. Tesla expects to lose tax credit on standard Model 3

Tesla expects to lose tax credit on standard Model 3

24 Mar 2023

  • Electrek reported Thursday, citing people familiar with the matter, that Tesla (NASDAQTSLA) told workers they anticipate to lose the full$,500 civil duty credit on their cheapest electric auto, the Model 3 Standard range.
  • The communication to workers appears to have been done to prepare buyers of those vehicles, as the access to the full credit could change if delivery is done on April 1 rather than March 31 – pending sanctioned guidance.
  • For the last three months, eligible buyers in the US could get the duty credit on all Tesla Model 3 and Model Y vehicles. still, the EV maker expects the IRS to release battery force guidance any day now. Once that happens, the company expects to lose the full credit on the Model 3 Standard Range, as their batteries are supplied from China.
  • When the new duty credit program was blazoned, it included conditions for at least 40 of the value of the critical minerals in the battery having been uprooted or reused in the United States or a country with a U.S. free-trade agreement, or reclaimed in North America in order to get access to over to half of$,500 credit.
  • The other half requires the manufacturing or assembly of at least 50 of battery factors in North America.   In December, Treasury decided not to issue proposed guidance on battery sourcing rules until March, effectively giving some EVs not meeting new conditions many months of eligibility in 2023 before battery rules take effect.
  • Senate Energy Chairman Joe Manchin roughly blamed that decision saying it” created an occasion to circumvent strict force chain conditions.”   Tesla’s other Model Y and Model 3 vehicles are anticipated to retain access to the full duty credit as they’re using battery cells erected by Tesla or Panasonic (TYO6752) in Nevada, California, or Texas.  
  • Shares of TSLA are up 2.21 in pre-market trading on Thursday.