Tesla Hits Delivery Threshold for Juicy Federal Tax Credit

Matt Posky
by Matt Posky
tesla hits delivery threshold for juicy federal tax credit

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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  • EBFlex EBFlex on Jul 13, 2018

    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.

  • Mermilio Mermilio on Jul 13, 2018

    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.

  • SCE to AUX I charge at home 99% of the time, on a Level 2 charger I installed myself in 2012 for my Leaf. My house is 1967, 150-Amp service, gas dryer and furnace; everything else is electric with no problems. I switched from gas HW to electric HW last year, when my 18-year-old tank finally failed.I charge at a for-pay station maybe a couple times a year.I don't travel more than an hour each way in my Ioniq 1 EV, so I don't deal much with public chargers. Despite a big electric rate increase this year, my car remains ridiculously cheap to operate.
  • ToolGuy 38:25 to 45:40 -- Let's all wait around for the stupid ugly helicopter. 😉The wheels and tires are cool, as in a) carbon fiber is a structural element not decoration and b) they have some sidewall.Also like the automatic fuel adjustment (gasoline vs. ethanol).(Anyone know why it's more powerful on E85? Huh? Huh?)
  • Ja-GTI So, seems like you have to own a house before you can own a BEV.
  • Kwik_Shift Good thing for fossil fuels to keep the EVs going.
  • Carlson Fan Meh, never cared for this car because I was never a big fan of the Gen 1 Camaro. The Gen 1 Firebird looked better inside and out and you could get it with the 400.The Gen 2 for my eyes was peak Camaro as far as styling w/those sexy split bumpers! They should have modeled the 6th Gen after that.