Tesla is an interesting company that we love to watch and learn about. They’ve proudly done things differently from the rest of the auto industry, which is a bit of a double-edged sword. While the interest in Tesla continues to grow and many of us watch and admire them and their CEO, Elon Musk, for the brash practices that seem to disrupt the industry, we’ve also seen Tesla has its share of problems. One problem that’s about to take place will do more than affect the company; it’s going to have an effect on you as a customer.
The Tax Credit for Tesla is Ending
Currently, any automaker that sells an electric vehicle in the US makes it possible for the customer to experience up to a $7,500 tax credit. This tax credit is limited to the first 200,000 models that are electric. For most companies, this isn’t a problem at all, but for Tesla, this is extremely limiting because they only sell electric vehicles. In a short period of time, Tesla will deliver its 200,000th vehicle in the US, which will automatically trigger the phase-out of the tax credit.
What Happens After 200,000?
Once the phase-out is triggered, the value of the tax credit will be reduced. Six months after the date of the sale of this vehicle, the credit will be reduced to half, making it possible for customers to still receive a credit of $3,750. After this six-month period, the credit is reduced by half again to $1,875. After an additional six months, the credit is gone entirely. Once the 200,000th Tesla model is sold, the credit will disappear after eighteen months, which is actually a very short period of time and may cause a serious problem for Tesla to arise.
Affecting the Customers
Yes, the reduction of the tax credit will become a difficult part of the sales process for Tesla, but the effect will be felt more by those customers waiting for the Model 3 Short Range. Currently, Tesla doesn’t even produce the $35,000 version of the Model 3 that’s supposed to be the one that was presented at the affordable Tesla everyone can drive. The wait for this car to begin to come off the assembly line is still six to nine months, which means these customers won’t benefit fully from the tax credit when it arrives.
Were We Duped
When Elon Musk stood on the stage and showed us the Tesla Model 3 shell and told the world it would be a car that was priced at $35,000 was he lying to us? When he told the world it would only cost $1,000 for you to put your name on the list to have this car be the one you drive when it’s built, did he lie to us? Not at all, these claims are still true, but anyone who expected to receive the $7,500 tax credit and bring the price of the Model 3 down to $27,500 was certainly dreaming because the credit will be gone before this version of the car arrives.
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