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A federal tax credit funded through the Inflation Reduction Act can currently shave up to $7,500 off the price of Tesla\u2019s Model 3, but that\u2019s about to drop in half. The tax credit will fall to $3,750 by January 1st, 2024 for the Model 3 Rear-Wheel Drive and Model 3 Long Range, the company warned. <\/p>\n<\/div>\n
Elon Musk\u2019s company made the announcement via a banner on Tesla\u2019s website, TechCrunch<\/em><\/a> reports. Starting at around $36,000, the Model 3 comes with the lowest cost of any Tesla vehicle. Now, Tesla says the full tax credit will only be available to deliveries made through December. <\/p>\n<\/div>\n Why? It looks like Tesla will be unable to meet sourcing requirements under the Inflation Reduction Act (IRA). That might also affect tax credits for the Model Y and Model X next year. <\/p>\n<\/div>\n Starting next year, \u201can eligible clean vehicle may not contain any battery components that are manufactured or assembled by a [foreign entity of concern] FEOC,\u201d the new guidance says. The Department of Energy says<\/a> FEOCs include entities \u201cowned by, controlled by, or subject to the jurisdiction or direction of\u201d governments including China, Russia, North Korea, and Iran. <\/p>\n<\/div>\n Tesla has another motivation to warn customers about the diminished tax credit: end-of-year sales. The company traditionally tries to get as many cars out the door as it can before the new year in a push to meet its delivery targets. This year, Tesla has said it expects to sell 1.8 million vehicles. <\/p>\n<\/div>\n