsche and others it'll take a while to get to the 200K mark.

I love the Tesla I'm driving, but I can also see that the competition can undercut the price of the Tesla by thousands for the next few years. I'll stay loyal, but it's still going to be a matter of getting more people to buy Teslas in order to keep going.

Well, if the SR+PUP+color is $42k, it'll still be way cheaper than other premium vehicles.