Tesla buyers could take advantage of new federal tax credits for electric vehicles next year, executives at the automaker said Wednesday. Credits can reach $7,500 for new vehicles and $4,000 for used vehicles.
Tesla’s eligibility for previous tax credits ended in January 2020 when it reached the limit of 200,000 vehicles sold per automaker. The cap of 200,000 vehicles will be lifted on January 1 with the new rules, but the new requirements are stricter than the previous system. Tesla expects the US Treasury to issue detailed guidance by the end of the year.
The legislation is open to some interpretations of how the government will calculate the value of battery components, but a significant portion of the components must be manufactured or assembled in North America to qualify for half of the $7,500 credit. The other half depends on mining or processing critical minerals in the United States or in a country with which it has a free trade agreement. The percentages will gradually increase from 2024 to 2029.
“So far, it’s difficult to fully determine the eligibility criteria, but we believe Tesla is very well positioned to capture a significant chunk of it for solar storage and also for electric vehicles,” a representative said Wednesday. unidentified from Tesla on an investor call. (Tesla often doesn’t identify people speaking on behalf of the company when calling investors.)
The remarks represent something of a reversal for the automaker, as Tesla CEO Elon Musk had spoken out against proposed tax credits for electric vehicles last year.
“We don’t need the $7,500 tax credit. I would say, honestly, I would say that I would put this whole bill in a box. Don’t pass it,” Musk said in December 2021 of the infrastructure bill, citing concerns about the growing US deficit.
And when an early proposal to extend the electric vehicle tax credit included extra money for union-built vehicles, Musk again came under fire.
“Not obvious how this serves American taxpayers”, Musk said. “This is written by Ford/UAW lobbyists, as they manufacture their electric car in Mexico.”
Musk has had a contentious relationship with the Biden administration and has resented the White House’s highlighting of competitors’ electric vehicle efforts rather than his own. Just earlier this month, Musk told Republican Senator Lindsey Graham that “we didn’t ask for this one,” referring to the tax credit included in the Inflation Reduction Act. , “GM and Ford did it”.
But Tesla and its executives were more receptive to tax credits on Wednesday.
“We view the passage of the Cut Inflation Act as a significant impetus toward accelerating our mission while expanding the battery supply chain in the United States,” said an unidentified executive from Tesla on the call.
Tesla allows the public to vote on questions its leaders must answer. The most voted question was on Tesla’s ability to meet the electric vehicle tax credit thresholds in 2023, 2024 and 2025.
Tesla didn’t address specific years, but Musk said that “at a high level I will say we expect to fully meet the IRA requirements.”
Another Tesla representative noted on the call that it manufactures its battery modules and vehicles in the United States, which will help it qualify.
Half of Tesla’s vehicle lineup will default to ineligibility without massive price cuts. The Tesla Model X SUV and Tesla Model S sedan seem unlikely to qualify, as SUVs must cost no more than $80,000 and sedans must not exceed $55,000. The most affordable Model X is $120,990 and the cheapest Model S is $104,990.
Some versions of the Model 3 sedan and Model Y SUV may qualify, but buyers will still need to meet income requirements. A single buyer’s income must not exceed $150,000, $225,000 if head of household or $300,000 if married.