Tesla Model 3 production may factor in US tax credits
Once Tesla sells its 200,000th car in America, the federal tax credits it receives per car will end, affecting the retail price, putting pressure on the automaker’s ability to honour the $35,000 price tag for its newly-released Model 3, which already received 325k pre-orders. Given the potentially long delay on Model 3 deliveries (not expected until at least 2017), Model 3 buyers could miss out on the $7.5k tax credit for electric vehicles altogether as Tesla may have already had its full allocation. However, according to Auto News, “eagle-eyed customers and analysts noticed a loophole in the IRS rules for the credit: The $7,500 credit for electric-drive vehicles isn't cut until the end of the quarter after the one in which a company hits its limit of 200,000 cars delivered in the United States. So, the reasoning goes, Tesla could intentionally hit its limit on the first day of a quarter, then deliver a wave of vehicles to American customers over the next six months before the credit begins to disappear.” Elon Musk was asked about this potential loophole on Twitter, and certainly didn’t discount it as a possibility, answering: “We always try to maximize customer happiness even if that means a revenue shortfall in a quarter," and when asked if Model S and Model X may exhaust remaining credits he responded “"Our production ramp plan should enable large numbers of [new customers] to receive the credit."

SAN FRANCISCO -- Tesla Motors, facing a likely shortage of U.S. tax credits for the Model 3, its first mass-market electric vehicle, may consider a clever production strategy to squeeze more money out of the program for its buyers.

But that would add to the logistical challenges for a company that has struggled in the past to deliver products on time.

Tesla said last week that 325,000 people had placed refundable $1,000 deposits on the Model 3, a sedan starting at $35,000 with a range of 215 miles and up, in its first week of orders.

Because of a limit on the number of Tesla customers who can claim a $7,500 federal tax credit on electric-drive vehicles, it seemed some Model 3 buyers would come up empty-handed.

Yet eagle-eyed customers and analysts noticed a loophole in the IRS rules for the credit: The $7,500 credit for electric-drive vehicles isn't cut until the end of the quarter after the one in which a company hits its limit of 200,000 cars delivered in the United States.

So, the reasoning goes, Tesla could intentionally hit its limit on the first day of a quarter, then deliver a wave of vehicles to American customers over the next six months before the credit begins to disappear.

Asked about this gambit on Twitter, Musk seemed to acknowledge it.

"We always try to maximize customer happiness even if that means a revenue shortfall in a quarter," Musk replied in an April 3 post on Twitter.

When asked whether owners of Tesla's Model S sedan and Model X crossover EVs, who go to the front of the reservation queue, would exhaust the remaining credits, Musk added: "Our production ramp plan should enable large numbers of [new customers] to receive the credit."