Tesla Close To 200,000 Sales This Year and Probably Limit Model 3 Tax Credits

Tesla says it will sell its 200,000th electric vehicle sometime this year. That means the US residents on the Model 3 waiting that stretches almost to a half-million have to wonder if they’ll get the full $7,500 tax credit, a partial credit, or none at all. Tesla could tinker with deliveries to make more buyers eligible for the credit. Buyers will be helped most if Tesla can crank up to its claimed production of 5,000 units per week.

What Tesla Said

Tesla, in a filing on Friday with the Federal Securities Exchange Commission, gave notice that it will sell it's 200,000th car this year.

Under current regulations, a $7,500 federal tax credit available in the U.S. for the purchase of qualified electric vehicles with at least 17 kWh of battery capacity, such as our vehicles, will begin to phase out over time with respect to any vehicles delivered in the second calendar quarter following the quarter in which we deliver our 200,000th qualifying vehicle in the U.S. We currently expect such 200,000th qualifying delivery to occur at some point during 2018. Here we are with 10 months left in 2018, and at “some point” during those 306 days, Tesla will have sold 200,000 Model S, Model X, Model 3, and earlier Roadsters. That begins the countdown toward the end of the available $7,500 tax credit. A credit is better than a tax deduction — about three times as good, if you pay a third of your income as federal taxes.

How the countdown works

This is how the federal tax credit works. It’s the same for every automaker. General Motors counts as one automaker, not as four (Chevy, Buick, Cadillac, GMC). Ditto Ford and FCA, as well as BMW-Mini-Rolls-Royce, etcetera.

• The automaker reaches 200,000 sales. Every car in that quarter sold and delivered is eligible to receive the full $7,500 tax credit. The full credit applies in the following quarter, too, no matter how many cars the automaker delivers. If Tesla hits 200,000 in the third quarter, July through September, every car delivered by Dec. 31 is eligible for the credit.
• For the next two quarters, buyers are eligible for a half credit, or $3,750. In this example, through June 30, 2019.
• For the next two quarters, buyers are eligible for a one-quarter credit, of $1,875.  That would be through Dec. 31, 2019.
• Then it’s gone.

To get the federal tax credit, you have to pay US taxes and you have to have paid as much in taxes as the credit is worth. In this example, you have to have paid $7,500 in taxes in 2018. You can’t take it the following year.

Related Topics

Tesla Model 3