By on July 12, 2018

Tesla Model S Grey - Image: Tesla

Tesla Motors announced Thursday that it officially reached 200,000 deliveries this month, which is good news in terms of overall sales. But the figure also means the company has surpassed the threshold requiring that federal tax credits be phased out, which is bad news.

Some speculate that, without government incentives, fewer people will be willing to buy Tesla-branded vehicles. While that’s a possibility, the brand offers unique, trendy models not readily available elsewhere. We’d presume a discount on an iPhone would probably help sales as well, but affordability it isn’t the main reason people purchase them.

We’ll see what kind of impact it has on the automaker as the $7,500 federal electric vehicle tax credit for new owners is gradually phased out. It will also be telling for the electric vehicle market as a whole, as Tesla is the first EV producer to reach the limit. 

The company’s website now includes an incentives breakdown by date on its support page. As the first manufacturer to surpass the 200,000 vehicle limit, the brand will be able to retain the existing incentives through the end of the year. After January 1st, the federal tax credit will be reduced by half to $3,750. Six months later, it will be halved again before being completely eliminated at the start of 2020.

We’d imagine this will increase overall demand in the short term, though the long-term impact is unknown. Neither the Model S sedan and Model X crossover are particularly affordable vehicles, so we might see more lower-trimmed versions sold in the future. Meanwhile, the Model 3 is supposed to be Tesla’s budget car and would be a steal at $35,000 if government incentives were there to soften the blow. But the company isn’t building that version yet. Instead, it’s focusing on more expensive trims. The bargain Model 3 isn’t supposed to enter into production until the end of the year — right about the time the tax credit gets chopped in half.

[Image: Tesla Motors]

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43 Comments on “Tesla Hits Delivery Threshold for Juicy Federal Tax Credit...”


  • avatar
    Sub-600

    Tesla is probably the most resistant EV producer to the loss of incentives, and that’s without ICE products to back them up. Tesla buyers want that performance and that cachet. Maybe if the novelty wears off?

    • 0 avatar
      mcs

      Porsche, Jaguar, and Mercedes would be even more resistant to the loss of incentives, although they’ll have them. In my case, I don’t even care about the incentive. I’m probably going to go with a Taycan and not with a Tesla for other reasons. The Porsche is track tested and better cooled, has ultrafast charging, rumored to have a two-speed drive, and has a nice interior.

  • avatar
    Carroll Prescott

    We taxpayers should not be subsidizing buyers of a product who shift their burden onto the rest of us.

    End all subsidies and tax credits and let the early adopters bear the burden of their intrigue.

    • 0 avatar
      healthy skeptic

      Unless there’s a higher reason for encouraging adoption (less pollution).

      Agreed the subsidies shouldn’t last forever, but they can be used wisely to accelerate a promising product or industry faster than would have occurred organically in the free market.

      • 0 avatar
        jacob_coulter

        Except most electricity is produced from fossil fuels.
        And modern ICE cars are incredibly clean already.

        This is corporate welfare that is making life better for billionaires like Musk, not the average taxpayer.

        • 0 avatar
          healthy skeptic

          >> Except most electricity is produced from fossil fuels.
          And modern ICE cars are incredibly clean already.

          Not as clean as EVs, even when some of the electricity comes form fossil fuels. Well-to-wheel of ICEs is still greater. Also, the grid is going to continue to get greener. Gas won’t.

      • 0 avatar
        markf

        “Unless there’s a higher reason for encouraging adoption (less pollution).”

        Where does everyone think the electricity is coming from?

        I could buy that argument if were like France who produces the vast amount of electricity through nuke power. But we are not.

        Just shifting the emissions from the tailpipe to the plant…..

        • 0 avatar
          28-Cars-Later

          How dare you apply critical thinking.

        • 0 avatar
          mcs

          @Markf Just shifting the emissions from the tailpipe to the plant…..

          It depends on where you live. Where i live its solar, nuclear, and natural gas. I could go solar at home at some point. If your power plant is natural gas, then it’s cleaner than an ICE. Furthermore, electrics are more efficient than ice, so not as much power is consumed.

        • 0 avatar
          healthy skeptic

          >> Where does everyone think the electricity is coming from?

          30% coal
          30% nat gas
          20% nuclear
          7% hydro
          13% renewables

          ^^ Figures are very rough. Fossil fuels are a lot, but certainly not all. Gas is pure fossil fuel, plus indirect emissions to get it from well to the gas station. And large coal and nat gas plants are more efficient than millions of little ICE plants.

          >> Just shifting the emissions from the tailpipe to the plant…..

          Not just shifting. Reducing as well.

          BTW, I have no problem with nuclear on an idealogical basis. France’s grid is fine with me.

      • 0 avatar
        racerstodeath

        That’s the fallacy that we are all lead to believe in until we find out we actually do more harm than good. Example 1, what happened to all the ethnol subsideies that was supposed to ween us off foreign oil? Billions spent but no return on the investment. How about cash for clunckers, that was supposed to save the environment but was there any research done afterwards to measure it’s effects?

        The free market is the only system that actually can filter out the good and the bad. To subsidise EV vehicles at this early stage means all the other good solutions are thrown out the window. A good example is BEV vs PHEV vehicles. If reducing CO2 and cleaning the environment is the end goal, PHEV meakes much more sense than an EV in terms of price, performance and accessibility. Not everyone needs to go 0-60 in 3 seconds.

        Finally, EV subsidies should not have been avaialble for anything over 150% of the median car price. For a wealthy individual to be able to get a Tesla P100D with almost $10k in incentives is just an example of how bad US public policy is.

        • 0 avatar
          FreedMike

          Actually, I’d argue exactly the opposite – poor folks aren’t usually the first in line to be early adopters of expensive new technologies. They’re usually marketed towards people or entities with money. That’s the way it worked with PCs when they first came out in the early ’80s, and the feds laid out a tax credit for them as well. That worked out nicely, I’d say.

        • 0 avatar
          j_slez

          “The free market is the only system that actually can filter out the good and the bad. To subsidise EV vehicles at this early stage means all the other good solutions are thrown out the window. A good example is BEV vs PHEV vehicles. If reducing CO2 and cleaning the environment is the end goal, PHEV meakes much more sense than an EV”

          Umm, PHEVs do get the tax credit. It’s based on battery size, so most of them get less of a credit, but they do get it. Ford (Fusion and C-Max) and GM (Volt) have each had over 100k buyers eligible for tax credits on PHEVs.

          “Except most electricity is produced from fossil fuels.”

          And less and less of it every day, as more solar and wind come online. Can you claim that your gas car gets cleaner as it ages?

          EVs aren’t ready to be the primary vehicle for everyone, and it may be a long time before they are. Nobody is making you give up your ICE. While occasionally I miss the rumble of a nice V8 or the feel of shifting my own gears, overall I find an EV much better to drive. My personal guess is that the transition will feel a bit like the one from CRT to flat-panel TVs. When the transition gained steam, the picture quality on CRTs was still better than flat panels. Despite that, flat panels became the thing to have because of their other advantages. For a while there were purists who still bought and held onto CRTs. Now you can’t give one away.

        • 0 avatar
          Art Vandelay

          In fairness, we are pretty close to being weaned off of foreign oil though domestic production likely has more to do with that than ethanol.

      • 0 avatar
        FWD Donuts

        Meh. Higher reason to subsidize electric cars? How about slapping massive tariffs on everything that comes in from overseas on bunker oil burning container ships. Absolutely filthy and responsible for 10% of global greenhouse gas emissions. Never mind the fact they bring trash over from India and China — where those jokers throw as much filth in the air as they want.

    • 0 avatar
      Sub-600

      It would be interesting if only global warmists were taxed for incentive purposes. Their numbers would dwindle in a hurry.

      • 0 avatar
        FreedMike

        Well, if we’re going to apply this logic, I suppose that people who are all up in arms about border security should be drafted into ICE…

        (Actually, regardless of what’s causing climate change, it’s happening, the cost of dealing it is built into all our taxes, and the bill’s going nowhere but up.)

  • avatar
    FreedMike

    I’m sure the Anti-Tesla Fanboy Club will be chagrined, but this won’t hurt them all that much.

    • 0 avatar
      derekson

      Considering the effect the end of subsidies has had in markets like Hong Kong and Denmark, the empirical data disputes your statement. Perhaps you don’t think losing the incentive SHOULD matter, but the best available evidence says that it does matter.

  • avatar
    28-Cars-Later

    “We’d presume a discount on an iPhone would probably help sales as well, but affordability it isn’t the main reason people purchase them.”

    Yeah what are those again?

    • 0 avatar
      FreedMike

      My daughter has one that her mom got for her. I’ll say this much – they do work better (they’re fast, and the camera, in particular, is terrific). But do they work eight hundred bucks better than my cheapo LG? Nope.

      • 0 avatar
        Lockstops

        Do they work better than 3 cheapo LG’s you have to buy while the iPhone keeps working like new? Do they work better as a seamless user interface with your Mac and iPad, providing a much higher level user experience?

        Well, go ahead and buy the Asian hardware that uses an evil personal information selling highly political corporation’s software. See where that gets you in the long run. Or you could do even better and buy a Chinese phone next time, unfortunately for you there are no North Korean or Russian phones on the market.

        • 0 avatar
          28-Cars-Later

          bgr.com/2017/06/22/samsung-flip-phone-galaxy-folder-2/

          I win :)

          • 0 avatar
            Art Vandelay

            You only win until the Nokia 8110 4g (Bannana Phone) is released in the US. Then I can make like NEO and call for an exit.

            Seriously though, I love those high end flip phones. I wish we got them.

            And as to the iPhone vs Android…if I replace every year, I go Android. If I hold 2 years or more…iPhone.

  • avatar
    rpn453

    What an odd system. Now the ones responsible for advancing EV technology will be at a disadvantage?

    I’d have made the credits a first-come, first-served deal; irrespective of manufacturer.

    • 0 avatar
      healthy skeptic

      Yeah, in hindsight, that might have been the way to go.

      • 0 avatar
        Luke42

        The idea is to get companies to make the investments necessary selling EVs.

        Tesla’s all in on EVs. They don’t need to be convinced, or babied anymore.

        Now, do we want Tesla to have a monopoly? Or do we want to create a competitive marketplace?

        I’m a card-carrying Tesla fanboy and really looking forward to my Model 3 — but it’s because Tesla is an EV company. I like the Nissan Leaf and the Chevy Bolt, too. I want there to be a healthy competitive marketplace for EVs, and I want more Tesla-like companies there. I’m such an EV fanboy that I’ll even give VW a second chance if they bring a serious EV lineup to market.

  • avatar
    EBFlex

    I don’t think this will have an effect on Tesla sales. The cultists will buy a Tesla regardless.

    Everyone else will be more impacted by the fact that the car is built in a circus tent, displays abysmally low quality, the company hasn’t produced a profit ever, and that the CEOs only talent is issuing false promises.

    • 0 avatar
      Luke42

      Go test drive an EV sometime!

      If you like low end torque and good NVH, you’ll love the EV driving experience.

      I’ll admit that green sympathies got me to the dealer to take my first EV test drive. But the driving experience us what I remember!

      • 0 avatar
        Lockstops

        What the hell, you really think electric cars (currently on offer) have less cabin noise?

        • 0 avatar
          Luke42

          I’ve driven the Leaf and the Volt, and they have the best NVH of any car I’ve driven in those price bands.

          When you take thousands of little explosions per minite out of the drivetrain, the car can’t help but be smoother and quieter.

          • 0 avatar
            mcs

            on a back country road with good pavement with the windows down, I can pass a runner and hear their feet hitting the pavement.

        • 0 avatar
          Scoutdude

          Yes they do at least on a relative basis. I’m sure a top of the line Lexus or Mercedes is still quieter than a Leaf or Bolt, but compare the Leaf or Bolt to a similar class of car and they are quieter.

  • avatar
    EBFlex

    I don’t think this will have an effect on Tesla sales. The cultists will buy a Tesla regardless.

    Everyone else will be more impacted by the fact that the car is built in a circus tent, displays abysmally low quality, the company hasn’t produced a profit ever, and that the CEOs only talent is issuing false promises.

  • avatar

    Maybe the people buying a Model 3 will miss a 15% discount. But not those buying a Model S or X. With prices for most of those models pushing past $100k. The 7% discount on the purchase price isn’t going to stop any of them.


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