Biden gives Americans a financial incentive to not buy a tesla

EV credit 2024

Starting in 2024, the U.S. government will enforce updated Federal Tax Credit guidelines for electric vehicles (EVs), a move that has sparked backlash and speculation about the Biden administration’s motives, as the change affects one of the most popular models from the best-selling EV maker in the U.S.

Under the revised provisions of the Inflation Reduction Act, the eligibility criteria for the coveted $7,500 point-of-sale tax credit will tighten, effectively sidelining popular models like Tesla‘s Model 3 Rear Wheel Drive and the Model 3 Long Range. Amid a flurry of tweets, Tesla enthusiasts are questioning whether the changes are part of a broader strategy to curb Tesla’s market dominance in the EV market, which currently stands at 53.79 percent.

Tesla leads the electric vehicle market in the U.S., commanding over half of total EV sales, as illustrated in this breakdown by brand. The graph highlights the contrast between Tesla’s market share and that of its closest competitors.

The U.S. Department of the Treasury and the Internal Revenue Service, earlier this month, released new guidelines aimed at invigorating domestic manufacturing and fortifying supply chains against foreign entities of concern which include Russia, North Korea, China, and Iran. According to Secretary Janet L. Yellen, the Inflation Reduction Act heralds a new era of American manufacturing prowess, with nearly $100 billion in clean vehicle investments since its enactment.

Yet, starting on January 1, 2024, clean vehicles with battery components or critical minerals linked to foreign entities of concern like China will no longer be eligible for the full tax credit.

The bar graph illustrates Tesla’s sales performance per quarter, showing the dominance of the Model 3 and Model Y, which significantly outpace the sales of Models S and X.

Tesla’s Model 3 Rear Wheel Drive and the Model 3 Long Range will no longer qualify for the tax credit in 2024 due to their reliance on certain Chinese-made batteries. Tesla’s website acknowledged the shift, urging customers to complete purchases by the end of 2023 to benefit from the full tax credit.

Newsweek has reached out to the White House and Tesla via email for comment.

The reaction on social media was swift, with prominent Tesla investor Sawyer Merritt highlighting the abrupt end to the Model 3’s tax credit eligibility on the X platform, formerly known as Twitter. “Tesla has received updated guidance from the IRS. The Model 3 RWD & Long Range will lose the ENTIRE $7,500 Federal EV credit starting January 1, 2024.” The investor continued, “Tesla previously thought the EV credit for those trims would be cut to $3,750, but now their interpretation is $0. Take delivery by Dec 31 for full tax credit.”

Subsequent tweets have ignited a debate, with accusations of the Biden administration’s bias against Tesla and Elon Musk. “So what you’re saying is… when the legacy auto manufacturers for whom these credits were meant to benefit all scale back their EV ambitions, the administration changed the rules to make sure Tesla loses the benefit,” one X user said. “Seems like a vendetta against Elon,” another replied.

Another user highlighted the perceived lack of support for Tesla, saying, “America’s most domestically-based manufacturer receives zero help from the government.”

The relationship between President Biden and Elon Musk has been nothing short of turbulent, users on X say. Despite a recent moment of accord earlier this year concerning Tesla’s commitment to expanding its charging network, there has been a history of mutual jabs and overt omissions from EV summits which point to a dynamic between the President and the richest man in the world.

The impending revisions to the EV tax credit system have implications for Tesla’s market share and consumer choices, rendering the affected Tesla models effectively $7,500 more expensive on January 1, 2024, compared to their price on December 31, 2023.