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Federal tax credit on Tesla models set to ratchet down again July 1

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Tesla Model S Grille (Image courtesy of Tesla Inc.)

Buyers who want to buy a Tesla have only a few days to take delivery if they want to earn a federal tax credit of $3,750 after they buy.

Tesla is in the midst of the phase-out of its federal tax credit after it surpassed selling a cumulative total of 200,000 cars last June.

The $1,875 credit on Teslas will last from July 1 to December 31, before Tesla buyers lose the credit altogether.



Tesla is not the only automaker facing the wind-down of its federal tax credits. General Motors is one quarter behind Tesla; it reached the tax-credit cap last fall after selling 200,000 Chevy Volts and Bolt EVs combined. Its tax credit amount got cut in half April 1; it will fall to $1,875 on September 1 and go away next April.

Tesla initially lowered prices on all its models to offset some of the loss for buyers, but it later raised prices again, then made several more adjustments in pricing and equipment levels that renders any direct comparison moot.

A proposal in Congress could extend the tax credits, but President Trump opposes the effort.



Not all taxpayers receive the full benefit for which their car is eligible, either. Since the incentive is structured as a tax credit, buyers can only receive a credit equal to up to the amount of total taxes they owe in the year they bought an electric car.

Several automakers, including GM, Ford, and BMW have seen their tax credits go quickly because plug-in hybrid vehicles count as a full vehicle against the 200,000-unit cap, even if their credits started out at less than the full $7,500.

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