Tesla Model 3 RWD’s $7,500 EV Tax Credits will be reduced

Tesla published a notice on the Model 3 RWD’s configurator page, informing buyers that its EV tax credits will reduce by March 31. The Tesla Model 3 RWD will be affected by the US Treasury’s battery guidance for the Inflation Reduction Act’s (IRA) $7,500 EV tax credits.

The US Department of Treasury will release the battery guidance for EV tax credit qualifications. The guidance will cover battery production, assembly, and mineral sourcing requirements. A US official already stated that fewer EVs would qualify for full or partial credits once the battery guidance is in effect. 

The Tesla Model 3 RWD’s battery pack is produced and assembled in China, reducing its qualifications for the IRA’s $7,500 EV tax credits. Under the US Treasury’s battery guidance, at least 50% of EV battery components must be produced and assembled within the United States or in a country with a free trade agreement. 

The Model 3 RWD’s battery pack uses CATL’s LFP cells from China, making it ineligible for credits under the battery sourcing guidance. In the soon-to-be-released battery guidance, at least 40% of the minerals used in an EV’s battery must be sourced in the United States or a country with a free trade agreement with the US.

As of this writing, the price of the Tesla Model 3 RWD is $42,990 without the $7,500 tax credit from the IRA. Tesla’s Model 3 Long Range and Performance variants are equipped with domestically produced and assembled battery packs. As a result, the Model 3 Long Range and Performance variants still qualify for the full $7,500 EV tax credits. 

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Tesla Model 3 RWD’s $7,500 EV Tax Credits will be reduced
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