Photo provided by Tesla

Tesla Touts Tax Credits & Price Cuts

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Here it is not yet the middle of April and Tesla has already rejiggered its pricing structure for the fifth time. By lightning-like calculation, that is an average of one price change every 19 days or so, although not all pricing changes have applied to all models.

In a new posting on its website, Tesla deals at length with the various tax credits that will apply to its vehicles and solar products now that the IRS has promulgated its final regulations designed to implement the provisions of the Inflation Reduction Act and other state, local, and federal clean energy and electric vehicle programs.

“Several government entities and local utilities offer electric vehicle and solar incentives for customers, often taking the form of a rebate or a tax credit. Rebates can be claimed at or after purchase, while tax credits are claimed when filing income taxes. Find state and local-specific incentives available in your area,” the posting says. Then it inserts the requisite legal disclaimers:

“Incentives listed here are provided for your convenience and should not be considered an absolute and complete list and is not a guarantee of your personal eligibility or the incentive’s availability. These programs are subject to change or end at any time, and are outside of Tesla’s control. For example, some programs have an allocated budget or submission deadline after which the program will end. Be sure to visit the specific program’s website for the most up-to-date information on availability, eligibility and redemption requirements.

“Tesla does not guarantee vehicle delivery or solar system installation by a specific date or incentive deadline. Your eligibility for any tax credits depends on your personal tax situation. We recommend speaking with a tax professional for guidance.”

Tesla & Federal Tax Credits On Vehicles

Here is the news you have been waiting for regarding Tesla and tax credits. “On January 1, 2023, the Inflation Reduction Act of 2022 qualified certain electric vehicles (EVs) for a tax credit of up to $7,500. Based on new IRS guidance, the $7,500 credit will be reduced for Model 3 Rear Wheel Drive on April 18 to $3,750.”  The company then mentions the exceptions and exclusions that apply.

  • Customers must buy a car for their own use, not for resale
  • They must use the vehicle primarily in the U.S.
  • There are income limitations based on a taxpayer’s Adjusted Gross Income
  • The maximum sales price cannot exceed $55,000 for sedans (Model 3) or $80,000 for SUVs (Model Y)

The company also provides a helpful link to the IRS website.

Solar & Storage Credits

We sometimes forget that Tesla also sells conventional rooftop solar PV systems, Solar Roof products, and its Powerwall residential storage battery. Until recently, there was no federal tax credit for standalone battery storage, but that has changed.  “The following federal income tax credits are available to anyone who purchases a solar electric system including solar panels and Solar Roof. Energy storage paired with solar systems are considered qualified expenditures eligible for the tax credit,” the company says. Below is a list of tax credits and eligibility dates.

Courtesy of Tesla

Further down the page, the company offers links to state and local incentives by state so customers can more easily find all of the rebates and incentives that may apply.

Price Cuts

Tesla cut prices last Thursday on both versions of its Model 3 sedan by $1,000 and on its Model Y SUVs by $2,000, the website showed. It also cut prices on both versions of its more expensive Model S and Model X by $5,000, according to ArsTechnica.

In addition, Tesla quietly introduced a new single-motor version of the Model Y with a listed range of 275 miles priced at $49,990. Presumably, this car is equipped with an LFP battery pack. Tesla has been offering a single-motor Model Y in China and other markets for some time, but this is the first time it has offered that car in the North American market. The dual-motor Model Y, which used to be the least expensive version, is now $52,990, and the Model Y Performance is now $54,990.

The single-motor, rear-wheel-drive version of the Model 3 is now $41,990 and the Performance version now lists for $52,990. On its website, Tesla says a new long-range version of the Model 3 is coming later this year. Tesla has cut the price of its base Model 3 by a cumulative 11% since the start of the year, with a 20% reduction on the base Model Y.

What Does It All Mean?

Stock market analysts are driving themselves crazy trying to figure out what Tesla is up to with all these price changes taking place so quickly. The answer is probably not that mysterious. The company is no longer a barrier-busting startup. It is rapidly become a mature automaker that is subject to the same market forces as all its competitors. Supply chain issues and changes to in national regulations and incentive programs are roiling the automotive industry and Tesla is trying hard to adapt and adjust to the changes in a way that keeps demand for its products strong while keeping an eye on its profit margins all the while.

Tesla has a secret advantage. Unlike traditional automakers who tend to set their prices at the beginning of each model year and stick with them until the next model year rolls around, Tesla can adjust is prices up or down at will in much the same way that traditional service stations set their prices every morning to adapt to overnight market fluctuations.

The big challenge for Tesla is to keep selling as many cars as it can produce. As production continues to ramp up in Austin and Fremont, it has to find more buyers, and the best way to do that is to lower prices until supply equals demand. It’s a delicate dance and Tesla seems to be able to do it better than any other manufacturer.

Tesla has been manufacturing and delivering record numbers of cars this year, but its totals have disappointed investors nonetheless. It isn’t easy keeping the balloon of higher expectations aloft. In some ways, Tesla is a victim of its own success — and predictions that are often extremely difficult to turn into reality.

The good news is that customers can now order a dual-motor Model Y for a net cost of $45,490, assuming the buyer is eligible for the federal tax incentive. That’s about $20,000 less than the highest price ever for the Model Y. Sweet!

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Steve Hanley

Steve writes about the interface between technology and sustainability from his home in Florida or anywhere else The Force may lead him. He is proud to be "woke" and doesn't really give a damn why the glass broke. He believes passionately in what Socrates said 3000 years ago: "The secret to change is to focus all of your energy not on fighting the old but on building the new." You can follow him on Substack and LinkedIn but not on Fakebook or any social media platforms controlled by narcissistic yahoos.

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