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Tesla, the renowned electric vehicle (EV) manufacturer, has recently made an update on its website indicating that all new Tesla Model 3 vehicles will now qualify for the full $7,500 federal EV tax credit. This change brings good news to potential Tesla buyers, as it allows them to benefit from significant savings when purchasing an electric vehicle.
The federal EV tax credits were introduced by Congress in August of the previous year as part of the Inflation Reduction Act. The primary objective behind these credits was to reduce the United States’ reliance on China for batteries. The $7,500 tax credit is divided into two components. To qualify for the first half of the credit, which amounts to $3,750, EVs must have 50% of the value of their battery components produced or assembled in North America. The remaining half of the credit requires that 40% of the value of critical materials used in the vehicle’s production be sourced from the United States or another country that has a free trade agreement with the U.S.
Although the tax credits came into effect on January 1, the Treasury Department had delayed publishing the guidelines related to battery sourcing. This delay was intended to provide EV manufacturers with sufficient time to meet the requirements outlined in the legislation. However, on April 18, the department began enforcing the critical material sourcing requirement. As a result, several vehicle models, including BMW, Rivian, Volvo, and Hyundai, lost their eligibility for the full tax credits they had previously qualified for during the first quarter of the year. Tesla’s Model 3 also saw its full credit slashed in half during this period.
In an unexpected turn of events, Tesla’s website update now indicates that all Tesla vehicles, including the Model 3, will be eligible for the full $7,500 tax credit. Previously, only the Model 3 Performance variant qualified for the complete credit. However, with the latest update, both the Model 3 long-range all-wheel drive and rear-wheel drive versions will also qualify. This means that customers who purchase these models will be able to enjoy the full tax credit benefit. To put it into perspective, the Model 3 rear-wheel drive, when factoring in the tax credit, now starts at $32,740.
Interestingly, Tesla has not explicitly stated what led to this change in eligibility. However, CEO Elon Musk indirectly acknowledged the update by retweeting a screenshot of the website displaying the tax credits available for each vehicle. It is important to note that the Treasury Department’s official website has not yet been updated to reflect Tesla’s newfound eligibility for tax credits. As of now, it remains unclear why the change has been made, and the department has yet to respond to inquiries seeking clarification on this matter.
This development showcases Tesla’s ongoing commitment to making electric vehicles more accessible and affordable to a broader consumer base. By qualifying for the full federal EV tax credit, Tesla vehicles become even more attractive to potential buyers, as they can take advantage of significant cost savings. As the EV market continues to grow and evolve, initiatives like these tax credits play a crucial role in incentivizing consumers to adopt clean and sustainable transportation alternatives.
