Tesla's 'Free' Model X for Referrals Probably Eligible for Federal Tax Credit
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!)
More by Aaron Cole
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