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Tesla Model 3 vs Tax Credit: The Hidden Killer

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There is a hidden killer when it comes to purchasing the Tesla Model 3 and this is in the form of owners not getting offered tax credit when they purchase an electric vehicle.

Tesla said that the Tesla Model 3 is going to be delivered to customers in December 2017 and at the moment there is over 325, 000 reservations for the vehicle.

A spokesperson said that they had started to receive reservations for the Tesla Model 3 a week ago and that up to date they have around $14 billion in future sales if the people go ahead and purchase the vehicle. This means that essentially it is the biggest one week launch of a product and interest wasn’t garnered from paid endorsements or advertisements.

Over in the US those buying an electric vehicle can get $7.500 in federal tax credit, however, it does look like thanks to the limitations that some people are not going to get the credit.

Apparently the tax credits for electric vehicles start to decrease when that car maker has sold 200,000 electric vehicles in the US.

At the moment there hasn’t been any confirmation about the total amount of vehicles sold, however sales have been confirmed to the tune of 42,000 for the Model S during 2014 and 2015. It is thought that they will deliver around 80,000 to 90,000 electric vehicle by the end of 2016 and around 200,000 by 2018. This should be when the Model 3 gets delivered to the majority of the customers.

When the amount sold reaches 200,000 we will then see the tax credit entering into the phase out stage and the credits reduce to 50% during the following 6 months and then down to 25% over the six months that follow.

Some analysts have come across a loop hole though. The $7,500 tax credit doesn’t get cut until reaching the quarters end after the company sold 200,000 electric vehicles. This may see Tesla meeting the limit intentionally during the first day of the quarter and then they may deliver the customers remaining vehicles over the following six months. This then allows customers to save the $7.500.

While the issue hasn’t been talked about by Elon Musk, there have been hints on Twitter that the company may be planning to make use of the loophole.