Tesla’s Model 3 Tax Credit Cut: Buyers Should Know

UrduGeeksدسمبر 6, 2023

2 3 minutes read

Tesla's Model 3 Tax Credit Cut: Buyers Should Know

It has been officially verified by Tesla that the federal tax credit for two different trim levels of the Model 3 would be reduced by fifty percent beginning in the next year. As a result of the modification of the electric vehicle (EV) incentive program in 2023, the $7,500 tax credit that is available to customers of the Model 3 based on their income eligibility has been a substantial incentive.

Eligibility requirements, on the other hand, have developed over time, and now electric vehicles are required to fulfill rules concerning the cost and the origin of their components. When it comes to components, particularly battery materials, the standards are growing more stringent with each passing year. This highlights the necessity of increasing the amount of locally supplied batteries and materials in North America.

What Buyers Need to Know About the Reduction in the Tax Credit for Tesla’s Model 3
At Tesla’s exhibit at the China International Supply Chain Expo (CISCE) in Beijing on December 1, 2023, attendees have the opportunity to test out the electric vehicle Model 3 that Tesla has developed.

As a consequence of these modifications, Tesla has declared that the tax credit for certain Model 3 versions will be reduced. The automobile manufacturer disclosed the news that the tax credit for the Model 3 Rear-Wheel-Drive and Model 3 Long Range would be decreased in an update that was posted to its online design studio throughout the night.

Customers are entitled for a tax credit of up to $7,500 if they take delivery of a qualified new Tesla vehicle and satisfy all of the requirements stated by the federal government. Beginning on January 1, 2024, the tax credit for the Model 3 Rear-Wheel Drive and Model 3 Long Range will be lowered to $3,750. Obtain a complete tax credit by taking delivery by the 31st of December. "Only for purchases that are eligible for either cash or loans,” the electric vehicle manufacturer stated, as reported by Electric.

Tesla has not provided any additional information regarding the particular causes for the reduction in credit; however, it is thought that the reduction is connected to the origin of some battery components. The tax credit has evolved into a "point-of-sale” incentive, which offers the opportunity to apply for it directly at the time of automobile purchase rather than at the time of return.

Tesla’s China-Made EV Sales Drop

The China Passenger Car Association revealed that there were 82,432 sales of Tesla electric vehicles registered in the month of November. This figure represents a decrease of 17.8% compared to the same month in the previous year. When sales dropped by 21% in December 2022, this is the largest loss that has occurred since then. On the other hand, deliveries of Model 3 and Model Y automobiles manufactured in China increased by 14.3% from October, as reported by Reuters.

BYD delivered a record 301,378 passenger vehicles in November, which is an increase of 0.09% from October and 31% from the previous year. This growth occurred despite the fact that competition in the Chinese electric car business remains severe.

Tesla, Other EV Makers Agree to Use Climate Trace

In the meanwhile, Tesla, General Motors, and a number of other manufacturers have reached an agreement to utilize Climate TRACE to quantify emissions of greenhouse gases.

With the intention of closely monitoring emissions in supply chains, the database, which was introduced by Al Gore, a former Vice President of the United States, during the COP28 climate summit, was created. The Climate TRACE program encompasses more than 350 million sources of greenhouse gas pollution across the globe. It provides businesses with an impartial and all-encompassing instrument to evaluate and construct supply chains that produce low emissions.

It has been stated by Teslarati that the Climate TRACE database, which was introduced in the year 2020, provides an alternative to the information that suppliers self-report. The database will be utilized by a number of companies, including Tesla, General Motors, Polestar, Boeing, and Muir AI, among others, in order to evaluate emissions from suppliers of steel and aluminum and locate sources of manufacture that are cleaner without incurring major cost increases.