Electric car manufacturer Tesla (NASDAQ: TSLA) does not report how other automakers generate monthly sales in the US, and believes industry watchers are revising the numbers. This has in the past made it difficult to figure out when the company will reach 200,000 units in US sales, the key threshold that triggers the $ 7,500 federal tax credit that is available to electric car buyers.

Tesla has only quietly confirmed that it will be 200,000. Electric vehicle delivered in the US

White model 3 beside a mountain

Model 3. Image source: Tesla.

The exit begins

Tesla has now updated its support page describing incentives in the US, noting that the full $ 7,500 balance is available for the remainder of 2018. As currently structured, full credit is available for the quarter in which the 200,000th qualifying vehicle is delivered. as well as the following quarter. For the next two quarters, 50% of the loan will be available, followed by 25% of the loan for the two quarters thereafter.

Federal tax credit

For delivered vehicles

$ 7,500

On or before December 31, 2018

$ 3,750

January 1 to June 30, 2019

$ 1,875

1st of July to 31st of December 2019

Data source: Tesla.

As the company only sells electric vehicles, Tesla is the first automaker to reach the 200,000 threshold Nissan and General Motors are not too far behind. It is worth noting that many states offer various incentives in addition to the federal loan, and that GM is currently lobbying to expand or expand the loans.

There was speculation that Tesla was strategically delaying some shipments to push the 200,000 threshold. CEO Elon Musk tweeted in 2016 that the company would try to help as many people as possible to get the loan.

The company reported a remarkably high number of transit vehicles at the end of the second quarter consisting of nearly 3,900 Model S and Model X vehicles and over 11,100 model 3 cars, fueling the theory that Tesla was trying to get the triggering event going to bring July – and in the third quarter.

Chart shows vehicles in transit

Data source: SEC submissions. Chart by author.

However, the increase in vehicles in transit could also be due to the progress of ramping model 3 production.

Potential impact on demand

The news has a significant impact on potential Tesla customers, who include the strong incentive in their purchasing decisions, especially those interested in the cheapest $ 35,000 base model 3 that Tesla has not yet produced. The full federal loan would theoretically lower the starting price of this base model to $ 27,500, for example, comparable to many mainstream mid-range sedans of non-luxury brands.

Tesla estimates that the basic model 3 can be produced with a standard battery in six to nine months. At this time, half of the federal loan will still be available. There is evidence that demand for Model 3 may not be as strong as hoped, possibly because many reservation holders are waiting for the cheaper version and the loss of the federal tax credit will have an increasingly negative impact on demand.


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