Don't Expect Much Tax Credits from Tesla Model 3

Posted by Kirhat | Saturday, April 09, 2016 | | 0 comments »

Tesla Model 3
Those who expect to get a lot of tax credits when they tried to reserve a Tesla Model 3 recently, may be disappointed.

Sure, anyone who buys a plug-in car in the U.S. today is eligible for a federal tax credit of up to US$ 7,500. That's more than 20 percent of the Model 3's US$ 35,000 starting price. The catch is that the tax credit won't last forever - in fact, it's only good on the first 200,000 U.S. cars that any manufacturer sells.

And it looks like the tax credit could start phasing out for Tesla buyers just as it ramps up production of Model 3's in early 2018.

That could put a huge dent in demand said Karl Brauer, senior analyst with Kelley Blue Book. More than 40 percent of car buyers interested in a Model 3 told a KBB survey that they wouldn't buy a one without the tax credit.

"You've got people counting on the tax credit and they'll be frustrated when they discover it's gone," Brauer said in a CNN report.

A Tesla spokeswoman said the company won't speculate on when the tax credit will run out for its buyers.

"We are committed to providing customers with up-to-date information about current incentives at the time of purchase, we'll do the same when it's time for customers to confirm their Model 3 orders," said Tesla spokeswoman Khobi Brooklyn. "Most importantly, we build our vehicles, including Model 3, to offer compelling value without any incentives."

Buyers qualify for the tax credit when they actually buy the car, not when they put down a US$ 1,000 deposit to place an order. There are also state tax credits for electric car buyers that will continue to be available even after the federal tax credit expires.

Tesla CEO Elon Musk says even he has been surprised by the level of demand for the Model 3 so far. About 276,000 customers have put down deposits to reserve a car in less than a week.

The loss of the credit could become a competitive disadvantage for the Model 3. The comparably priced electric Chevrolet Bolt is due to go on sale early next year. It's likely General Motors will keep its tax credit for months, or perhaps a year or more, after Tesla.


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