Tesla Model 3 RWD and Long Range to Lose Full $7,500 Federal EV Credit in 2024

In a recent development, Tesla has received updated guidance from the Internal Revenue Service (IRS) regarding the federal electric vehicle (EV) tax credit. Starting from January 1, 2024, the Model 3 RWD (Rear-Wheel Drive) and Long Range variants will no longer be eligible for the $7,500 federal EV credit. This is a significant blow to Tesla, as the company previously believed that the credit for these trims would only be reduced to $3,750.

The news was first announced by Tesla enthusiast and Twitter user Sawyer Merritt, who shared the IRS guidance in a tweet. According to the tweet, Tesla’s interpretation of the updated guidance is that the Model 3 RWD and Long Range trims will lose the entire $7,500 federal EV credit, effectively reducing the incentive to zero.

The federal EV tax credit has been a crucial factor in driving the adoption of electric vehicles in the United States. It has provided an incentive for consumers to purchase electric vehicles by reducing the overall cost of ownership. However, the credit is subject to a phase-out period for each automaker once they reach a certain threshold of EV sales.

Tesla, being one of the leading electric vehicle manufacturers, has already surpassed the threshold for the full $7,500 credit. As a result, the credit for Tesla vehicles has been gradually decreasing over the past few years. This latest update from the IRS means that Tesla’s Model 3 RWD and Long Range trims will no longer receive any federal tax credit, making them less attractive to potential buyers.

The removal of the federal EV credit for the Model 3 RWD and Long Range trims is expected to have a significant impact on Tesla’s sales in the coming years. The $7,500 credit has been a compelling incentive for consumers, helping Tesla maintain its position as a leader in the electric vehicle market. Without this credit, the Model 3 RWD and Long Range variants will face stiffer competition from other automakers offering similar electric vehicles at a lower price point.

It is worth noting that the federal EV tax credit still applies to Tesla’s other models, such as the Model 3 Standard Range Plus and the Model Y. These vehicles will continue to receive a reduced credit of $1,875 until the end of 2024, after which the credit will be phased out completely for Tesla.

Tesla has been working towards making electric vehicles more affordable and accessible to a wider range of consumers. The company recently introduced the Model 3 Standard Range Plus, which is priced more competitively compared to the RWD and Long Range trims. This move indicates Tesla’s commitment to driving EV adoption even without the federal tax credit.

In conclusion, the updated guidance from the IRS means that Tesla’s Model 3 RWD and Long Range trims will no longer be eligible for the $7,500 federal EV tax credit starting from January 1, 2024. This change is likely to impact Tesla’s sales and competitiveness in the electric vehicle market, as the credit has been a significant incentive for consumers. However, Tesla continues to offer other models that are eligible for a reduced credit, and the company remains focused on making electric vehicles more affordable in the absence of the federal tax incentive.

.

BREAKING: Tesla has received updated guidance from the IRS. The Model 3 RWD & Long Range will lose the ENTIRE $7,500 Federal EV credit starting January 1, 2024.

Tesla previously thought the EV credit for those trims would be cut to $3,750, but now their interpretation is $0.… pic.twitter.com/VlruMDM31H

— Sawyer Merritt (@SawyerMerritt) December 13, 2023

Source

@SawyerMerritt said BREAKING: Tesla has received updated guidance from the IRS. The Model 3 RWD & Long Range will lose the ENTIRE $7,500 Federal EV credit starting January 1, 2024. Tesla previously thought the EV credit for those trims would be cut to $3,750, but now their interpretation is $0.… twitter.com/i/web/status/1…

RELATED STORY.