U.S. taxpayers have already invested tens of billions of dollars in supporting the electric vehicle part of the green revolution, and Tesla (TSLA) -) has been one of the biggest beneficiaries.
Buyers can qualify for up to $7,500 in tax credits under the IRS program if they buy a new plug-in EV or fuel cell vehicle for use primarily in the U.S. if they are under certain income thresholds.
DON'T MISS: Great News for Prospective EV Buyers (And It Involves Tesla)
The program has been a boon for Tesla, especially the company's Model 3 -- its cheapest vehicle -- as Tesla says all versions of the vehicle are eligible for the full $7,500 credit.
However, Tesla's website is also saying now that reductions in that tax credit are likely to occur after December 31.
NEWS: @Tesla now states on their website that there will likely be reductions to the $7,500 EV tax credit in the US for eligible new Model 3 buyers after Dec 31, 2023. pic.twitter.com/1bqQczo7NU
— Sawyer Merritt (@SawyerMerritt) July 12, 2023
More Business of EVs:
- A Full List of EVs and Hybrids That Qualify For Federal Tax Credits
- Here’s Why EV Experts Are Flaming Joe Biden’s Car Policy
- The EV Industry Is Facing an Unusual New Problem
While the website doesn't give a reason for the expected reduction, Twitter users have their theories.
This is probably due to battery materials and production that qualifies for a tax incentive shifting to larger cyber truck batteries. Not enough materials left for model 3 batteries, so they will use non-tax incentive qualifying suppliers of raw materials for those batteries.
— cannasseurs.io (@cannasseursio) July 12, 2023
To reach the full credit, 40% of the vehicle's minerals must be "extracted or processed in the United States or a U.S. free-trade agreement partner," according to the IRS. Half of the vehicle's components must also be manufactured or assembled in North America.
And the program becomes more strict about its component thresholds each year. By 2027, the program dictates that 80% of a vehicle's battery minerals and components must meet domestic production requirements.
The Model 3, Tesla's most popular model, has especially benefitted from the program as the Model 3 is now cheaper than the Toyota Camry -- by far the country's top selling sedan-- in California.
Get exclusive access to portfolio managers and their proven investing strategies with Real Money Pro. Get started now.
