Lifestyle
Model 3 Buyers May Miss Out On Federal Tax Credits
By the time Tesla starts building its entry level Model 3 cars, the federal tax credit may have long since expired.
Model 3 buyers may not be able to take advantage of the $7,500 federal tax credit for electric vehicles, for two reasons. First, the federal credit under Internal Revenue Code Section 30D (IRC 30D) begins to decrease once a manufacturer reaches 200,000 qualifying EV sales in the US.
Second, the $35,000 price tag of the Model 3 (before incentives) will appeal to mass market buyers who may not necessarily fall into the same high income bracket as those that purchase the Model S and Model X. As Evan Niu of The Motley Fool explains, “The $7,500 credit can only be applied if the customer has a tax liability of $7,500 or more, and any unused portion is not refundable and can not be carried forward”. This means any person taking home $50,000 a year or less may not have a large enough tax liability to qualify for the full $7,500 federal tax credit.
Let’s take a closer look at both of these factors.
The Incredible Shrinking Tax Credit
Congress, in its infinite wisdom, enacted the federal tax credit to give manufacturers an incentive to sell electric cars. It is a pump priming strategy that was meant to have a relatively short shelf life at 200,000 vehicles sold.
Tesla does not break down its sales numbers by country, but in its most recent letter to shareholders it said it sold 42,000 Model S sedans in America in 2014 and 2015. Elon Musk says the company will deliver between 80,000 and 90,000 cars this year. Assuming half of those go to US customers and adding in estimated sales in 2012 and 2013, Tesla could approach that 200,000 mark in calendar year 2018.
Pictured above: Tesla Store grand opening in Hingham, MA via Rob M
After that, the EV incentive program enters into a “phase out period” at which point the tax credits are cut to 50% and 25% of the original $7,500 credit over the next 6 to 12 months, respectively, until the plan is eventually phased out in its entirety. Based on Tesla’s sales figures and projected growth rate, analysts expect that to happen for Tesla in 2018.
IRC 30D states:
The qualified plug-in electric drive motor vehicle credit phases out for a manufacturer’s vehicles over the one-year period beginning with the second calendar quarter after the calendar quarter in which at least 200,000 qualifying vehicles manufactured by that manufacturer have been sold for use in the United States (determined on a cumulative basis for sales after December 31, 2009) (“phase-out period”).
Qualifying vehicles manufactured by that manufacturer are eligible for 50 percent of the credit if acquired in the first two quarters of the phase-out period and 25 percent of the credit if acquired in the third or fourth quarter of the phase-out period. Vehicles manufactured by that manufacturer are not eligible for a credit if acquired after the phase-out period.
The critical factor in determining whether Model 3 buyers will be able to take advantage of the full tax credit will be timing. For every month the Model 3 gets delayed, more Model S and Model X cars will be sold, getting the company closer to that 200,000 phase out period.
The Demographics of Model 3 Buyers
It seems fairly obvious that someone looking for a $35,000 Model 3 will be in a different socio-economic status than a person looking to purchase a Model S P90D. The way the federal tax credit is set up, if a person only owes $5,000 to the IRS for the year in which a qualifying car is purchased, the credit is limited to $5,000. Any excess is lost. The taxpayer cannot carry over any unused portion to a subsequent tax year.
Other Considerations
Several other factors will make that $35,000 Model 3 a rare bird indeed. Tesla has already indicated it will build the cars with the most options first. This is normal procedure for the company. For instance, manufacturing on the Founders Edition and Signature Series Model X began first followed by P90D production cars. It may be a while yet before any entry level 70D Model X cars get built.
Similarly, the first Model 3 cars will likely have the largest battery available (70 kWh? 90 kWh?). If dual motors are offered, the first cars will have those as well. Panoramic roof, upgraded interiors, premium sound systems, Autopilot activation, and a host of other extra cost options will push many cars close to $60,000. Even with the full federal tax credit, a fully loaded Model 3 will cost far more than $35,000.
It could easily be a year or more after the Model 3 is introduced before any entry level $35,000 Model 3 is available. By then, the federal tax credit will likely be long since used up.
Related Model 3 News
Elon Musk
Tesla primes Cybercabs for 4K streaming and high bandwidth gaming with Starlink integration
Tesla is now shipping Cybercabs from Giga Texas with Starlink hardware built in as standard.
Tesla’s Cybercabs are now leaving Gigafactory Texas with Starlink hardware on the rear hatch in significant numbers, according to drone footage captured Tuesday by longtime Austin drone observer Joe Tegtmeyer. Production at the factory ramped back up after the Labor Day weekend, and his flyover of the outbound lot showed rows of gold Cybercabs alongside Model Y Long Wheelbase units, many carrying the satellite module for the first time as standard equipment rather than a one off retrofit.
Giga Texas today is busy with production coming back up following the long weekend. Of interest today in the outbound lot is the appearance of hundreds of Mode; YL’s and many more Cybercabs and for the 1st time equipped with the Starlink module one the hatch in big numbers.
At… pic.twitter.com/G9yl6s51m4
— Joe Tegtmeyer 🚀 🤠🛸😎 (@JoeTegtmeyer) September 8, 2026
Tesla first showed Starlink built into an actual Cybercab on August 10, when the Robotaxi account posted images of a single gold unit with the antenna integrated into the roofline above the taillights and called it the first Cybercab with Starlink integration. That followed a July reveal where Tesla and Starlink jointly posted a cutaway diagram of the antenna placement without a working vehicle to back it up. Ashok Elluswamy, Tesla’s VP of AI software, said at the time that the connection isn’t required for the car to drive itself. It exists mainly for navigation, customer service and keeping tabs on the fleet.
Musk has made a different case in public. During Tesla’s Q2 earnings call, he said the company can’t afford robotaxis stranded in what he called “Bermuda Triangles of lack of cellular connectivity,” and he separately claimed on X that Starlink will eventually reach every Tesla built, calling it the only way to deliver high bandwidth to billions of vehicles. He has also pitched the antenna as an entertainment upgrade, telling riders they would be able to stream 4K video or play games during a trip.
The rollout has moved fast since. Robotaxi service opened to the public in Austin on September 3, and Cybercabs had already been spotted with Starlink hardware in Houston and near Miami International Airport in the weeks before Tuesday’s factory footage showed the module shipping at volume rather than on scattered test units. Whether the satellite link earns its keep is still an open question. Tesla’s unsupervised service currently runs in dense metro geofences in Texas and Florida, markets where cellular coverage is already strong, which is not where the rural dead zones Musk describes tend to show up.
Lifestyle
Tesla Cybertruck targets job site crews with new Tailgate Utility Track and Bed Gear Box accessory
Tesla launched a $350 tailgate track and a $985 lockable Bed Gear Box for Cybertruck.
Tesla’s Cybertruck team added two more items to the Tesla Shop, targeting job site crews and owners who use the truck bed for actual work rather than just showing it off. The official Cybertruck X account posted the Tailgate Utility Track and the Bed Gear Box within minutes of each other, part of a five item batch that also included a reflective jacket, a spray paint hat and an updated reflective tee.
The Tailgate Utility Track runs $350 and turns the folded down tailgate into another mounting surface. It’s a single aluminum track with a T-slot for sliding accessories and two L-track attachment points, plus two load stops included in the box. The pitch is straightforward: strap down oversized cargo, like lumber or a cooler, that hangs off the back of the bed without it sliding out mid-drive. It bolts onto the existing tailgate and works on every Cybertruck trim.
Tailgate Utility Trackhttps://t.co/PCAYXlFBvS pic.twitter.com/sCV2NVxf1W
— Cybertruck (@cybertruck) September 3, 2026
The Bed Gear Box costs $985 and is a different kind of accessory. It’s a lockable aluminum storage box, 55.78 inches long, 19.8 inches wide and 7.79 inches tall, that mounts to the bed’s L-track rails and comes with two internal bins for smaller items. According to Tesla, at just over 57 pounds empty, it’s meant to stay in place rather than come in and out with each trip, giving owners a factory-fit alternative to loose totes for tools, recovery gear or emergency supplies. Tesla’s listing notes that Long Range and Dual Motor AWD Cybertrucks need the L-Tracks accessory installed separately before the Gear Box will mount, since L-tracks come standard only on certain configurations.
Tesla Cybertruck bed gear box accessory
Both accessories lean on the idea Tesla has been building toward since Elon Musk first described the Cybertruck’s third-party attachment strategy at the 2023 shareholder meeting, when he said the truck would ship with mounting points so outside companies, and Tesla itself, could keep adding gear without redesigning the bed. That’s the same L-track backbone underneath the tailgate shield and jumpseats Tesla launched last year, and the off-road armor package that arrived through the same X account in 2025.
Owners looking to round out the rest of the L-track ecosystem, cargo dividers, MOLLE panels, bed racks and similar gear, can find a wider range of options through our Cybertruck accessories collection.
Elon Musk
Elon Musk says he knows how to save Earth for a billion years
Elon Musk says sentient AI satellites launched from the Moon could keep Earth livable forever.
Elon Musk spent part of his weekend describing a plan to keep the planet livable for roughly a billion years, and it starts with satellites that can think for themselves.
In a post on X, Musk argued that swapping fossil fuels for solar and wind power will not be enough to protect humanity from what he called extremely severe extinction events, the kind that occur roughly every 100 million years. His fix is what he called sentient satellites, or solar-powered satellites, controlled by AI, that would sit in a fixed spot between Earth and the Sun after being launched off the Moon using a giant electromagnetic catapult instead of rockets.
The satellites’ onboard AI would make continuous, small adjustments rather than waiting on human instructions. The mass driver is Musk’s proposed way of getting the raw material there cheaply by using an electromagnetic launch track built on the Moon, where lower gravity and no atmosphere make it far easier to fling cargo into space than it is from Earth.
But we do need to act much faster than that if people still want to live where the beach is today. We have about 50 years or so to take action, which should be more than enough time for the space satellites to solve any heating problems. https://t.co/xhrVQALwQw
— Elon Musk (@elonmusk) August 30, 2026
Musk shared a Grok generated estimate suggesting roughly 5 percent of Florida’s land, or about 1.68 million acres, could face regular flooding by 2070 under a high sea level rise scenario, and said humanity has about 50 years to act before coastal living looks very different than it does today.
This is not the first time Musk has floated the idea. He raised a similar concept in November, describing a solar powered AI satellite constellation that could make tiny adjustments to incoming sunlight to fine tune Earth’s temperature. Musk has also tied planetary risk to his broader vision at SpaceX, where his compensation package is explicitly linked to establishing a self-sustaining Mars colony, one he has described as an insurance policy against the kind of extinction event he referenced this weekend, and where he has said humans could set foot within five to seven years.
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