Tesla hits 200,000 U.S. sales, tax credit phase-out to commence

Elon Musk Is None Too Happy That People Are Laughing At His Submarine

Elon Musk Is None Too Happy That People Are Laughing At His Submarine

But two calendar quarters after a company sells its 200,000th electric vehicle in the USA, the tax credit begins to phase out.

Customers will still be eligible for the full $7,500 credit for vehicles delivered on or before December 31, 2018. The tax credit is then reduced by 50 percent every six months until it phases out.

Until now, for example, Tesla has been focusing Model 3 production on effectively one core variant: the rear-wheel drive, Long Range pack with the premium interior.

The incentives were created to boost electric vehicle sales by giving buyers a tax credit that would bring prices in line with competitive gas cars.

Tesla has delivered 200,000 electric cars to buyers in the United States, a spokesperson said on Thursday, meaning tax credits will now begin to be lowered, while rivals such as Mercedes-Benz, BMW AG and Audi AG will bring electric models to the market with a full tax credit in place.

Each manufacturer is allotted 200,000 credits before the phaseout begins.

With more than 400,000 customers holding deposits on the Tesla Model 3, many of those customers will likely not receive any federal tax credit. So far, the company is only building high-end versions of the Model 3 for significantly higher prices.

Despite this anti-selling, however, Model 3 reservations remained high, with Tesla most recently confirming that it still has a backlog of 420,000 orders for the electric vehicle.

Hundreds of customers are on the waiting list for the lower-priced Model 3 sedan, which becomes available in 2019, and the reduction of the tax credit could impact some buyers' ability to afford the vehicle. Since the vehicle reservations exceeded the company's estimates, Tesla has embarked on an initiative to anti-sell the compact electric auto. Bloomberg's Model 3 production tracker has become more accurate over the past few months, with the system only being 2% off its estimates for Tesla's Q2 figures for the compact electric auto.

GM is still expected to be the next automaker to cross the 200,000 threshold, which could happen later this quarter.

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