Tesla has updated their website to show that all variants of the Model 3 now qualify for the full $7,500 tax credit in the US. This change now makes the entry-level Model 3 even more appealing to buyers as it is now priced below $30,000 in some states when combined with local incentives.
According to the ‘Electric Vehicle & Solar Incentives’ support page on Tesla’s website, the Model 3 Rear-Wheel Drive (RWD) and Long Range variants are eligible for a tax credit up to $7,500. Despite the website saying this is effective as of April 18, 2023, this is actually not true as the these two variants used to only be eligible for up to half of the tax credit, or $3,750.
To make sure all buyers are aware of this change, Tesla has also updated the Design Studio with a new message that reads “All new Model 3 vehicles qualify for a federal tax credit for eligible buyers.” (h/t: @SawyerMerritt)
As pointed out by Sawyer Merritt on Twitter, Colorado buyers can now get the Model 3 RWD for just $27,740 after the state recently introduced a new $5,000 EV tax credit.
Tesla has not explained why these two variants of the Model 3 now qualify for the full tax credit. Previously they were only eligible for half of the incentive as the batteries were assembled in China. Presumably Tesla has been able to shift their supply chain so as to build all Model 3 vehicles at Fremont to now meet the requirements for the full tax credit. This would mean at least 50% of the value of the battery components are produced or manufactured in North America in the fiscal year 2023, and at least 40% of the value of critical minerals used for the vehicle, including cobalt, copper, nickel, graphite, and lithium, are extracted, processed, and/or recycled domestically or in a country with which the U.S. has a free trade agreement.
Tesla may have been able to do this and shift their supply chain because of a change north of the border in Canada. Tesla is now exporting the Model 3 RWD, Model 3 Long Range, Model Y RWD, Model Y Long Range, and Model Y Performance from China, where no similar rules around battery sourcing exist, meaning imported vehicles still qualify for the $5,000 federal incentive in Canada.