Tesla confirms US tax credit will be halved for Model 3 RWD and LR in 2024

Tesla has confirmed on its website that both the Model 3 Rear-Wheel Drive (RWD) and Long Range (LR) variants will no longer be eligible for the full amount of the US federal tax credit starting on January 1, 2024.

Back in June Tesla’s website only warned that a reduction in the tax credits for the Model 3 were likely, without stating which variants. A few months later the website was updated again to clarify that it was expected to be halved from $7,500 to $3,750, but again without specifying which variants.

In an update to the Design Studio on Friday, Tesla’s online configurator now states that the tax credit for both variants of the Model 3 will be reduced to $3,750 next year. Tesla says to take delivery before the end of the year to ensure receiving the full credit. (h/t: @SawyerMerritt)

“All new Model 3 vehicles currently qualify for a federal tax credit for eligible buyers. $7,500 tax credit will reduce to $3,750 for Model 3 Rear-Wheel Drive and Model 3 Long Range on Jan 1, 2024. Take delivery by Dec 31 for full tax credit,” Tesla says on the configurator.

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Credit: Tesla

As you can see the old message also stated the final decision was pending federal guidance, and that federal guidance arrived last week, leading to Tesla updating their website. The Biden administration will now restrict electric vehicle (EV) buyers from receiving the full tax credit if they buy cars with battery materials sourced from countries deemed unfriendly or hostile to the United States, including China. Based on the message it appears as though the Model 3 Performance will retains its full $7,500 tax credit for eligible buyers. No similar message has been added to the Model Y configurator in the US.

Another change coming in 2024 for US buyers is that the tax credit will be moving to the point of purchase. This is a significant change as currently EV buyers have to wait to file their taxes to claim the credit.

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