February 23, 2018
Time is running out for Tesla buyers to get a $7,500 federal tax credit with their purchase.
In an SEC filing early Friday, Tesla said it expects that the federal tax credit for its customers will end at some time in 2018.
The credit for each automaker ends a few months after they sell 200,000 plug-in cars the United States. Tesla, which only makes electric cars, sold about 300,000 vehicles worldwide through the end of last year. And it looks like it will be the first automaker to hit the 200,000 mark in the U.S. this year.
Shoppers who buy plug-in vehicles from most other automakers, such as Toyota (TM), Nissan (NSANF) or Ford (F), will continue to get the credit until those manufacturers hit 200,000 in U.S. sales.
The loss of the tax credit will significantly increase the cost for buyers and could hurt demand. Tesla (TSLA) started deliveries of the Model 3 last year, its first mass market vehicle with a starting price of about $35,000, and it has orders and deposits for more than 500,000 of the cars. But buyers don't get the tax credit until they take delivery of the car, and the Model 3 has run into production bottlenecks. As a result, Tesla only delivered 1,764 of the cars through the end of last year.
So only a small fraction of Model 3 buyers will be able to get the tax credit, and some may decide to back out of the purchase if they don't qualify. They have all put down a $1,000 deposit, but it's refundable.
Given the waiting list, no one who orders a Model 3 today will be able to get the tax credit. Those ordering a Model S or Model X may qualify, but those are much more expensive cars that can cost more than $100,000. Waiting time for those models is generally two to eight weeks, according to Tesla's web site.
The fact that the credit will run out for Tesla buyers does not come as a surprise, but this is the first time that Tesla has given a time frame for when it expects the tax credit to end.
The Tesla filing also disclosed that the company added 7,500 employees last year, a 25% increase in staffing levels that brought its total employment to 37,500. That came as the company ramped up production at both its California assembly plant and at two "Gigafactories" making lithium batteries in Nevada and Buffalo N.Y.
Tesla declined to comment on the loss of the tax credit, or its hiring, beyond the statements in the filing.
Most other automakers are nowhere near that 200,000 vehicle limit. For example Nissan has sold 115,000 of its all-electric Nissan Leaf, which went on sale in 2010.
But General Motors (GM), which has sold more than 160,000 cars that qualify for the credit, could soon reach that 200,000 limit, perhaps as soon as the end of this year. It sold 23,000 of the all-electric Chevrolet Bolt last year, as well as 20,000 of the Chevy Volt, a plug-in hybrid that can run on gas or electric and also qualifies for the credit. Sales of the Volt have fallen as the Bolt has become more available.
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