No EV Tax Incentive - Deal Breaker For You?

No EV Tax Incentive - Deal Breaker For You?

Forbes has a great write up about how Tesla could maximize the number of people who get tax incentives before they are capped. Even with the stretching it looks like a good number of pre-orders may not get the incentive. [Link spam filtered but search Forbes for Tesla Can Hack The Tax Code To Max Out The Number Of People Who Get $7,500 Back, Here's How]

Curious as to if the lack of the tax incentive would be a deal breaker for anyone? At what point would you say a Model 3 isn't worth the cost?

PhillyGal | April 6, 2016

I'm just one of the 115,000 people who reserved before the unveiling but I will be getting myself a Model 3 regardless of the tax incentive...


My financial situation changes and I end up getting a second S or X - but considering I neither want a car that large nor that expensive, I really need to wait.

MaverickR | April 6, 2016

No. However for me its the cost of base + options. I atleast want AWD and full Autopilot. If that ends up being too high (without the Tax incentive) then I might have to reconsider.

By the way Latimes today came out with an article which suggest that very few early adopters will get the Tax Incentive. Google 'latimes Government subsidies may be gone before most buyers can get a Tesla Model 3"

Hopefully Elon puts some real thought into this.

mb30 | April 6, 2016

I'm buying either way, but i'll probably get less options if i dont get the rebate. I'm getting AWD, Auto Pilot and Supercharging (assuming they charge for it) no matter what. If the credit is still available ill likely move to the next battery pack size.

dsvick | April 6, 2016

Nope, not a deal breaker. I would hope that everyone that ordered late on the 31st or afterwards went into it on the assumption that they wont get the credit.

I saw the LA Times article this morning as well, it didn't seem to take into account the phase out period, nor that Tesla has hinted at scheduling deliveries to maximize the number of people that get the credit. The Forbes article presented a better case, although it could be off significantly if there production estimates or percentage of US orders is off.

PhillyGal | April 6, 2016

The problem with the whole "may get less options" thing (which is my take as well) is that we might not know at the time of configuration who will still be eligible.

But Tesla is very aware and will plan accordingly to deliver as many within the full incentive period as possible.

MaverickR | April 6, 2016

@PhillyGal - Agreed. Not to mention that Tesla will build the heavily optioned cars first.

mb30 | April 6, 2016

@phillygal - that's a good point. Hmm - not sure what i would do then. I guess it depends on when i get asked to configure and how long its been since the first person was asked. It wont be exact, but we can probably make an educated guess as to how many went out. Now if im in the first batch asked to configure im just going to make it the way i want in my predefined budget (45k). Another nice thing for me (and anyone else from NY) is that they just passed into a new rebate for EV purchases. The state will give 2k as a tax credit. So if im lucky enough to get the 7500, i'll be sitting at 9500 in total, which is really nice if you ask me :P

PhillyGal | April 6, 2016

@mb - Same in PA when we got our S. An extra $2,000.
And our electric company gave us $50. It's something!

Shesmyne2 | April 6, 2016

Not a deal breaker.
The tax incentive is a bonus but
I'd get the car either way.

Still Grinning ;-)

adias.angel | April 6, 2016

@mb30 I am very jealous of your NY credit. I'm stuck in Michigan with antiquated dealership laws prohibiting direct sales from Tesla. So I can't even imagine them trying to help companies, even local ones, sell EVs.

lock123 | April 6, 2016

Possibly - depending on the final product. I imagine the car with the limited options I require will come in at 40-42K when I realistically would like to keep the cost to the low to mid 30's.

starke49 | April 6, 2016

Will still buy, but limit options possibly.

Red Sage ca us | April 6, 2016

Elon Musk has been warning people since at least 2013 to not expect a Federal Tax Credit of any kind on Tesla Motors' Generation III vehicles. He knew that the combination of sales limits for the program, plus political pressure to eliminate 'subsidies', and pressure from traditional automobile manufacturers could all lead to it being abolished. That is why he has clearly stated that the starting price would be $35,000 -- without any incentives -- for three years now. So, I don't worry about it at all.

anujasharma19 | April 6, 2016

Might be a deal breaker for me.

I don't have as much money lying around as most tesla buyers. I live in CA, so the state + fed rebates would total $10,000, which would knock the base price down to $25k! I know I won't find a better car for that much money. I can afford a $25-30k car, but it would not be smart to spend $35-40k at this point in my financial life. I could do it, but there are just smarter things I should be doing with my money at this point.

f3rretus | April 6, 2016

Not a deal breaker.

jordanrichard | April 6, 2016

Here is the best way to approach it. Mentally and financially plan on paying $35K + options. If the timing works out and you get the full $7,500, great, you got a bonus. Also and what not many people are mentioning is the credit doesn't go from $7,500 to zero. It phases out over time, starting 6 months after Tesla reaches 200,000 U.S. sales.

MarlonBrown | April 6, 2016

It is likely cost effective regardless the incentive. I had a Mini before replacing with BMW 3. Mini engine went bad 2 months after the factory warranty expired. Maintenance costs cleaning engine before that simply outrageous. I would likely charge Model 3 at work. I expect to elimiate $350/month in fuel costs then and get the Tesla eight year battery warranty unlimited miles(hopefully it will be available).

adias.angel | April 6, 2016

@MarlonBrown I did the same calculation based on my 1 hour commute to work. It figured out to roughly a $2,500 per year in gas costs. So after eight years I have saved $20k with no maintenance if the warranty is the same as the other models. That tax incentive makes it look a whole lot sweeter though.

mntlvr23 | April 6, 2016

Not a deal breaker, but will likely affect the amount of options that I get.

Shopaholic | April 6, 2016

It was nice on the part of the government to give rebates / tax breaks to get new technology's going. There are no incentives except for business use to buy ICEs and that doesn't prevent people from buying cars. I would say the rebate you get for buying an EV is not having to pay for gas!

grantwatson | April 10, 2016

I live in Alberta where there are no rebates or other incentives (provincial or federal). I bought a Model S and have reserved a Model 3. Enough said.

skygraff | April 10, 2016

Getting it no matter what.

I will be putting "car payments" into a dedicated bank account from this summer until delivery to offset any extras and wont' be counting on the incentive even though I was #2 in line to reserve at my store (think the reservation went through first since my guy was a faster typist). If I get the incentive, it'll be an extra bonus which I might turn into a balloon payment the following year since I've gone the past 17 without a car payment; not to mention the higher insurance. | April 10, 2016

Not a deal breaker. The tax credits would be icing on the cake. I am confident we will get more than we paid for.

WormtownKris | April 10, 2016

Not a deal breaker. Based on where I'll be in the queue, I'll probably be in line for the final phase out period ~$1850, but I'm counting on $35k plus options. If I get the tax credit it will be a pleasant bonus.

warren_tran | April 10, 2016

I haven't bought a brand new car for myself since 2003 so I'm getting it regardless. I would able to select more option if i know by the time I config the car whether I'm qualify for the tax incentive.

eandmjep | April 10, 2016

I look at it like this. I have 2 years to save before getting my email to configure my pre-order. I totally expect to have 50% down. Any incentives remaining would just be a bonus. I wont purchase Autopilot at the start unless my driving needs change. I hope larger battery packs are an option. Range will be my target.

bryan | April 10, 2016

Not a deal breaker, but we don't really know all the prices of options and what the base comes with.

Haggy | April 11, 2016

If I weren't entitled to tax credits or incentives, wanted to buy the car, and needed a car, I'd have to compare the car to whatever else I could get for the price. I suspect that I'd still find that it's a good car for the money compared to ICE vehicles in its class. I suppose I could look at something like the Bolt and see that with its tax credits it's much cheaper than the 3. But if I were looking to get what GM is marketing as a crossover, I wouldn't be looking at the Model 3 in the first place. I'd be looking at other crossovers of that size.

teslagiddy | April 11, 2016

Would free hay for life and a free pooper scooper get you to go back to your grandfather's horse and buggy?

Morlandoemtp061383 | April 12, 2016

We should all do what we can to extend the federal tax credit, myself and prashant have petitions out there, please take time to sign them and spread the word to extend them. Our tax dollars should be used to further electric cars, because we have been artificially propping up oil and the icb engine for too long. Electric cars are the future we should do everything in our power to ease this transition until the majority of cars out there are electric or some other non polluting source.

SoFlaModel3 | April 12, 2016

Those planning to purchase this vehicle should do so under the premise that the tax credit is a bonus that you may or may not get. I am getting this car whether my credit is $7,500, $0 or somewhere in between. If the tax credit is the deal breaker than this may not be the car for you.

adias.angel | April 12, 2016

@Morlandoemtp061383 I was so happy to see the petitions out on I wish Tesla would send the link out to everyone who ordered a Model 3. The tax incentive will make EVs available to a wider audience.

Hi_Tech | April 12, 2016

Reserved 2. Getting both no matter what... though, if I'm not getting the tax credit, I may push out one of the two until the Model Y comes out. In short, will not stop me from buying.

Two points to make though:
1. Even without the tax credit, the Model 3 will be a far better vehicle than any others in it's price range;
2. The tax credits are not other people's money given to us for buying... it's our own money we are allowed to keep more off for going EV.

ColoDriver | April 13, 2016

Not a deal breaker for me. My reservation is somewhere near the end of the first 115,000 so I figure there is a small chance of getting all the Federal credit (fingers crossed) and a good chance of getting some of it. The Colorado tax credits carry through 2019 when they begin to phase out so I should be able to receive all of that. Without the tax credits the Model 3 will be a pricey (for me) but manageable car, with both credits it's not too much more than I paid for my current used car 10 years ago.

Roamer@AZ USA | April 13, 2016

No effect on the decision to buy a Tesla.

Ruby110 | April 13, 2016

No effect on decision, only in bank balance. | April 14, 2016

Not at all. I currently lease a BEV to lower my fossil fuel usage. The federal rebate and state check are nice bonuses.

lawrenceatanacio | April 15, 2016

I live in Southern California and got my reservation for 2 model 3's at 9:08am, 17th in line, but with no employee/previous tesla owner. I will buy 2 low upgraded models and give one to family if I get the tax incentives, if I miss the 7.5k, then I will only get 1 and upgrade it.

jschnyderite | April 15, 2016

I wouldn't say that reduced or no rebate is a deal breaker, but having the rebate makes it a no brainer.
If we find out a year down the line that the likelihood is that we'd get no rebate, I'd have to weigh the cost of the M3 vs other cars I'm interested in. Right now we are seeing 2 years in advance what Tesla has in store, but most car companies don’t even let you see 1 year in the future.

If the M3 still makes sense financially when factoring in fuel/maintenance savings, features and overall appeal vs other cars, I’d still buy it without a rebate – though I’ll admit, it would become a tough pill to swallow if many M3 owners get the rebate and I fall outside that due to timing of preorder and/or production delays.

Haggy | April 15, 2016

Another factor is that with the tax credit, there will be more people who will buy the car even though they don't need a new car. Without it, there will be plenty of people who will find it competitive with other cars at the same price and buy it because they like it better.

carlk | April 15, 2016

Apparently it is not for most reservation holders. There are already close to 400,000 of them.

pgraessl | April 16, 2016

I would like to see ₸esla deliver the Model ≡ (after the delivery around the fremont facilty) first to europe untill the production is ramped up to about 150'000 cars per year. After that start delivering in the US and giving so almost everybody in the US the full taxreduction.

Mmmm, i would actualy profit from that. I live in Switzerland in a Canton where we dont have any rebates on EV's, but having the Model S leading the Countrys luxury car segment. It would be great to have a Model ≡ that early delivered ;-)

Haggy | April 16, 2016

Tesla wants to start with local deliveries for a good reason. That way they can make mine first, and have me come back in a few weeks so they can fix what they hadn't yet figured out. It would be far easier than getting a car back from Switzerland.

melinda.v | April 16, 2016

I would buy without the tax credit, but with it would not fee so bad about adding extras to it's cost :)

TaoJones | April 16, 2016

It's worth noting that half of the US population pays zero federal income tax, and is therefore ineligible for the federal tax credit, whether in whole, halved, or quartered.

As for the other half, well, some funny things became evident during that initial flurry of reservations. I have a friend with a large family. She signed up on day 1, and found out later that 2 or 3 other family members had also signed up online within the first week. At least 1 of those family members had no idea that a federal tax credit (or the state rebate, or the state agency-sanctioned free HOV/carpool lane usage) was available. They just liked the idea of having a car in the garage that didn't need gas ever, and probably didn't mind the fact that they would never have to mess around with oil changes, transmission service, smog testing, and so forth either. That, and they liked how the car looked.

On day 1, I schlepped myself from the coast to Palm Desert to wait in line for a few hours. It was worth it as I was in and out of the store in a few minutes after 10am. The vaguely amusing part is that I don't even want a Model 3. I like what I have (late 2014 Model S AP), except for the fact that I'll probably end up selling it in June/July after 18 months of ownership at 50,000 miles driven due specifically to the anemic ESA (not to mention the lack of one for miles 100,001-150,000), and the inconsistent nickel and diming that has become evident as part of the Service experience these days. (stellar service experiences and abhorrent service experiences with no rhyme or reason as to what you'll get next do not confidence build).

I just figured the reservation was worth having in case I decided that I wanted a Model 3, since signing up on day one was the only way to ensure the full tax credit *and* delivery within the first 6 months of production regardless of optioning, as a California owner. I'm within the first 25,000 reservations after employees, probably, and it's reasonable that they'll get 25,000 cars out in the first 6 months. I don't know that I'll want one of the first ones :), but that's neither here nor there.

One thing's for sure - Elon and company (literally) are going to deserve all the credit they get for delivering this car, and the supercharging and service networks and gigafactories plural and manufacturing and assembly factories to support it globally.

As a TSLA investor (with no inside information whatsoever), I would suggest laying hands upon a few shares for the long term, as your circumstances allow, *before* the 2nd reveal event.

dalesmith1962 | April 16, 2016

Not a deal breaker.

Haggy | April 17, 2016

Although half of all car buyers might not pay federal income taxes, there are more used car sales than there are new car sales. Otherwise, it would mean that most cars on the road would get replaced each year. But it's not even close. There are no tax credits for a used EV. It might take a while before people can even find a used Model 3. But there are people who will buy a used Model S even though they might have otherwise bought a new car for less money. The advantage of buying a used Tesla is that the tax credit keeps the price down. If I want to sell a used Model S where I am, the price will drop over $10,000 from what I paid as soon as I drive it away after paying for it. People compare used car prices to the effective cost of a new car. So even those who get used cars have the tax credits factored into the price.

With the Model 3, there could be people who buy the car, get the rebates and credits, and sell the car for more than it cost them after taxes. A person could sell it as a used car, meaning it gets used in between the time the person buys it and sells it. Acting as a middleman would be illegal, so there would have to be at least some personal use. A person couldn't buy it with the intent of flipping it, but I expect that there will be some who have the name of a parent or uncle on the title as a second owner, so somebody can claim the credit.