According to Tesla's Model 3 page update, the federal credit for the Tesla Model 3 RWD, which is the most affordable vehicle in its lineup, will be reduced by $7,500 to $3.750. The Model 3 RWD's federal tax credit will be reduced to $7,500 from $3,750 starting April 18.
Last month, it was reported that the Model 3 base model would lose its $7.500 federal tax credit. This was followed by a notice posted to the all-electric sedan’s order page. The remaining federal credit for the Model 3 RWD had not been listed by Tesla at the time. Tesla's most recent update effectively confirms the Model 3 RWD is still eligible in order to receive a federal tax credit for $3,750.
Customers who purchase the Model 3 Performance and higher-end versions of the Model 3 will still be eligible for the $7,500 tax credits. With this in mind the Model 3's updated federal credit structure could be an incentive to potential buyers to consider buying higher-end variants.
The Tesla Model 3 RWD's lithium-ion battery pack was made in China and is therefore not eligible for the IRS $7,500 tax credit. According to the US Treasury's Battery Guidance, at least 50% must be made and assembled in the United States or a country that has a free trade agreement. This requirement is met with the Model 3 Performance battery pack. It is made at Giga Nevada.
It is not eligible for the current battery source guidance because the Model 3 RWD's pack contains CATL LFP cells sourced in China. The upcoming guideline for EV batteries stipulates that at minimum 40% of the minerals used must be from the United States, or a country that has a free-trade agreement with the US.
