Tuesday, 17 July, 2018

Tesla to begin phasing out federal tax credit in 2019

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Cecil Davis | 13 July, 2018, 16:55

Both GM and Tesla have been lobbying Congress since past year, hoping to win changes to tax law that would allow them to continue to collect the tax credit, but they have been unsuccessful to date. Additionally, a Bloomberg Businessweek profile outlined several possible safety hazards at Tesla's factory.

The current tax incentive system, created to encourage drivers to purchase electric or electrified vehicles, offers a $7,500 tax credit on new cars, but only up to a limit. As Tesla wrote in an annual report filed with the US Securities and Exchange Committee in February, its customers get the full $7,500.

Farewell, tax credit, we barely knew ye. The tax credit is then reduced by 50 percent every six months until it phases out. The credit will expire for Tesla customers in January 2020.

From Jan. 1 next year, the $7,500 tax credit will drop to $3,750 around midyear, the Tesla website said.

Hundreds of customers are on the waiting list for the lower-priced Model 3 sedan, which becomes available in 2019, and the reduction of the tax credit could impact some buyers' ability to afford the vehicle. The Model 3, which starts at $35,000, was created to broaden Tesla's customer base beyond the luxury segment and accelerate the pace of electric-vehicle adoption.

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For Tesla, speculation in recent weeks about whether Elon Musk's EV maker has or hasn't reached that figure was almost as ripe as whether it would be able to reach the 5,000-per-week Model 3 production target.

Tesla employees told the magazine they were forced to walk through raw sewage that had spilled on the factory floor over fear of causing production delays.

Another production associate, Mikey Catura, said some employees have developed a "zombie-like" stare after drinking large amounts of Red Bull, provided for free by Tesla, in order to make it through the 12- to 16-hour shifts. Today, though, a Tesla spokesperson confirmed to Electrek that it did, indeed, hit the 200,000 delivery point this month.

The full credit is only available while a manufacturer maintains sales below 200,000-which means Tesla hit that sales threshold this month.