How is the tax credit going to affect your decision?

How is the tax credit going to affect your decision?

Lot's of talk on here about the tax credit. How much will this factor into your decision of which model to get?
Right now it looks as if all/most early US reservations will get the full tax credit whether they choose the early production LD w/Premium package or the SD with any package. This is based on US delivery #200K not happening until at least Jan 1 and the full tax credit being available for any car delivered through June 30, 2018.
Personally I am on the fence here. If I knew that I would get 100% of the tax credit I might hold out for the AWD version. I don't think I really need it here in the D.C. area for weather but (to me) it would help with a little range as I drive a lot, resale value, and Tesla would have more Model 3 production under its belt to work out any bugs. Also, hopefully by May/June there would be a few more options available like a tan/cream interior as well.
For the people that made later reservations the choice may be get the LD with full credit or SD with only half. This may be a harder decision for some as the difference is $5250 in pricing of the car with tax credit (I know you don't get it when you purchase) without any options or packages. ($44K car with $7500 tax credit vs $35K car with $3750 tax credit).
What do you all think?

dsvick | 25. August 2017

I'd like to get AWD, but it would likely mean only half the tax credit if I do. I don't "need" the tax credit but it is certainly nice so I'll wait and see if pricing for AWD comes out before I need to decide and I'll go from there. If it's cheap enough I'll give up half the credit and wait on AWD.

Vikman | 25. August 2017

I'm in the same boat as dsvick but leaning towards AWD regardless.

r.beeshaw | 25. August 2017

I'm in Ontario, Canada and my purchase will be entirely dependant on the $14k incentive. I'm REALLY hoping that it will stick around until late 2018 when we are slated to get our Model 3's up here. I

dyefrog | 25. August 2017

I'm thinking more and more that Tesla will provide some sort of incentive to soften the impact of the diminishing tax credit. It's certainly not necessary as the backlog of orders is still beyond their capacity but as the economies of scale kick in, it may be financially feasible to supplement the base offerings with a graduated level of features as it winds down. As the first level kicks in, something valued at $3k and then at the next level, another $2k and finally another $2k when it's depleted. One can always hope.

ron369 | 25. August 2017

It will definitely affect my decision, but I am waiting a while before even thinking about it. By the time that I am invited to make my final choice, it should be clearer when the tax credit will start phasing out, and how long it will take to get the various models of the car. I reserved "late" on 4/7/2016, so my window is Feb-Apr for the long range, and further out for the others.

AJPHL | 25. August 2017

I'm keen to maximize the tax credit. The 3 is intended to be a secondary vehicle replacing a Hyundai Elantra, with the primary vehicle being a $40K Mercedes that adjusted for inflation would be around $43K today. Philosophically I need to keep the 3 below what I paid for the Mercedes else it's not a secondary vehicle. To be considered the primary vehicle it needs both AWD and LR, yet AWD isn't available until Q3 at the earliest, so I'd be giving up several $K of credit just so the 3 could have primary vehicle status. Keeping the 3 as secondary makes room to replace the Mercedes with a Y in a few years. The decision now will be whether to spend $9K to add LR to a secondary vehicle.

GATSLA | 25. August 2017

Good post above @ TheChad. The $7,500 is a very important factor for me. I am in the Jan-March window. The question for me is whether I get the extended battery earlier or wait for the regular battery which is in the April-June window. I don't really need the extended battery, but may get the extended battery so I get the car sooner and guarantee or increase my likelihood of the rebate. Plus it does not hurt to have the extra range just in case. I think that extra $9,000 for the extended battery is high, but the tax rebate makes it more palatable to me.

bmz | 25. August 2017

@TheChad: "This may be a harder decision for some as the difference is $5250 in pricing of the car with tax credit (I know you don't get it when you purchase) without any options or packages. ($44K car with $7500 tax credit vs $35K car with $3750 tax credit).
Don't forget the cheapest early delivery M3 costs $49,000 not $44,000.

TheChad | 25. August 2017

@bmz- that is why I said without any options or packages. It is also assumed that once Tesla starts producing the SD version you will be able to get the LD version without premium package. Those dates are Q1-Q2 2018 so still within the full tax credit date range assumption.

carlk | 25. August 2017

Nothing. I'm going to wait for the performance model and will likely waste my current owner slot and tax credit. On the other hand people who waited will probably partially compensated by added or improved features in the future. Not necessarily like some say designed to soften the impact but that's how Tesla does things anyway. Elon famously has said you've bought the wrong car if you don't expect Tesla to make significant improvement every 12 to 18 months.

rxlawdude | 25. August 2017

Not a deciding factor for me, but since we are very excited to be near the front of the line, getting an early M3 is the cake; the tax rebate is frosting.

carlk | 25. August 2017

@AJPHL You must be kidding yourself. I can't imagine that you will take the Merc instead of the Tesla when you get into the garage. You've heard people let their Porsche to collect dust after they got the Model S haven't you? I'm one of those people.

ölbrenner | 25. August 2017

Getting the full tax credit is a go/no go decider for me. It gets me into an EV that costs $5-$10k more than I would normally spend on any car (EV or ICE), and it's an immediate depreciation buffer.

Also since some are calling it a rebate, it's a US federal tax credit (and depending on timing and your personal tax situation, will be worth anywhere from $0 to $7500 to you). A rebate is something every person would get in full, which is not the case here.

jefjes | 25. August 2017

The tax credit will only affect the timing of when I order the EAP. If I get the credit, I'll order EAP as soon as the credit is realized in my bank account and if I don't, I'll order EAP when I save up an additional $6k to pay for it.

prsist | 25. August 2017

Tax credit is icing on the cake for me. I'm getting the car with or without the federal tax credit.

rxlawdude | 25. August 2017

@olbrenner, point taken. But the definition of rebate is: a partial refund to someone who has paid too much money for tax, rent, or a utility. Therefore, while it is a tax credit, it effectively is a REBATE to those with tax liabilities that are offset by the credit.

PhillyGal | 25. August 2017

Whatever the case, I hope that Tesla is very clear and transparent (as much as they can be) about when they hit the 200,000 mark and when, realistically, people in the US who have a reservation can expect their car by options.

My hope is that they hit it after 1/1/18 and that by then, they have a clearer estimate of when people should get their cars so that it's a not a 3 month window. I might not get the last part of that wish so soon though, as the backlog is so long.

PhillyGal | 25. August 2017

Actually, backlog isn't the issue. How long/hard the production ramp will be is the problem making it impossible to give a smaller window.

roadkill | 25. August 2017

Tax credit is everything to me. Can afford the car without it, just can't justify it.

ölbrenner | 25. August 2017

@rxlawdude, counterpoint taken, but respectfully disagree.

Anyways back to the normally scheduled thread.

dd.micsol | 25. August 2017

tax incentives has nothing to do with my purchases. It's the blood oil that does.

bmalloy0 | 25. August 2017

Not even a little. I make so little a year that I would barely be able to claim all of the 1/4 credit. The only reason I can afford the 3 is because I've had very little in the way of bills and have managed to save up enough to get monthly payments down low

Garyeop | 25. August 2017

I was late to the party, so I plan to take the first offer, wait a year, then possibly sell it to upgrade to AWD.

Carl Thompson | 25. August 2017

"Getting the full tax credit is ... an immediate depreciation buffer."

Normally it isn't. When you go to sell your used car people know you got that rebate and they take it off of what they offer in addition to normal depreciation. They're not going to give you credit for spending money to buy the car they know you didn't pay. If your car cost $37,500 with the credit used car buyers look at it as a $30,000 car because they know they they could just buy it themselves with the credit or they can buy it used from someone else who won't charge them for money they didn't actually spend.

However, it may be different for the Model 3 for a couple of reasons depending on when you sell.

First if you sell early demand for the Model 3 is bound to be very high for the first year or so and I'd expect upward price pressure due to demand outstripping supply to more than make up for normal depreciation and more.

If you sell late it's possible that if Tesla has already run out of the credits at that time then buyers will know that they would need to pay that $7,500 if they were to buy the car themselves. So they may be willing in that circumstance be willing to give you credit for some of it even though they know _you_ didn't actually pay it.


batmanasb | 25. August 2017

Pretty sure I'm hovering somewhere between Q1 and Q2 for the First Production and Q4 for AWD. I would 100% get the AWD if the tax incentive wasn't there, but at is stands, AWD would technically cost me 7.5k + whatever the AWD option costs (I'm guessing somewhere between 5k and 10k, so ~7.5k). Which means AWD is effectively double the price! So I just can't justify paying double the price for a feature I can probably live without. IIRC, snow has sadly become nearly non-existent around the DC area. This realization is pretty hard on me too since I strongly believe in future proofing every big investment I make, but this time I'm hoping that skimping out on AWD doesn't end up biting me in the ass several years from now. But I'm thinking I could always invest in another EV by then, and give the self driving M3 to my parents as a gift and a way to keep them safe.

M3forMe | 25. August 2017

The tax credit is icing on the cake for me. But it will help to pay for the Autopilot. I will get the base car no matter what.

autoxer7 | 25. August 2017

I'm in WA state and waiting until 2018 Q3 to get AWD I'd most likely sacrifice about $7k in federal and state tax incentives. Add in the actual cost of AWD and it becomes a $12k option. I think I'll end up getting a car from the first production run and then consider trading it in after a year for a D.

kaffine | 25. August 2017

The tax credit will be nice but the biggest driver on what I get will be how fast can I get the car.

I finally convinced myself to get AWD instead of RWD then the estimated delivery dates got posted. Waiting another year for a new car is out of the question at this point. So I will get RWD with LR and PUP. I need the LR and PUP has some features I want.

The tax credit will help pay for some of the aftermarket upgrades such as PPF and upgrading the power to my garage/house.

ReD eXiLe ms us | 26. August 2017

PhillyGal: Oops... There goes that 'realistically' word again... ;-)

Just figure that any Tesla Model 3 that is Delivered after June 30, 2018 has no hope of receiving the full benefit of the $7,500 Federal EV Tax Credit as an incentive to buy.

Alvin27 | 26. August 2017

Without the tax credit?

There would be no rush to replace my current vehicle. I would probably get fewer pricey options. I would consider waiting for the model Y.

noleaf4me | 26. August 2017

No need for AWD in ATL -- frankly more that can go wrong as the drive system has to go through a CV joint up front which do not last as long as drives on wheels that do not steer. Also less Frunk room. Not sure how much added performance you will get either as the MS difference between the RWD and AWD is minimal

AJPHL | 26. August 2017

@Carl Thompson how are used buyers 3, 5 years down the line going to know whether I got the tax credit?

KP in NPT | 26. August 2017

yeah @Carl Thompson that is not true. For instance, KBB does not consider tax credit when making an evaluation, and used car sales whether trade ins or private go by KBB. That also has not been the case with S/X values.

bj | 26. August 2017

All I know is that the US tax credit is, rightly or wrongly, delaying the first international deliveries by a significant period of time. An example of a tax rule distorting business decisions. I doubt Tesla would delay that long if this was not a consideration.

Australia has essentially no incentives for buying or owning an EV whatsoever. Some states have very minor incentives like reduced registration fees but that's about it. In my state there is nothing. Mind you this does have upside - the small number of libertarians here grind their teeth because they can't accuse Tesla of being successful locally due to socialist taxpayer subsidies and that really irritates them because it defies the narrative.

Anyway, financially it makes do difference whether I get my Model 3 next week or in 18 months time. However the tax situation in the USA means I get my Model 3 in 18 months time.

RichardKJ | 26. August 2017

Just to muddy the water in California... There's a measure that has passed committees in both houses of the legislature to increase incentives so that the consumer price of an EV is about the same as an "equivalent" ICE. This would include increasing the incentive to account for decreasing federal incentives (the Tesla provision). Who knows whether/when this will happen, but it is apparently more than a pipe dream.

Steam613 | 26. August 2017

Little effect. I would be getting the 310 mile premium interior no matter if it was last. I was holding for the AWD version until reading some of the threads on this forum. I am thankful what I want is also first production. I may get a premium paint rationalizing the rebate to do so. But I'll be paying cash for this car. I have been saving years for it, not knowing 'IT" was going to be the Tesla M3.

Haggy | 27. August 2017

"Normally it isn't. When you go to sell your used car, people know you got that rebate and they take it off of what they offer in addition to normal depreciation."

It won't matter whether or not I got the credit, and if somebody got the same car six months later, it had the same features, was considered the same model, had the same mileage, nobody would pay a $7500 premium because that person didn't get the credit.

In reality, people who would buy a Tesla know that I got $10,000 in incentives. But what's relevant is that they could also get $10,000 in incentives on a new car, so if they wanted to buy a barely used one, negotiations would start off $10,000 lower once the car is out the door. If I sold it immediately, I wouldn't even be entitled to the federal tax credit or the state rebate, but somebody buying the car won't care. What matters is that the buyer could get it on a new car and whether I got it would be irrelevant.

Once incentives are gone, it will come down to getting a new car with no tax credit or getting a used one. If I sell one in perfect condition for $5000 less than a new one, nobody is going to say that I should sell it for even less because I got a $7500 credit. People will see that they can get the same car from me for $5000 less. If they want me to drop the price another $2500 and a bit more for depreciation, they can ask. But I can say "sorry but somebody else just bought it."

I expect used prices to increase once the incentives go away.

Carl Thompson | 27. August 2017

"In reality, people who would buy a Tesla know that I got $10,000 in incentives. But what's relevant is that they could also get $10,000 in incentives on a new car, so if they wanted to buy a barely used one, negotiations would start off $10,000 lower once the car is out the door. If I sold it immediately, I wouldn't even be entitled to the federal tax credit or the state rebate, but somebody buying the car won't care. What matters is that the buyer could get it on a new car and whether I got it would be irrelevant."

Thanks, you stated it better than I did. There will also presumably be other people selling their used cars who got the credit who won't try to charge used car buyers for money they didn't spend. And smart buyers will as you say factor the existence of the rebate in to what they are willing to offer for a car. So, no, I don't think the rebate is a hedge against depreciation. Depending on how you look at it you could say the rebate _increases_ depreciation as because of it a used car won't be worth as much as it would without it.


ReD eXiLe ms us | 28. August 2017

bj: Tesla already accelerated the Model 3 Production schedule. That is why some people were able to take Delivery at the end of July 2017. With the Model S, the first right hand drive territories to take Delivery did so per Wikipedia, "The right-hand-drive model was released in the UK in June 2014, followed by Hong Kong in July 2014 and Japan in September 2014. Deliveries in Australia began in December 2014." That is respectively, 24, 25, 27, and 30 months after Model S left hand drive Deliveries to the U.S. began. Remember, a year ago, many were predicting that even U.S. Deliveries of the Model 3 might not take place until December 2017 (not to mention how Tesla Naysayers were claiming it would either: 1) Never come out; or 2) Not see the light of day until 2019 or 2020. So, if you are invited to configure by July 2018, place your order, the car is shipped, and you receive it prior to October 2018, you are well ahead of the curve compared to your compatriots who first ordered the Model S. Thus, your Delivery has not been 'delayed' at all, but Expedited instead. And, if Tesla is able to reach 10,000 units per week of Production prior to the end of Q2 2018, you might get your car even sooner.


Haggy is correct.

andy.connor.e | 28. August 2017

Im going into this as if there is no tax credit. If i know i can afford this car without the tax credit, then anything i do get is a bonus. And specifically, if i get any tax credit, all that is going in a lockbox for full autonomy whenever that gets released and approved in my state.

LA-Fohlen | 28. August 2017

For me it comes down to what I need vs what I can afford. Tax credit helps but is not the only factor. If I just calculate the first prod release $49,000 - $7,500 full tax credit vs regular range $35,000 - $3,750 the normal range comes still at a $10k lower costs. So then it depends, do you really need the long range and the premium package? If not you may want to skip the full tax credit and still end up with a lot cheaper car.

andy.connor.e | 28. August 2017

Theres ways to look at it. With that standing, if you wanted the range but didnt want to wait for the long range without PUP, the tax credit would essentially give you the PUP for free + another $2.5k. For the people who want to keep this car for a Long time (10+ years), "decking it out" (if you will) might help keep the cars ability to remain significant, and not fall obsolete in the next 8 years when other car companies start pumping out EVs. (higher trade in value?)

LA-Fohlen | 28. August 2017

if you consider that you go from $7,500 tax credit to 0 then you're correct but since it is reduced over time it might still be slightly more expensive. Now, a $1,250 for the PUP if you consider $7,500 tax credit on the $49k car vs $3,750 tax credit on the LR without PUP is rather small. Considering that we don't even know how the Tesla configuration would look like, maybe the LR will still only be available with PUP after standard range becomes available, I would not take the chance of waiting. In this case tax credit becomes important.

rcobbjr | 28. August 2017

@LA-F "If I just calculate the first prod release $49,000 - $7,500 full tax credit vs regular range $35,000 - $3,750 the normal range comes still at a $10k lower costs."

I agree with this logic and I'm struggling with the LR vs the regular. I do want the PUP but I don't think I really need the LR. Are you of the strong belief that the tax credit will be gone and / or reduced before end of Q2 2018? I think if I can hold out until then and still get the full credit then the regular w/ PUP is the better of the two.

dberto | 28. August 2017

@r.beeshaw Being in Ontario, Canada the two biggest factors are the tax credit from the Provincial government and the exchange rate on the dollar. Currently the Cdn $ is $0.80USD so that adds 25% to the price. The stronger the Canadian dollar gets the better for us. As far as the tax credit, we are having a provincial election in June 2018 and the credit will probably be abolished if the ruling party does not form the government, which is likely the case. If the delivery date is late 2018 that is in real jeopardy. If the tax credit goes away and the dollar is weak I don't think I can justify the cost. Are there any other Canadian reservation holders thinking the same? | 28. August 2017

The tax credit is just gravy for me. I've been driving EVs for four years in an effort to lower my carbon footprint. Tax credits and rebates are nice, but not important in my decision to drive electric.

cowboys5 | 28. August 2017

dberto: I'm also from Ontario and my thinking is the same as yours. Not that concerned with the dollar fluctuation as I priced it based on 75 cent dollars, but the $14,000 provincial subsidy is huge for me.

LA-Fohlen | 28. August 2017

@ rcobbjr I can't say I strongly believe in this timeline. I follow just what some of the other forum members as well as Youtubers say. Also, the has the sales numbers for the US listed and until the end of July there are still just over 65,000 cars before Tesla would hit the magic 200k. I assume that when the sales numbers getting updated by the end of this week into next week this will tell us a bit more. Right now, I would think it looks like the limit for Tesla will be reached in Q1 2018.

rcobbjr | 29. August 2017


Musk has suggested a 20,000-per-month production rate for Tesla by the end of the year, but even at a more modest rate it would hit that ceiling in the first quarter of 2018. Tesla Model S-3-X Reaching the sales mark triggers a phase-out period in which, two calendar quarters later, buyers can still claim 50 percent of the credit for two quarters, and then 25 percent for vehicles delivered for two quarters after that. So with the timeline experts anticipate, a $7500 tax credit will apply to Tesla models delivered by September, then a $3750 credit would apply through 2018, followed by an $1875 credit for the first half of 2019. Tesla vehicles wouldn’t be eligible for the credit at all after that.

Am I reading this correctly that if and I know its an "if" the 200k is hit in the Q1 2018 then the "full $7500" goes for two more quarters? I thought it went through just the next full quarter? then decreases to 1/2 for a quarter etc.? If this is correct its a little better of a picture.

andy.connor.e | 29. August 2017

You make a good point. For me, the tax credit is going to affect which options i get. Because "not getting the car" is not an option for me lol.