This site may earn affiliate commissions from the links on this page. Terms of employ.

Tesla says it will sell its 200,000th electric vehicle sometime this year. That means the US residents on the Model 3 waiting that stretches almost to a one-half-1000000 accept to wonder if they'll go the full $vii,500 tax credit, a partial credit, or none at all.

Tesla could tinker with deliveries to brand more buyers eligible for the credit. Buyers will be helped most if Tesla tin crank up to its claimed production of five,000 units per week.

What Tesla Said

In a filing Friday with the federal Securites Exchange Commission, Tesla gave notice that will sell it'south 200,000th auto this year:

Under current regulations, a $vii,500 federal revenue enhancement credit available in the U.South. for the purchase of qualified electric vehicles with at least 17 kWh of battery capacity, such as our vehicles, will brainstorm to phase out over fourth dimension with respect to any vehicles delivered in the second calendar quarter post-obit the quarter in which we deliver our 200,000th qualifying vehicle in the U.S. We currently expect such 200,000th qualifying delivery to occur at some point during 2018.

Here we are with 10 months left in 2018, and at "some point" during those 306 days, Tesla volition have sold 200,000 Model S, Model X, Model 3, and before Roadsters. That begins the inaugural toward the end of the available $7,500 tax credit.

A credit is better than a taxation deduction — near 3 times every bit skilful, if y'all pay a third of your income equally federal taxes.

How the Countdown Works

This is how the federal tax credit works. It'due south the same for every automaker. General Motors counts as 1 automaker, not as four (Chevy, Buick, Cadillac, GMC). Ditto Ford and FCA, as well every bit BMW-Mini-Rolls-Royce, etcetera.

  1. The automaker reaches 200,000 sales. Every car in that quarter sold and delivered is eligible to receive the total $7,500 taxation credit. The full credit applies in the following quarter, too, no matter how many cars the automaker delivers. If Tesla hits 200,000 in the third quarter, July through September, every automobile delivered by December. 31 is eligible for the credit.
  2. For the next two quarters, buyers are eligible for a half credit, or $3,750. In this example, through June 30, 2019.
  3. For the adjacent two quarters, buyers are eligible for a i-quarter credit, of $1,875.  That would be through Dec. 31, 2019.
  4. So it's gone.

To get the federal tax credit, you take to pay US taxes and yous have to have paid as much in taxes as the credit is worth. In this example, you have to have paid $seven,500 in taxes in 2018. You can't take it the post-obit year.

How Tesla Can Game the System (Legally)

As Tesla approaches the 200,000 initial cap, information technology can tinker with deliveries to US customers. Elon Musk has hinted at this. Ideally, Tesla would hit the cap on the first day of a new quarter. Worst example, say, is if Tesla delivered its 200,000th car on June 30, the last mean solar day of Q2, or Sept xxx, the last twenty-four hour period of Q3.

Let's say Tesla sells 100,000 cars in the US this yr; sales were nearly 50,000 in 2017. For 2018, that's about 275 cars a solar day. (nosotros're treating every day as a sales twenty-four hour period and assuming constant, not rise, product. It's a simple example.) In the all-time case, U.s. buyers would get the revenue enhancement credit on 50,000 cars (every commitment of Q3 and Q4). Worst example, the credit would go to 25,275 buyers: i day at the terminate of Q3, plus all of Q4.

Nobody knows what Tesla'south product actually will be. Information technology depends a lot on how quickly Tesla cranks up production of the Model 3. Tesla said it would build 5,000 cars a week in the fourth quarter last year, and now information technology says it will practise it one-time this quarter. Right now, several sources say information technology's closer to 1,000 a week. The most fascinating source is the BusinessWeek Tesla Model iii Tracker, which relies on individuals reporting their purchases and their machine's VIN number, which should be in sequence. As of February. 26, BusinessWeek says Tesla has built eight,670 cars, and is now edifice at the charge per unit of 1,052 per calendar week. The offset Model 3s were delivered in July 2017.

At the rate of 1,052 per calendar week, Tesla could produce another 46,000 Model 3s by the end of the twelvemonth. If Tesla averaged two,500 a week, it would be 108,000. So the more than Model 3s Tesla builds in 2018, the more than buyers become the taxation credit. Nigh analysts say Tesla will have a hard time hitting 5,000 cars a week by the end of this quarter. But if it does do 110,000 this year, possibly 125,000-150,000 Model 3s, and continues that pace in 2019, then near of the US taxpayers who are amid the estimated 455,000 who've plunked down deposits worldwide, nearly will get some kind of credit. Merely not as many every bit those who idea they might get $vii,500 back, when they plunked down a deposit back in 2016.