American automaker Tesla recently updated its official website to notify customers of the Model 3’s $7,500 federal tax credit qualification.
It must be noted that the Model 3 Rear-Wheel Drive variant initially only qualified for $3,500. Now, all Tesla Model 3 variants are entitled to the full tax credit for electric vehicles, as verified by the federal government.
What changed?
Through the Inflation Reduction Act, the US government requires that 40% of the EV’s critical minerals be domestically sourced or in a partner country and 50% of the battery parts value be produced and assembled in North America.
Therefore, it is safe to assume that the EV giant may have changed the source of the Model 3 RWD batteries’ materials or the location of its assembly. Initially, Tesla was apparently sourcing the model’s li-ion phosphate battery cells from its Chinese supplier CATL.
Available tax credits for the Tesla Model 3
The Tesla Model 3 RWD variant costs $40,240 in the US. Thanks to the $7,500 tax credits under the IRA, that original price drops to $32,740.
However, it must be noted that buyers must also qualify for income limits and MSRP caps, which are $55,000 for cars; $80,000 for trucks and SUVs.
That incentive is already a big deal considering that the average price of EVs in the US is still around $45,000. However, depending on the state, customers can still access more incentives for the “most sought-after EV” in the world.
For instance, New York provides up to a $2,000 discount under its Drive Clean Rebate for EVs, including the Model 3. Therefore, buyers can acquire the Tesla car for only $30,740, including the IRA tax credits.
On the other hand, California also offers a $7,500 tax rebate for EV buyers, which also qualifies the Tesla Model 3.
The price of the Model 3 is reduced to $25,240 when federal and California state subsidies are combined. This price drop makes the Tesla EV less expensive than the Toyota Camry’s base price of $26,320.
Apart from that, Tesla also offers its own local incentives in different states. For instance, the automaker has a $2,410 incentive for the Model 3 RWD in Southern California, further reducing its price to $22,830 for eligible buyers.
See Also:
- Tesla raises Model S and X prices with free 3-year Supercharging credits
- Tesla Model 3 now qualifies for the $7,500 EV tax credit
- Tesla offers $1000 off and a free three-month trial of FSD under its referral program
- Tesla urges buyers to choose the Model 3 with a new charging incentive
- EPA to mandate up to 67% of all new cars sold in the US to be electric by 2032
Interestingly, Tesla’s gen-3 car platform is expected to introduce EVs to a whole new market of middle-class and younger consumers. It turns out that some of those consumers, particularly in California, may be able to purchase a Tesla at a discount right now, at least while incentives are still in effect.
