All Tesla Model 3 Trims Now Eligible for $7,500 Tax Credit

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In a significant boost for electric vehicle (EV) buyers, Tesla has announced that all new Model 3 cars in the US now qualify for the full $7,500 EV tax credit. The credit has effectively reduced the starting price of the Model 3 to $32,740 (with incentives), making the car more affordable to a broader range of customers. In fact, in some states, the price tag could drop below $30,000.

Previously, only the Rear-Wheel Drive (RWD) and Long Range versions of the Model 3 were eligible for a reduced tax credit of $3,750. However, starting April 18, 2023, all Model 3 versions, including the Performance model, will qualify for the full tax credit amount.

Somehow, Tesla has reallocated U.S. 2170 battery cells for its Performance Model 3 it seems to allow the latter to qualify for the full tax credit. Recently, Tesla began importing Model 3 vehicles from Giga Shanghai (likely with LFP cells from China’s CATL) to Canada, so this move may free up inventory for the U.S. market.

As a result of this update, prospective buyers in Colorado will soon be able to get a new Model 3 for as low as $27,740. This has significantly narrowed the price gap between the Tesla Model 3 and traditional gasoline cars. For instance, the difference in the starting price between a new Honda Accord and a new Model 3 RWD is now just around $5,000. Similarly, there’s only a $6,000 difference between the starting price of a Toyota Camry and the RWD Model 3, points out @SawyerMerritt.

The discounts also apply to existing inventory Model 3 vehicles, which currently have an extra price drop.

These changes are a direct result of the Inflation Reduction Act of 2022, which came into effect on January 1, 2023. This legislation enables certain EVs to qualify for a tax credit of up to $7,500. To be eligible for this credit, customers must purchase the car for personal use, primarily use the vehicle in the U.S, and meet certain Adjusted Gross Income and Manufacturer’s Suggested Retail Price (MSRP) restrictions.

Tesla has confirmed that customers who take delivery of a qualified new Tesla vehicle and meet all federal requirements are eligible for a tax credit up to $7,500. For a comprehensive list of the current requirements, customers are advised to review the IRS website.