Tesla's Tax Credit To Be Cut By 50%

Tesla’s Tax Credit To Be Cut By 50%

Bussiness Top Stories

The buyers of Tesla cars can no longer enjoy the tax cuts that they had come to expect from the electric car maker’s products as the federal tax credit will be cut by half from beginning of 2019. As per federal law the credit for electric cars would be slowly phased out over a period of three months after an automaker manages to sell 200,000 electric cars within one quarter within United States. Tesla was the first automaker in USA to reach that target in July 2018. The achievement brings its share of joy and challenges for the brand as it is getting ready to launch its latest low cost model.

The latest Tesla Model 3 which is priced at $35,000 is the firm’s lowest priced model till date and is targeted at budget conscious car aficionados but the tax credit roll back will make the model expensive by nearly $3,750. The model is likely to face competition from several automakers that have been working on developing their own electric car models some of which are ready for launch in 2019. During the first six months of 2019 the tax credit will fall by 50% and six months following that it will be rolled back by another 50%.

Tesla owners that have not purchased in outright may not have qualified for tax credit but in those cases Tesla takes the tax credit and lowers price of the lease by that amount. It is not easy to walk into a showroom of Tesla and buy a model after testing it like traditional car dealers as it has limited inventory and orders take months to fulfill. Though Tesla has been doing its best to complete the orders it received to help its customers qualify for full credit it would not be able to make the new Model 3 till another 5–6 months.