Tesla hasn’t confirmed why its Model 3 RWD and Model 3 Long Range will no longer be eligible for the full federal tax credit in 2024, but it’s likely to do with requirements mandated by the government. In addition to limits on a purchaser’s adjusted gross income, price caps on the EVs, and whether a new electric car is being bought for personal use as opposed to resale, another limitation to the tax credit has to do with where the vehicle and its components are built. Specifically, if some crucial components are made in China, then an EV won’t be eligible for the full credit.
Certain components in Tesla’s batteries are made in China, which is possibly why some models will be disqualified for the full credit at the end of the year. This is a result of the Biden administration’s continuous refining of the Inflation Reduction Act and EV tax credit, as well as its push to enhance competition with China in the tech and industrial sectors. If the requirements are altered again at some point, or if Tesla moves its manufacturing stateside, there could be advance changes to tax credit eligibility for certain Tesla models in the future.
In the meantime, if you’re thinking of buying a Model 3 RWD or Model 3 Long Range, you can save thousands by doing so before December 31. To advance incentivize year-end sales, Tesla is also offering six months of free supercharging to anyone taking delivery of the Model 3 or Model Y by the end of the year.
