Visual approximation pic.twitter.com/sMn3Pv476Y
— Elon Musk (@elonmusk) October 12, 2018
Think about this for a moment. A basic Model S 75D has a price of on the order of $77,000 (including $1,200 in fees). A $7,500 tax credit is not an insignificant discount for a car of that caliber. And that sum is an even greater benefit for those who are going for the base Model 3 (well, base in the context of what you can get right now, a vehicle with a long-range battery and premium interior; according to Tesla.com the standard battery won’t be available for at least three months and possibly six), which is at $49,000.
With the disappearance of the $7,500 tax credit, that Model 3 will suddenly be, in effect, 15-percent more expensive than it was on October 14.
Now here’s the kicker: Tesla is a victim of its own success.
The federal government started a program that would provide a tax credit of up to $7,500 for electric vehicles that were bought in or after 2010. This was a sweet incentive for people to buy EVs. It can be traced to the American Recovery and Reinvestment Act of 2009, back when there were programs like the so-called Cash for Clunkers: the government wanted to get people out there and shopping.
The lawmakers concluded, however, that once a given automaker sold 200,000 EVs, there was sufficient demand that there would no longer be a need for such a pot sweetener. So once the 200,000th vehicle was delivered, the clock started ticking: the full $7,500 for the next two quarters; half of that ($3,750) for the next two quarters, then half again ($1,875) for the two quarters after that.
Then there would no longer be any need to fill out IRS form 8936, Qualified Plug-In Electric Drive Motor Vehicle Credit.
Tesla sold its 200,000th vehicle in July 2018, so the clock started running on the cash. At the end of 2019, there will be no federal tax credit for purchasers of Teslas.
The next company on the bubble is General Motors because of the Chevy Bolt EV and Volt. While Volt sales through the third quarter are 13,243, down 13.7 percent compared to the same period last year, remember that it has been on the U.S. market since December 2010, so its sales plus those of the Bolt are getting close to a cumulative 200,000.
While there is still a long way to go for some companies (Kia Soul EV anyone?), there is the potential killing of federal tax credit program and an addition fee for purchasers of EVs, as proposed by Wyoming senator John Barrasso.
But for Tesla, the party’s over. Not completely done. But still the confetti has been popped. And this isn’t even taking into account the condition of the company’s stock, which was over $387 per share a year ago and is now bumping along at about $260.
Anyone for a shot of Teslaqulia?