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Tesla loses United States subsidies as it hits 200,000 sales mark

13 July 2018

After the full year, the company's customers are no longer eligible for that tax credit. The credit is cut in half for vehicles delivered January 1 - June 30, 2019, then slashed again to $1,875 for deliveries from July 1 - December 31.

Under a major tax overhaul passed by the Republican-controlled U.S. Congress late previous year, financial incentives in the way of tax credits that lower the cost of electric vehicles are available for the first 200,000 such vehicles sold by an automaker.

In March, GM Chief Executive Mary Barra called on Congress to expand the consumer tax credit for electric vehicles as the company boosted production of the Bolt in response to strong demand.

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Since the credits apply when the purchase is completed, it appears that few, if any, buyers will be able to take advantage of the full $7,500 discount on this model.

Each manufacturer is allotted 200,000 credits before the phaseout begins.

The clock is ticking for Tesla customers looking for incentives on their vehicle purchase.

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Despite this anti-selling, however, Model 3 reservations remained high, with Tesla most recently confirming that it still has a backlog of 420,000 orders for the electric auto. When the base Model 3 becomes available, many may sell for about that price with Autopilot, all-wheel drive, or the premium package, plus an optional paint color or wheel choice.

The company said it hit its goal, producing 5,031 Model 3s during the final week of June, prompting Musk to tell employees, "I think we just became a real auto company".

Shares of Tesla were down 1.7% in trading Thursday after it confirmed a lucrative tax credit will end next year, making its electric cars more expensive for potential customers. 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. The Model 3, after all, would likely determine whether Tesla could achieve its target of becoming profitable this third or fourth quarter.

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Tesla loses United States subsidies as it hits 200,000 sales mark