Tesla Mannequin 3 might lose $7,500 tax credit score in 2024 beneath new battery guidelines


Tesla Model 3 may lose $7,500 tax credit in 2024 under new battery rules

Jonathan Gitlin

Tesla has engaged in a collection of worth cuts over the previous 12 months or so, however it may quickly wish to take into consideration making some extra for the Mannequin 3 sedan. Based on the automaker’s web site, the Tesla Mannequin 3 Lengthy Vary and Tesla Mannequin 3 Rear Wheel Drive will each lose eligibility for the $7,500 IRS clear automobile tax credit score at first of 2024. (The Mannequin 3 Efficiency might retain its eligibility.)

From Tesla's website.

From Tesla’s web site.


The start of 2023 noticed the beginning of a brand new IRS clear automobile tax credit score meant to incentivize folks by offsetting a few of the greater buy price of an electrical automobile. The utmost credit score continues to be $7,500—similar to this system it changed—however with a spread of latest situations together with revenue and MSRP caps, plus necessities for growing the quantity of every battery that have to be refined and produced in North America.

A brand new hiccup appeared at first of December 2023, although—within the type of new steerage from the US Treasury Division relating to “international entities of concern.”

China is a type of international entities of concern (together with Russia, North Korea, and Iran), and the brand new steerage says that an EV can’t be eligible for tax subsidies if the elements have been manufactured or assembled in these international locations, or if a few of the battery minerals have been extracted or refined in these international locations (starting in 2025). It additionally applies to batteries made by firms which can be owned or managed by international entities of concern.

Given the excessive diploma of Chinese language state involvement in that nation’s auto trade, it will in all probability imply that fewer EVs will qualify for the tax credit score subsequent 12 months.

Tesla is just not forthcoming on its website in regards to the purpose for dropping the tax credit score for these Mannequin 3 variants, however it’s not the one automaker to face this downside. Ford additionally believes the Mustang Mach-E will lose its $3,750 tax credit score eligibility on January 1, 2024.


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