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Tax Credits for New Tesla Cars to Become History, as Production Grows

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TeslaOn Thursday, Tesla’s spokesperson confirmed that they have sold 200,000 electric vehicles in the United States. This means that Elon Musk’s company will have another hurdle to cross: the $7,500 tax credit will begin to disappear after this December 31st.

Last year, the Republican-controlled U.S. Congress passed the tax credits in order to lower the cost of electric vehicles and to make them more popular among the masses. They are available for the first 200,000 cars sold by a manufacturer. After that, the tax credit will be reduced by half every 6 months until it phases out.

This means that Tesla, from the beginning of next year until June 30th will have only $3,750 credit. After that, it will be halved again, and it will end next December 31st.

It puts Tesla at a disadvantage, while other manufacturers such as Mercedes-Benz, BMW AG, and Audi Ag will be able to bring their new electric models to the U.S. with full credit next year.

Another company that has the same issue is Gm. It has sold 184,000 full electric or plug-in hybrid vehicles by now. Nissan is next to pass the 200,000-car milestone, with 121,000 Leafs sold in the United States.

Additionally, both GM and Tesla have been trying to affect the policy by lobbying the Congress. They were trying to change it so it will allow them to continue collecting the full tax credit, even after the 200,000 cars are sold. However, by now no success has been seen.

Another solution was presented by Peter Welch, a Democratic representative from Vermont. He proposed changing the 200,000-vehicles threshold to a ten-year limit. Additionally, it would change the incentive from a tax credit you get at the end of the year to an instant rebate.

However, the hope for Tesla is not lost. China has extended its tax rebate program for EVs through 2020. It allows buyers to save 10 percent of the original price when buying an electric vehicle. With Tesla’s new Gigafactory 3 there, they can significantly increase the number of sales on the Chinese market.

[Via Autoblog]

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