Tesla Provides Additional Details On Tax Credit Phaseout


The tax credit will exist in some form through the end of 2019

Lately, there’s been a lot of talk about the electric vehicle tax credit. Several car makers – including Tesla – are headed for the tax break. Ever since the tax credit was introduced in 2010, it allowed anyone that is purchasing a qualified electric vehicle – including any new Tesla model – to be eligible for a $7,500 federal tax credit. Basically, the federal government would give you back the $7,500 through your income tax return in order to boost the adoption of electric vehicles.

In a nutshell, a tax credit is a dollar-for-dollar reduction of the income tax you owe to your government. For example, if you owe $1,000 in federal taxes but are eligible for a $1,000 tax credit, your net liability drops to zero. However, for every car manufacturer – including Tesla – the tax credit begins to phase out once a manufacturer has sold 200,000 qualifying vehicles in the U.S. For Tesla, that time has come.

Somewhere during last month, Tesla Tesla sold its 200,000th such vehicle. In turn, this means that the electric car company will enter a phase where their eligibility for the tax credit phases out. Naturally, customers immediately started to inquire about the ins and outs of the phase-out of the tax credit, prompting a detailed explanation from the car maker. The following federal income tax credit amounts are available to anyone who purchases a new Tesla Model S, Model X or Model 3:

Federal Tax CreditFor Vehicles Delivered
$7,500On or before December 31, 2018
$3,750January 1 to June 30, 2019
$1,875July 1 to December 31, 2019

While the tax credit will exist in some form through the end of 2019, those who want the full $7,500 tax credit will need to take delivery of their vehicle by the end of this year. This means that simply ordering a car from Tesla won’t be enough. Customers actually need to finalize the delivery of their car to be eligible for the tax credit deal. Additionally, eligibility for income tax credits depends on your personal tax situation. Tesla recommends speaking with a tax professional for guidance over the matter.

Source: Tesla

Categories: Tesla

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30 Comments on "Tesla Provides Additional Details On Tax Credit Phaseout"

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Sticky wicket for Tesla to navigate. Being the first to have the tax credit phased out, it will be interesting to see how they price their vehicles going forward, and also see how big an impact it will be on future sales. Seeing how thin their margins already are, it’s yet another challenge for them to overcome. I’m sure they’ve been planning this phase for awhile, it ain’t like it snuck up on them, so I’m sure they have some kind of plan in place.

Yes, interesting times. I wonder if Tesla will lobby Congress to phase out tax credits for all EV manufacturers. That would be one way to ensure that the playing field is level.

Lets see, they are selling every one they can make and still have a backlog. What do you think the effect on sales will be?

Why do you think they want to go Private? They will get slaughtered by better car makers who still have their tax credit.

This gives Tesla another reason to push back the $35,000 version of the Model 3 till mid 2019 or even 2020, forcing people who want the full or half federal credit to order the current versions now so they get delivery before end of the year.

You’re not making any sense. People who want the full tax credit are already under pressure to “option up” their order to make sure they get to buy the car before the end of the year. Pushing the $35k option back further than the end of this year would be pointless, insofar as accomplishing the goal you stipulate.

“it allowed anyone that is purchasing a qualified electric vehicle – including any new Tesla model – to be eligible for a $7,500 federal tax credit.”

No where in this story is the definition of a “qualified electric vehicle” specified. Any newbie reading this will be led to think every EV on the market gets the full $7500 credit.

Maybe you’d think that. For all other newbies, there is this thing called internet.

Yeah, they probably go to an internet EV site like, hmmm….. I don’t know…. maybe InsideEV’s?

Most people will turn to IRS web site about tax information, not InsideEVs.

Not sure what internet you’re on but the one I frequent has tons of people asking EV sites and forums about tax credits. Lots of misinformation out there on the internets and going to a train-wreck of a website like a giant government bureaucracy is usually the last thing a person wants to do when the want some quick info.

(⌐■_■) Trollnonymous

I think the playing field needs to be leveled.
The stupid Goooooberment needs to phase out the OPEC welfare of petrol fuels.
Yes, phase out the gasoline/petrol fuel subsidies.

While I agree with you in principle, and I general I support eliminating ALL government welfare programs, this simply isn’t going to happen. I’m not telling you that you’re wrong to want it, but government support of / intervention in the petroleum market isn’t going away for a long time, if ever.

Please detail what these supposed petrol subsidies are.

I’m not seeing any new information or additional details in this article. Pretty disappointed.


Would it work to pay the full price (35.000) and do all the necessary paperwork with Tesla in 2018 (i.e. purchase and own the car in 2018), but only pick it up say by mid 2019? A leap of faith of course, but IMO worth it, and a possibility Tesla ought to offer. Thus even people not on the waiting list could order one and get the full tax credit, but naturally would have to wait longer to get it delivered.

No. The credit applies when you take delivery of the vehicle, date of registration by owner, not when you pay for it.

Need the base Model 3 to be delivered before Dec 31st 2018 for me!!

Not gonna happen.

Tesla is killing it LOL

The tax credit should stay in place. Other, far more profitable companies did not get a tax credit.

You remember when people bragged about Tesla outselling the Porsche? When Tesla loses its tax credit, while Porsche has theirs, I can see why Musk wants to go Private.

The thinking behind the incentive program is to allow car companies to add a premium of $7500 to the cost of their car to offset the additional costs of bringing electric cars to market; The buyer pays an additional $7500 above the price of the car to the dealer and the IRS gives the buyer a tax offset of up to $7,500. It is in effect a pass-through offset to the car companies. Tesla simply used their money earlier than the others and that was their decision to make whatever the consequences, period. In theory, the price of their cars should be at Least $7500 less when the incentive expires

And, BTW, the EV revolution is underway thanks to Elon Musk and Tesla. Europe and China are committed and the U.S. car makers can ill-afford to continue trying to slow down EVs without risking losing market share. U.S. auto CEOs better be ready to sell EVs a bunch and start dumping their obsolete gas cars.

Ford is in financial trouble and they are going to stick with gas guzzlers lol

This is news???

So what if it phases out for Tesla? The credit was not created for Tesla anyway. Anyone that brings up the “rewarding the laggards” bs is a Tesla fan rather than an ev fan. Tesla jumped head first to get market share….which they did so it wasn’t all for nothing.