Tesla's US Tax Credit Set To Come To An End

Tesla's US Tax Credit Set To Come To An End

The clock is ticking for Tesla customers looking for incentives on their vehicle purchase. The Palo Alto, California-based carmaker is the first to trigger the reduced incentive in the U.S.

That means we now know how much the Model 3 costs with all the options-and "affordable" is kind of a stretch. Thus, it would have caused the tax credits start to phase out one full quarter after Q3, so as of January 1, 2019.

The US government subsidises purchases of electric cars with tax credits of up to $7,500 (£5,700), which apply to all of Tesla's cars.

The change represents a net price increase for Tesla buyers. As of July 1, the credit will be reduced even further to $1,875.

Each manufacturer is allotted 200,000 credits before the phaseout begins. CNBC had previously reported that the same factory suffered several fires as it scrambled to meet its Model 3 goals.

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Many of those same buyers who have not yet received their cars have waited for Tesla to follow through on its promise to build a vehicle for $35,000. The production milestone was finally attained by the company during the final week of June, but it did not escape criticism from the company's doubters, some of whom predicted that the Model 3's 5,000/week "burst" production would be unsustainable. Without the tax credit, those later buyers may get less auto for the same effective price.

Opting for the Model 3 dual-motor auto would add $5000 [£3800] to the $35,000 [£26,650] starting price of the entry-level Model 3 in the US, Musk said, and would allow the vehicle to reach 0-60mph in 4.5sec, with a 140mph top speed and 310-mile driving range.

Sales reports show that the company pulled out all the stops to avoid selling its 200,000th vehicle in the US until after July 1, to maintain the full tax credit for one extra quarter, by pushing more sales to Canada among other things.

However, under changes to subsidies for electric cars introduced previous year, the support is gradually phased out after a company has sold 200,000 vehicles.

GM is still expected to be the next automaker to cross the 200,000 threshold, which could happen later this quarter.

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