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Sunday, May 13, 2018

When Will The Federal Tax Credit For Tesla End? [April 2018 Update]

We've had an ongoing series here to track the US sales of Tesla cars to determine when they'll hit the 200,000 mark. This is an important sale for the US EV Tax Credit and it looks like this milestone sale will be happening within the next few months.

The April sales numbers (as estimated by the InsideEVs scorecard), have been added to our chart below.
As you can see, our trendline predicts that the 200,000th sale will occur early in July of this year. If this is when the milestone sale occurs, what will it mean for the incentive?

How Long Will The Incentive Last?

The tax incentive does not stop as soon as the 200,000th car is sold. Instead, the 200k sale starts a phase-out period. The incentive stays in full effect for the rest of the quarter with the 200k sale and for the next quarter. Then the incentive is at 50% for 6 months and then 25% for 6 months.

Possible US Incentive Phase Out Scenario for Tesla
So, if you want to buy a Tesla and receive the full $7500 federal tax credit (assuming you qualify), then (if this prediction is correct) you need to take delivery of your Tesla this year.

Earlier Predictions

In January of 2017, our model predicted that Tesla would sell their 200,000th US vehicle in April of 2018. April has come and gone and the model was too optimistic. Ironically, our prediction was considered pessimistic compared to the other predictions made at this time. Remember, the Model 3 had not yet started production and Musk was making ambitious promises.

By October 2017, it was clear that Model 3 production was not off to a flying start. The car that was designed to be easier to build than any previous Tesla, had plunged the company into "production hell" and accordingly our model had moved the milestone 200k vehicle to June of 2018.

As the rest of 2017 ticked by, our model kept the milestone delivery in solidly in June. By February 2018, it seemed clear that Tesla could hit the milestone in late Q2, but doing so would be a bad idea. First, hitting the incentive late in a quarter hastens the phase-out, but more importantly, it would mean that the full incentive would not be in effect for Q4 2018. If production continues to grow, Tesla could deliver more than 100,000 cars in the last 3 months of this year. That is 100,000 people that would be disappointed not to receive the full tax credit. So, how do you continue to ramp production, while also delaying the 200k US delivery? Send cars to Canada. Which is precisely what Tesla has begun to do.