Tesla sells 200,000th auto, starting phaseout of federal tax credits

Lloyd Doyle
July 15, 2018

That's because Tesla customers who receive their cars after the end of the year won't be getting a US$7,500 tax credit.

Under a major tax overhaul passed by the Republican-controlled U.S. Congress late previous year, financial incentives in the way of tax credits that lower the cost of electric vehicles are available for the first 200,000 such vehicles sold by an automaker. Last year, Tesla witnessed an increase in sales by nearly 100% than before but now, increased prices are likely to affect the sales volume until the company manages to manufacture its cars locally.

According to a new schedule posted to its website, the US$7,500 tax credit will still be available - regardless of whether it's a Model S, X, or 3 - between now and the end of the year.

The change represents a net price increase for Tesla buyers.

In March, GM Chief Executive Mary Barra called on Congress to expand the consumer tax credit for electric vehicles as the company boosted production of the Bolt in response to strong demand.

The clock is ticking for Tesla Inc (NASDAQ:TSLA) auto buyers in the US.

Each manufacturer is allotted 200,000 credits before the phaseout begins.

As Tesla continues to grapple with production and quality issues hamstringing its innovative Model 3 sedan, the competition is looming larger in the Silicon Valley automaker's rearview mirror. In addition to it, the company also reduced the prices of these models by 40 to 90 thousand Yuan.

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.

Customers holding out for the long-promised United States $35,000 model 3 with less bells and whistles will have to wait another six to nine months and will get US$3,750 back from the IRS, at best. After that, reaching the target this quarter became inevitable.

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