One of the financial benefits long afforded to EV buyers is that they can take advantage of a generous $7,500 federal income tax credit, a perk that Tesla owners have enjoyed for quite some time. An important caveat to the aforementioned tax credit is that it expires one quarter after a specific car manufacturer sells and delivers 200,000 EVs in the United States. Once that 200,000 threshold is met, the federal income tax credit for that manufacturer falls to $3,750 for a period of six months followed by a tax credit of $1,875 for the following six months.

That being the case, many Model 3 buyers hoping to enjoy the full $7,500 federal income tax credit will be out of luck. While it was initially assumed that Tesla would reach the 200,000 threshold sometime in 2018, Electrek reports that Tesla may hit the threshold before the end of the year. In fact, Tesla is even using this tidbit to help sell prospective buyers on the Model S since new orders will be fulfilled much faster than on the Model 3.

The report reads in part:

We have received several reports of Tesla salespeople from different Tesla stores in the US telling Model 3 reservation holders that they might not get access to the $7,500 federal tax credit if they don’t get their Model 3 delivery by the end of the year.

Suffice it to say, if you’re in the market for a Tesla and are keen on taking advantage of the government’s full $7,500 tax credit, you definitely will want to avoid the Model 3 altogether, unless you already have an existing reservation on the books. Additionally, if you’re set on purchasing a Model S or Model X, you should probably get your order in sometime during the first quarter of 2018 at the absolute latest.

The larger takeaway here is that the federal incentive to purchase a Tesla won’t be around for much longer. If we assume that Tesla hits the 200,000 units sold threshold in early 2018, the available pool of subsidy money will run dry by mid-2019.

View Comments