Tesla Model S Grey - Image: Tesla

Tesla Motors announced Thursday that it officially reached 200,000 deliveries this month, which is good news in terms of overall sales. But the figure also means the company has surpassed the threshold requiring that federal tax credits be phased out, which is bad news.

Some speculate that, without government incentives, fewer people will be willing to buy Tesla-branded vehicles. While that’s a possibility, the brand offers unique, trendy models not readily available elsewhere. We’d presume a discount on an iPhone would probably help sales as well, but affordability it isn’t the main reason people purchase them.

We’ll see what kind of impact it has on the automaker as the $7,500 federal electric vehicle tax credit for new owners is gradually phased out. It will also be telling for the electric vehicle market as a whole, as Tesla is the first EV producer to reach the limit. 

The company’s website now includes an incentives breakdown by date on its support page. As the first manufacturer to surpass the 200,000 vehicle limit, the brand will be able to retain the existing incentives through the end of the year. After January 1st, the federal tax credit will be reduced by half to $3,750. Six months later, it will be halved again before being completely eliminated at the start of 2020.

We’d imagine this will increase overall demand in the short term, though the long-term impact is unknown. Neither the Model S sedan and Model X crossover are particularly affordable vehicles, so we might see more lower-trimmed versions sold in the future. Meanwhile, the Model 3 is supposed to be Tesla’s budget car and would be a steal at $35,000 if government incentives were there to soften the blow. But the company isn’t building that version yet. Instead, it’s focusing on more expensive trims. The bargain Model 3 isn’t supposed to enter into production until the end of the year — right about the time the tax credit gets chopped in half.

[Image: Tesla Motors]




Please enter your comment!
Please enter your name here