Tesla's Productivity Boom Means Lower Federal Tax Credits

Jul. 15, 2018 9:30 AM ET by John Tallodi / 1 Comment

Simply put, buying a new Tesla is going to cost you more unless you buy one soon.

You would think that reaching the milestone of 200,000 delivered vehicles would be a cause for celebration (and it is), but it also means that the current $7,500 federal tax incentive for electric vehicles is going to be phased out. Tesla is the first EV manufacturer to reach the cut-off point for the incentive and it will be interesting to see how consumers react to the increased pricing. Buy your Model S, X or 3 before January 1st, 2019 and you will still be eligible for the full $7,500 discount.

That amount will halve to $3,750 for the first half of 2019, then be halved to just $1,875 from July 1st until the end of the year. This should mean that demand will increase over the next few months as customers try to take advantage of the higher tax credits. It is worth remembering that the credits apply to delivered vehicles, so a delayed delivery may mean a lower tax credit. The current trade war with China may also affect Tesla's prices going forward. This means that while Model 3 production is finally getting some momentum, customers waiting for the cheaper base versions may not be eligible for the full $7,500 rebate by the time their cars finally get delivered.

There are also several state-based incentives across the U.S. that come with their own terms and conditions and these should still apply to eligible customers. These can range from minor rebates of $1,000, up to a $5,000 tax credit if you happen to live in Colorado. For more information on the various electric vehicle incentives take a look at Tesla's info page.

Tesla's Productivity Boom Means Lower Federal Tax Credits

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