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Tesla’s U.S. Tax Credit Coming To An End

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Tesla has delivered 200,000 vehicles in the United States, exceeding the threshold above which federal tax credits for EVs start to phase out, a spokesperson for Tesla said on Thursday—and its website had its incentives schedule updated.

Under U.S. federal legislation, buyers of EVs enjoy tax incentives of up to $7,500 per vehicle for a new purchase for use in the United States. This tax credit is available until 200,000 qualified EVs have been sold in the United States by each manufacturer, at which point the credit begins to phase out for said manufacturer.

When an automaker reaches 200,000 EV deliveries, the tax credits begin to phase out after one full quarter passes following the quarter in which the car manufacturer has hit the 200,000-delivery mark.

For Tesla, speculation in recent weeks about whether Elon Musk’s EV maker has or hasn’t reached that figure was nearly as ripe as whether it would be able to reach the 5,000-per-week Model 3 production target.

At the end of June, Tesla, as well as GM, was said to be very close to hitting the 200,000 U.S. delivery cap.  

According to Bloomberg, Tesla may have delivered more vehicles to customers outside the U.S. in Q2 in order to avoid hitting the 200,000 U.S. delivery cap in that quarter and hit the cap in Q3. Thus, it would have caused the tax credits start to phase out one full quarter after Q3, so as of January 1, 2019. By hitting the cap on or after July 1, Tesla would have one additional quarter with full tax credits that could be worth a combined more than $400 million to Tesla buyers, Bloomberg has estimated. 

Tesla’s Electric Vehicle Incentives page shows that the federal tax credit of $7,500 is valid for vehicles delivered on or before December 31, 2018. The tax credits then start to phase out—halved to $3,750 between January 1 and June 30, 2019, and then again halved to $1,875 from July 1 to December 31, 2019, until they stop.

By Tsvetana Paraskova for Safehaven.com

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