Tax credit phase out AWD M3 not an option anymore

Tax credit phase out AWD M3 not an option anymore

With the estimate delivery date available for the long range, standard, and awd. It looks like anyone waiting for a AWD M3 will have a reduce tax credit of $3750. If Tesla delivers 200,000 cars by Q1 of 2018, which only allows us till Q2 to get the full tax credit. With AWD coming out in spring of 2018 we won't see deliveries till Q3 or Q4. I guess I will not be getting the AWD version... tell me what do you think about this.

Shock | 31. Juli 2017

Sounds about right to me, I agree with your math.

TheChad | 31. Juli 2017

@Kenpenguin - Yep. I was in the "club" that wanted AWD and perhaps the P version depending on pricing. When Tesla announced the timeline for AWD I was initially a bit disappointed. I then did my own research on how well the S handles in snow/ice with RWD only. I currently have a RWD BMW that handles like a first timer on skates in in the ice and was extremely concerned about this. All the research I have done shows that RWD Tesla's handle extremely well in winter weather. It is a personal choice you have to make if you want AWD for weather, traction, torque, range, or whatever reason. I have made the decision to go with the initial production model due to the tax implications among other things.

JFleischood | 31. Juli 2017

I read that there is something like less than 100K left for the tax credit thing, because it is not per model, but per company. So all of the S & X models have already eaten into the limit on Tesla?

Is this true? If so, the 1st option will be the only one to qualify, and even then some people may not make the cut.

Magic 8 Ball | 31. Juli 2017

Yup, clever that Tesla would only make the 49K version available in time for the credit and not deliver the 35K version until the credit is mostly gone or all gone ; ).

PhillyGal | 31. Juli 2017

@TheChat - Your research has served you right. I won't go near my RWD Hyundai Genesis Coupe when there is a flake on the ground. I'll take my RWD Model S in a heartbeat.

dsvick | 31. Juli 2017

@JFleischood, @douwe

Yes, the credit is per company not per model and yes Tesla is already over 100K. However, it does not get cut off after the 200,000th is sold in the US. When it reaches that number everything sold for the rest of that calendar quarter and for the entire next calendar quarter will still get the full credit. The six months after that will get a half credit and the 6 months after that will get a quarter credit.

Right now it is expected that Tesla will hit 200K in Q1 or 2018, which means everything sold in the US until the end of June 2018 would get the full credit, so there would be a significant number of them that are not the $49K version.

dsvick | 31. Juli 2017

That should say "Q1 of 2018" ...

GetLib | 31. Juli 2017

If everyone who wanted AWD Dual Motors changed their "preference" in their "manage my reservation" page appropriately, I think Tesla might ramp up the AWD versions quicker... as not only will they see more AWD demand, but they will see less RWD demand (as preferences are switched).

lilbean | 31. Juli 2017

It's not their first rodeo. Tesla knows what they are doing.

sosmerc | 31. Juli 2017

@GetLib.......for what it is worth, I just did that. Hope it helps Tesla figure out what people want.

RonaldA | 31. Juli 2017

My Model S P85 gets me through Buffalo winters without issue, I've even driven in a couple blizzards with rear wheel drive. I suggest snow tires, but these cars do well in snow.

JFleischood | 31. Juli 2017

@dsvick - Thank you for that information. Very helpful. Would appear the AWD option for us east coast, non-Tesla owners, will still fall out of the full credit window, unless production moves up (which seems overly hopeful considering the already optimistic timeframe).

I am okay with that. I am really glad to hear that I should almost definitely qualify for the full tax credit, unless production really hits some snags. Unfortunately, the government getting rid of the tax credit next year is a distinct possibility as well I would think. We shall see.

Tropopause | 31. Juli 2017

$3,750 ain't nothing to sneeze at. I'll take it if you won't.

Magic 8 Ball | 31. Juli 2017

@dsvick Yes but i do find it interesting, and wonder why, the first ones available are only the more expensive RWD long range and they are only available with the additional 5k premium package. To me this seems much more like a marketing ploy vs a supply chain logistics issue. It sure seems like they could easily stretch out the marketing strategy to get more people to buy the more expensive (presumably higher profit margin) units by simply delaying delivery of the 35K models.

cnappi | 31. Juli 2017

@douwe : Yes I agree. It is tough being both a stock holder and a customer :D

Michael_Bluth | 31. Juli 2017

79,000 is the latest i heard. initially, i was not committed either way - towards longer range or awd. i am kind of glad tesla made up my mind for me. the sooner, the better for me. i was looking for a decently equipped M3 for about 45k before credits because with previous production delays, etc., i started to believe no M3 owner was going to see the full credit. so, while 49 or 50.5 is higher than i expected, if i can get it december this year or early next year, i'll take it.

viper17d | 31. Juli 2017

I'm in the northeast and was anticipating getting the AWD variant. Prior to the final reveal, based on the "6-9 months later" Elon comment, as a Day 1 in-store reservation holder, I was expecting 1Q17 or 2Q17 at the latest. Based on what I've seen, where 3Q17 or 4Q17 is more likely, it looks like I'll be getting RWD.

I was also expecting for a nicely equipped longer range AWD Model 3 to be closer to $55K than $65K. Considering that isn't the case, I'm feeling better about the RWD every day.

dsvick | 31. Juli 2017

@GetLib - "If everyone who wanted AWD Dual Motors changed their "preference" in their "manage my reservation" page appropriately, I think Tesla might ramp up the AWD versions quicker"

There would still be plenty of RWD vehicles desired to keep producing them for months.

@douwe - " wonder why, the first ones available are only the more expensive RWD long range and they are only available with the additional 5k premium package"
The reason is simple, because that's what they wanted to do first. The said, well over a year ago, that they'd be producing the more highly configured ones first. Someone has to be first. You wouldn't be upset if the specs you wanted were the first ones being produced.

Magic 8 Ball | 31. Juli 2017

@dsvick I am not upset at all just curious as to how they made that decision. Those type of decisions are not based on "that's what they wanted to do" those decisions are business related decisions based on a marketing strategy.

dsvick | 31. Juli 2017

@douwe - "I am not upset at all just curious as to how they made that decision"

No one here can answer that. It is probably a combination of a lot of different factors like ease of manufacturing, profit margin, parts availability, and many others.

Bighorn | 31. Juli 2017

The answer is likely gross margin and cash flow. They are not starting out with fully decked out cars as they have in the past with performance premiums. The first cars easily could have been $70K performance AWD cars, so while $35k is delayed by a month or two, $49k will be palatable to many given the unprecedented range and nice appointments.

ReD eXiLe ms us | 31. Juli 2017

Kenpenguin: No. Not "till Q2" but 'through Q2'. There is a difference. Tesla will be steadily increasing their Production. If they are at 5,000 units per week at the beginning of December 2017, they may well be over 7,500 units per week by the beginning of June 2018. Many, many thousands of people will acquire the Tesla Model 3 in time to take advantage of the Federal EV Tax Credit at $7,500.

dsvick is correct.

Bighorn is always right.

LA-Fohlen | 31. Juli 2017

I am surprised that they still have 79,000 units available from what I heard. If Tesla is keeping the delivery according to the estimate and I take the first production I even might be getting the full tax credit (which I really did not expect).

Garyeop | 31. Juli 2017

As I understand it, these are the dates and amounts

200K cars sold in america $7.5k ends $3.75k ends $1.875K ends
Now until Sept.30th 2017 Dec. 31 2017 Mar 31 2018 June 30 2018
Oct 1 - Dec 31 2017 Mar 31 2018 June 30 2018 Sept 30 2018
Jan 1 - Mar 31 2018 June 30 2018 Sept 30 2018 Dec 31 2018

I would GUESS there is
70% chance hitting 200K cars by Sept 2017
20% chance hitting 200K cars by Dec 2017
10% chance hitting 200K cars by Mar 2018

I do not believe chances are high that anyone gets the whole tax credit on anything but the first set offered. My estimator says March - May for $49K first version. If I can get the tax credit that makes it a $40K car (including my deposit). Or I could wait for the AWD, no credit, and pay probably near $60K. IF I CAN get mine within the full tax credit I will take what they give me. Not what I want...but still lets me be part of history.

Garyeop | 31. Juli 2017

Lets see if I can make this readable

200K cars sold in america----------$7.5k ends----------$3.75k ends----------$1.875K ends
Now until Sept.30th 2017----------Dec. 31 2017--------Mar 31 2018----------June 30 2018
Oct 1 - Dec 31 2017-----------------Mar 31 2018--------June 30 2018----------Sept 30 2018
Jan 1 - Mar 31 2018----------------June 30 2018--------Sept 30 2018----------Dec 31 2018

JFleischood | 31. Juli 2017

@dsvick - When is it considered you purchased the vehicle (for tax credit purposes)? Is it when you are able to make the $2,500 deposit online and officially order your vehicle? Or when you take actually physical delivery? Or somewhere in between?

Octagondd | 31. Juli 2017

People who want AWD and Performance models are not the people that the Federal credit is aimed at. Remember all the negative buzz that only the super rich are getting the credit because they can afford a Model S. The same would have happened if they brought out the AWD and Performance versions right away. The RWD with Premium interior and long range battery is the perfect candidate for an initial offering since it shows off the design, interior, acceleration and range. It also lets them work the kinks out with the drive train before more motors and performance versions are involved. The standard version is next to give the most early reservers that need the credit to get the car a shot at getting the car with the credit. Then the AWD and Performance. I know people are disappointed at the timeline, but it makes the most sense for the company and it may push more people to the S or X if they really want a Tesla sooner.

LA-Fohlen | 31. Juli 2017

@Garyeop - I am a bit more optimistic and I don't think that Tesla will hit the 200,000 mark this year but probably in the 1st quarter 2018.
One correction, the phase out last for 2 quarters each and not just 1 quarter as you indicated so if e.g. Tesla hits 200,000 cars in 1st quarter 2018 this would mean

$7.5k ends June 30 2018
$3.75k ends Dec 31 2018
$1.875k ends June 30 2019

csmith476 | 31. Juli 2017

Gary, the credit extends longer than that.

200K cars sold in America----------$7.5k ends----------$3.75k ends----------$1.875K ends
Now until Sept.30th 2017----------Dec. 31 2017--------June 30 2018----------Dec 31 2018
Oct 1 - Dec 31 2017-----------------Mar 31 2018--------Sept 30 2018----------Mar 31 2019
Jan 1 - Mar 31 2018----------------June 30 2018--------Dec 312018----------June 30 2019

milesbb | 31. Juli 2017

I believe Tesla will do everything in their power to delay hitting the 200k US sales number. They can divert all production to Europe and Canada, they can stockpile cars. By doing this they could sell the 200K US car on April 1. By April 1 M3 production rates will be significantly higher then Jan 1 so the next 6 months will could get a lot of cars sold with full tax credit, maybe 150 k above the 200k could get the full tax credit if Tesla plays this game.

Garyeop | 31. Juli 2017

^^ Please see LA-Fohlen and CSmith476 for correct dates ^^ (Thank you)

This means that IF THE 200Kth CAR is sold after Oct 1st 2017 then

Most people who are in line for Long distance car can get full $7.5k tax credit.
Most people who are in line for $35K car can get it with $3.75K tax credit
Most people who want AWD will get it at full price.

MarlonBrown | 31. Juli 2017

People call the Model 3 the new "M3". I am sure BMW is not happy about it.

Bighorn | 31. Juli 2017

The IRS considers the car counted at the date of service entry. Not everyone will claim the credit.
@ Gary
Your numbers seem way off. I can imagine the full credit going through Sept 30, 2018 if Elon was serious about gaming the deliveries.

greg | 31. Juli 2017

I'd not panic and wait and see where the numbers are at the time when you get asked to configure, as until that point its all theoretical anyway.

Then you can make the call of "do I take whats on offer, or wait for the AWD and chance a lesser [or no] Tax Credit".

Personally I think a RWD with tax credit "Bird in the hand" is worth more than any number of AWDs maybe with some Tax Credit in the wild.

After all, if what we're told is true, demand will tank once the Tax Credit expires, so buy a well configured RWD, and use your Tax Credit up to do so, use the car, until your second Model 3 reservation comes up for configuration.

If your RWD is ok in the snow and whatever keep it, if not, upgrade to AWD then, or the Y or whatever is available.
Meantime you have a Model 3 which is 9/10ths more than the rest of the reservation holders will have.

bj | 01. August 2017

Well as a slightly peeved international customer, I think the Tesla ramp-up and delivery schedule has 100% been determined with the US Federal Tax Credit in mind.

The give-away is that Telsa will not deliver ANY car outside of the US until Q3 2018 - even Canada, which requires no physical changes to the car whatsoever to be legally sold there. If the US tax credit was not an issue, Tesla would be delivering cars to Canada and potentially other markets much sooner.

Tesla will hit the full credit to the max with 100% production in 1H 2018 going to USA. Their logic is maximum revenue raising. Every USA sale in 1H is a sale they might only make if the full credit is available. Every car they ship outside the US in this period pushes a US customer into 2H 2018, halving of the credit, and a potentially cancelled order. The same is not true for the international customer - or at least delay is less likely to lead to cancellation than a Us customer losing a rebate.

Only when the credit halves in 2H 2018 does Tesla begin shipping any cars outside of the US. Each international delivery then pushes 1 US customer into 1H 2019 and a halving of the rebate again from $3750 to $1875. At that point they assume there is less risk of lost USA sales, and also they can only defer international sales for so long without tarnishing their brand.

It makes perfect financial sense. But it doesn't mean I have to like it.

Bighorn | 01. August 2017

If they game the system, they may also divert early cars internationally towards EOQ in order to push the 200,000 threshold into the next quarter. It's not as straightforward as you describe.

ReD eXiLe ms us | 01. August 2017

JFleischood | July 31, 2017
@dsvick - When is it considered you purchased the vehicle (for tax credit purposes)? Is it when you are able to make the $2,500 deposit online and officially order your vehicle? Or when you take actually physical delivery? Or somewhere in between?


According to the IRS, it is when the car is 'aquired' by the taxpayer. That is specifically noted as the transfer of Title in the State where the car is registered. In most cases, this will take place upon Delivery.

"For purposes of the 30D credit, a vehicle is not considered acquired prior to the time when title to the vehicle passes to the taxpayer under state law."

Plug-In Electric Drive Vehicle Credit (IRC 30D)

Bighorn | 01. August 2017

Did the IRS spell it that way--aquired? :)

ReD eXiLe ms us | 01. August 2017

bj wrote, "The give-away is that Telsa will not deliver ANY car outside of the US until Q3 2018 - even Canada, which requires no physical changes to the car whatsoever to be legally sold there."

Well, there are some physical changes, though rather minor, that is why officially a U.S. spec version of the Model S or Model X cannot be imported to Canada. Sure, someone from the U.S. can drive into Canada in their U.S. registered car... But a Canadian cannot cross into the U.S., buy a U.S. spec Model S, then drive it back home and register it there.

Oh, and Bighorn is always right. ;-)

ReD eXiLe ms us | 01. August 2017

Bighorn: I have a tendency to leave out that 'c' from time-to-time. I caught it at one point, but not all of them it seems. Such are the rules of proofreading acquisition. ;-)



I'm pretty sure that ties are not dresses, but I am not a robot.

Bighorn | 01. August 2017

I totally would have let it slide were it not in quotes:)

bj | 01. August 2017

@Bighorn - there is only one threshold to game here, that is the 200k USA sales threshold which triggers the commencement of the rebate phaseout, and for which the consensus is Tesla will hit early Q1 2018. Once that is triggered, the phaseout is fixed in time, there are no longer any volume measures which affect it.

If Telsa are at risk of hitting 200k before 1 Jan 2018, they may stockpile Model 3s, or send all the S's and X's they are building overseas, but they won't send any Model 3s overseas. That is certain.

ReD eXiLe ms us | 01. August 2017

Bighorn: Well, the part with the double quotes was lifted directly from the IRS' website. The part with the single quotes was my own, personal, typographical error. I understand, and appreciate your response. :-D

bernard.holbrook | 01. August 2017

Not quite bj, there is a rebate implication in Ontario, Canada as well. There will be an election next summer (2018) and if the provincial Conservatives get in the 14,000$ Canadian EV rebate is likely to be cut. If it's cut, I won't be buying the Tesla 3 new. Even the basic battery with AWD will be $50K Canadian and that's too much for an electric car with all of its limitations in a northern climate and low population density.

bernard.holbrook | 01. August 2017

Just to clarify, the rebate of 14K in Canadian dollars is only in Ontario. Quebec has a rebate of 8K (Canadian dollars).

ReD eXiLe ms us | 01. August 2017

bj: Thing is...? There are two countries that are adjacent to the United States of America... Canada, and Mexico. Sure, Tesla may not sell any of the Model 3 on opposite sides of the Atlantic and Pacific oceans this year, but they could still ship internationally if they want. And I believe that Bighorn's point was one I have made myself, cars 'in transit' are not counted against the 200,000 unit total in the U.S. Tesla won't have to stockpile cars. I think they could just time it so with about one week to go in this year, they halt Deliveries here of Model 3 alone, and still move as many Model S and Model X as they like.

In 2012 through 2016 Tesla sold approximately 111,096 vehicles (Model S & Model X combined) in the U.S. If combined U.S. Sales of Model S and Model X are as much as 55,000 units this year (it was about 47,000 in 2016), and they Deliver 35,000 of the Model 3 too, that would still total only about ~196,096 units. So, no real 'stockpiling' involved, just hold on to an average of about forty or fifty Model 3 cars per Tesla Store/Gallery site in the last week of this year, then drop them all the first week of 2018. Heck, they might even decide to cut it closer, to within 500 or 1,000 cars as a buffer to ensure the extension of the maximum Federal EV Tax Credit to the end of June 2018.

Once again, the counter is not based upon when the cars are built, but when they are Delivered. Acquisition by changing of Title.

bj | 02. August 2017

@bernard.holbrook - I don't think Tesla cares much about incentives in other countries. Their focus for the next nearly 12 months is 100% USA.

Where I live, EV incentives don't exist so it's a non-issue here.