Tesla's 'Free' Model X for Referrals Probably Eligible for Federal Tax Credit

Aaron Cole
by Aaron Cole

Details on Tesla’s “free” Model X for the first 10 referral buyers have been few since the beginning. First it appeared that the program would be limited by time, then it appeared it would be limited by country, now it appears that it’ll be limited by continent.

The first person to refer ten friends in each sales region— North America, Europe, and the Asia-Pacific — will receive a free Founder Series Model X.

But even more unclear is exactly how Tesla will give its winner their new Model X. Depending on how that happens, there are very few scenarios in which the new Model X owner (with 10 friends wealthy enough to buy new Model S cars) wouldn’t qualify for up to $7,500 back from the feds.

A spokesperson from Tesla didn’t comment on whether the Model X referral winner would qualify for the federal tax credit. A spokesman for the U.S. Department of Energy, the government agency that administratively handles the incentive, said he was unaware of a situation similar to Tesla’s Model X incentive and said the vehicle would qualify for the tax credit if the referrer used it as a personal vehicle, and qualified under the law as the original “acquirer” — the IRS doesn’t designate that the person must “purchase” the EV.

The applicable tax code only states that for the car to qualify for the credit ( IRC 30D):

  • the original use of which commences with the taxpayer,
  • which is acquired for use or lease by the taxpayer and not for resale,
  • which is made by a manufacturer,
  • which is treated as a motor vehicle for purposes of title II of the Clean Air Act [42 USCS §§ 7521 et seq.],
  • which has a gross vehicle weight rating of less than 14,000 pounds, and
  • which is propelled to a significant extent by an electric motor which draws electricity from a battery which–
    • has a capacity of not less than 4 kilowatt hours, and,
    • is capable of being recharged from an external source of electricity.

According to several accountants and CPAs, the $130,000+ cars would still be subject to significant income tax, under which there are extremely few scenarios that the qualifying referrer could escape (legally, anyway) paying tens of thousands for their finder’s fee prize.

But for the lucky one in North America who found 10 people to buy a Model S and get a Model X in return, Uncle Sam may have something for you for return for helping out the EV car business.

(Thanks TTAC legal readers!)

Aaron Cole
Aaron Cole

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  • Shaker Shaker on Sep 04, 2015

    I would think that the "winner's" vehicle's MSRP would be taxed under "Capital Gains" rules, which would net much more for the Federal Gov't (even with the $7.5k rebate), than a vehicle purchased with after-tax earnings, which would lose the $7.5k. The owner may also owe State Tax, too, depending on the state. I'm sure that the B&B will clarify this as the day moves on... :-)

  • SCE to AUX SCE to AUX on Sep 04, 2015

    The Federal EV rebate program doesn't depend upon the price paid for the vehicle, which is why the i-MiEV, Leaf, and 500e get the same amount as a Model S. So you might ask this - why do lowly EVs get the same rebate as expensive Teslas? Right now, I can get a new 2015 Leaf for $22k BEFORE the $9500 in rebates I'm eligible for, and before any negotiation. If I manage to beat the dealer down to $20k or $10k, what is that to you or anyone else? What if I got it for free after trading in a different car? This ongoing run of editorializing news is unabashed class envy against 'rich' Tesla owners, and by extension, against Tesla itself. Tesla and its buyers didn't invent this policy - liberals did. Now you rail against it because it doesn't benefit the 'right' people in your own eyes. But as another poster astutely pointed out recently, the rebates are not intended to reward people, but to 'save the environment' by keeping one less ICE off the roads. Whether it's a Tesla or a Leaf shouldn't matter - both are highly efficient vehicles that purportedly achieve the stated goals of the rebate programs, as did hybrids before them. So who buys them, and the price paid, is irrelevant.

  • Wjtinfwb Funny. When EV's were bursting onto the scene; Tesla's, Volt's, Leaf's pure EV was all the rage and Hybrids were derided because they still used a gas engine to make them, ahem; usable. Even Volt's were later derided when it was revealed that the Volt's gas engine was actually connected to the wheels, not just a generator. Now, Hybrids are warmly welcomed into the Electric fraternity by virtue of being "electrified". If a change in definition is what it takes, I'm all for it. Hybrid's make so much sense in most American's usage patterns and if needed you can drive one cross-country essentially non-stop. Glad to see Hybrid's getting the love.
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