Some Tesla Model 3 sedans Lose $3,750 Tax Credit in January – Kelley Blue Book

Tesla sells its Model 3 sedan in three trim levels. Every Tesla Model 3 bought between now and Jan. 1, 2024, will qualify for the full $7,500 federal electric car tax rebate. After that date, only the Performance trim will qualify.

The Model 3 rear-wheel drive (RWD) and Model 3 Long Range will get just half the credit.

The Credit Is Changing Next Month

Tesla hasn’t made a change. The federal government has.

Many EVs may lose access to tax credits on Jan. 1 because the law that gives them out changes over time.

Rules in the law govern where cars and batteries are built and where automakers get critical minerals used in battery construction. The law breaks the $7,500 credit into two parts and creates separate restrictions for each to promote jobs and industries in the U.S. or certain trade partners.

Today, China dominates global trade in key electric vehicle (EV) battery components. Congress sought to change that by writing a series of restrictions into the law promoting minerals originating from the U.S. or certain trade partners.

Each of the two sets of restrictions grows tighter in less than four weeks.

That means some cars that qualify today will likely lose access to one or both parts of the tax credit.

But automakers haven’t been able to tell us which cars will be losing credits that day because they’ve been waiting for the federal government to explain how it would enforce the rules.

We Expect This To Happen To Many EVs

The Treasury Department published its plans late last week. Over the remainder of the month, we expect to see most automakers reveal whether their cars will still qualify next year. So far, Chrysler has said its Pacifica plug-in hybrid minivan will still qualify, and Tesla has posted a notice on the Model 3 sales site noting that the credit will be cut in half for some trims.

We’re still waiting to hear about other Tesla models. Pages for its other cars still read “take delivery by December 31 for full $7,500 tax credit.” That notice has been in place for weeks. Tesla doesn’t operate a public relations department or answer reporters’ questions.

Other automakers have promised to get back to us with a list of qualifiers.

Should You Buy Fast?

If you’re in the market for an EV and planning to buy it very soon, you may want to speed up your plans. Buying before Jan. 1 could save you thousands.

If you’re not planning to buy soon, however, you probably shouldn’t make a five- or six-figure decision in a hurry just because of this.

Cars that lose credits on Jan. 1 could regain them at any time.

Automakers are shifting their supply chains regularly to help more cars qualify. If a company worked out new supply contracts for minerals later in the year, the percentage of battery components could change.

And automakers are very motivated to do that. A $7,500 price change could be the difference between a successful model and a flop.

So don’t assume that a car that loses credits on Jan. 1 will never have them again. Patient buyers can probably afford to wait while the global auto industry reshapes its supply chains. We’ll keep you posted on the list of qualifying cars as it evolves.