Sep 2018

Tesla’s Electric Vehicle Tax Credits Reach Phase-Out Period

Earlier this year, Tesla reached their limit for the Federal electric vehicle tax credit program. Under the program, each manufacturer’s first 200,000 EVs or plug-in hybrids are eligible for a tax credit of up to $7,500. Upon reaching the 200k mark, these incentives are cut in half every six months until no incentives remain.

Tesla reached the 200,000 vehicle threshold back in June, so their clock has started. They’re currently in the last full quarter in which the full credits will be applied. The remaining credits on their vehicles will be applied as follows:

As of January 1, 2019 -Rebates are reduced from $7,500 to $3,750
As of July 1, 2019 – Rebates are again cut in half to $1,875
January 2020 and beyond – No rebates for Tesla buyers

Tesla is currently arguing that this puts them at a disadvantage compared to their competition, but no major change is expected in the credit offerings. A bill was recently introduced that would extend these credits past the 200,000 limit, but it’s in the very early stages and has yet to even pass the House.

Tesla’s argument comes as no surprise, as other luxury manufacturers (Audi, BMW, Mercedes-Benz, and Jaguar) are just beginning their EV endeavors, so they have the majority of their tax-credit-eligible vehicles remaining.

GM is near the 190,000 mark, meaning they should hit the cap in the coming months. A bit behind them at 120,000 is Nissan as well as Ford at 109,000.