Tesla’s aggressive electric vehicle pricing strategy significantly boosted the company’s sales and deliveries across its key markets globally so far this year.
However, it seems a substantial part of the leading American automaker’s price cuts in the US is backed by government subsidies, as per Reuters.
Government subsidies for Tesla models
The report noted that Tesla qualifies for the Inflation Reduction Act’s battery tax credits as it domestically sources and assembles its power batteries. In Q2 2023, it received subsidies of $900 to $1,400 for each electric car sold in the country.
Apart from that, Tesla also gets $600 per EV from selling regulatory offsets to rival automakers to meet emissions regulations.
“Tesla’s manufacturing tax credits should help to at least partially offset some of the price cuts Tesla had to implement to spur demand.”
Morningstar Analyst Seth Goldstein said in an interview
Industry analysts forecast that Tesla and its battery supplier Panasonic will accumulate approximately $1.8 billion in production credits in 2023. At the same time, the rival General Motors–LGES partnership will only get $480 million, per the forecast.
In addition, Chief Financial Officer Zach Kirkhorn disclosed that the Musk-led automaker anticipates getting $150 million-$250 million in battery subsidies per quarter of the year after dividing the money with the Japanese battery supplier/partner.
“The value of credits this year will not be gigantic, but I think it could be gigantic. We think it probably will be very significant in the future.”
Tesla CEO Elon Musk said during the company’s earnings call in January
See Also:
- Tesla battery suppliers enjoy shares growth amidst IRA tax credits
- Local power battery production continues to expand, driven by a clause in IRA
- Tesla is the most searched auto brand in the US, Google data shows
- Tesla-Panasonic tandem secures around $1.8B in US tax credits in 2023
- Panasonic to expand battery output at Tesla’s Gigafactory Nevada
Reuters claims that Tesla is the top beneficiary of the IRA’s battery production subsidies in the US. As of now, the cheapest Tesla EV Model 3 RWD starts at $40,240. It must be noted that this cost excludes the EV tax credit of up to $7,500, which applies to new Model 3 and Y EVs.
