Tesla (TSLA) sales in the U.S. got off to a hot start this year thanks to the combination of price cuts and a new $7,500 federal EV tax credit. But Tesla’s lowest-price vehicle, the standard-range Model 3, may lose eligibility for the tax credit at the end of March.
An early Wednesday report from Electrek said Tesla has told employees that it expects to lose the credit. Tesla’s Model 3 page on its website has a banner informing EV shoppers that tax credit changes are coming soon. “Take delivery now to guarantee a $7,500 credit.”
New EV Tax Credit Rules Due
New IRS rules have been expected that will clarify eligibility guidelines, taking effect in April, for the Inflation Reduction Act’s $7,500 EV tax credit. The IRA was meant to encourage assembly and sourcing in the U.S. or from U.S. trade partners. As a result, the standard-range Model 3, equipped with an LFP battery made in China, stands to lose its favored tax status even though the vehicle is built in Fremont, Calif.
Tesla’s other Model 3 vehicles and the Model Y should retain eligibility for the full $7,500 EV tax credit. Those vehicles use battery cells built by Tesla or Panasonic in the U.S.
Data from Experian reported by Automotive News on March 15 show that Tesla sales jumped 34% in the U.S. in January vs. a year ago to just under 50,000. Model Y and Model 3 sales led the way, with the latter up 29% to 17,256. It’s not clear how many of those were of the standard-range variety.
TSLA Stock
Tesla stock rose 2.1% to 195.16 in early Thursday stock market action. TSLA stock lost 3.25% on Wednesday as the market slumped following the Federal Reserve’s rate hike.
TSLA stock finished about 12% below a 217.75 entry point on Thursday.
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