Tesla Buyers Won’t Get A $7,500 Tax Credit For Much Longer

Tesla owners looking to grab a bargain better be quick as before long, every vehicle in the company’s range will become more expensive.

Sometime next year, Tesla will have topped 200,000 cumulative sales of fully-electric vehicles, meaning those cars it produces will no longer qualify for the government’s $7,500 federal tax credit.

Car and Driver reports that Alan Baum of Baum & Associates believes Tesla will reach the 200,000 mark in the first quarter of 2018, if not earlier. Once that sales mark is reached, a phase-out period of the tax credit will commence.

For the following year, buyers will be able to claim 50 per cent of the credit ($3,750) and for the two quarters after that, 25 per cent ($1,875). Based on current estimates, this means the $7,500 tax credit will only be available for Teslas delivered by September. The 50 per cent credit will then apply throughout the entirety of 2018 before the $1,875 credit is offered for the first two quarters of 2019.

Based on current U.S. sales figures, it appears that both Nissan and Chevrolet’s plug-in hybrid and EV models will be available with the full $7,500 tax credit for at least the next 12 months.


  • Randy Terpstra

    Good. Time to ween EV buyers off the hog. Here in Ontario, EV buyers get a $15000 tax credit. Not cool. If the Ontario government gave me $15000, I could replace our 10 year old Impala, with a much more efficient and future friendly Spark.

    • LJ

      The Ontario government isn’t giving anything to anyone… the Ontario government is forcing taxpayers to give other people money to purchase cars.

      • BGM

        Right on, let’s say it like it is.

        And you, Randy, how dare you be driving a 10 year old Impala that surely polutes a lot? Either get with the program and by a new Model 3 or walk you peasant!

  • LJ

    And then sales of EVs will fall off a cliff.

  • Aquaflex

    Once the model 3 gets out there and has good reviews it will sell out for years to come!

    • gary4205


    • BGM

      I hope it does. I just don’t want it to get a single penny of my money in subsidies.

  • gary4205

    The notion of stealing billions of dollars from poor and middle class taxpayers in order to subsidize toys for the rich is hateful and despicable.

    • eye.surgeon

      Poor people don’t pay income tax, and neither do the lower middle class. Rich people pay most of the taxes so it’s hardly the rich stealing from the poor.

      • LJ

        While I agree with you about poor people not paying income tax, the bulk of all taxes are paid by the middle class.

        • Not to seem argumentative, but the top 20% of income earners pay over 57% of all Federal taxes. The middle three quintiles pay less than 14%. You can find the latest stats on page 32 of this report from the CBO: http://bit.ly/2x6mgRd

      • BGM

        It doesn’t matter whether you pay $1 or $1M a year in taxes. Not a single penny should be taken to subsidize things for other people.

        • eye.surgeon

          So you oppose food stamps, welfare, social security, medicare, public schools, state universities, medicaid, unemployment insurance, and disability? Me too.

    • Status

      You attend a church and you give away untaxed money to subsidize toys for rich evangelicals. You are a hypocrite.

  • Bill O

    Most of the estimates I’ve seen show GM and Tesla hitting the 200,000 threshold in the same quarter. GM cars that qualify are selling at a little lower rate as Tesla Model S and X right now, but they sold a lot of plug in hybrids when Tesla’s production numbers were low and those count against the total. Nissan is 1-2 quarters behind Tesla and GM on the tax credits.

    The way the tax credit is structured, it is an incentive for high income buyers to be early adopters of EVs. I don’t agree with the way it was structured, but most tax breaks are for the wealthy. The US tax code is massive, but only a few breaks are ever used by people making less than $100K a year.

    The idea with this type of tax incentive is that the wealthy get a short term benefit for adopting new technology and the entire population benefits on the back end as manufacturers perfect the technology and lower the price for everyone to benefit. In the electric car market this is actually happening with the introduction of the Model 3 which is the first mass produced, 200+ mile EV, with a starting price around that of the average car price. (The Bolt was the first 200+ mile EV under $40K, but it is not a mass production car, GM only plans to make around 30K a year.)

    Most early Model 3 buyers will have their federal income tax eliminated or drastically reduced at the 50% level, which does run for 6 months after the full rebate is gone. With the deductions most people take, a family of 4 with a household income of $100K a year may not pay $7500 in federal income tax. Because the tax code is complex, there are people making less than that who do pay $7500 a year, but it isn’t unusual for people making more than the median income to pay a lot less then $7500 a year.

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