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Why Tesla Model Y tax credit inclusion is good for some and bad for others
The Tesla Model Y complete lineup was recently added to the IRS list of qualifying vehicles that will give buyers a $7,500 tax credit. While it may seem like the company’s huge price cuts coupled with the tax credit would be good for everyone, it spells bad news for competitors that offer comparable EVs in the same category.
On Friday, the Model Y’s entire lineup was added to the list of qualifying vehicles after the U.S. Department of Treasury said, “The change will allow crossover vehicles that share similar features to be treated consistently.” The Model Y’s five-seat configurations did not reach the weight requirement to be considered SUVs and were put in another category that included “All Other Vehicles.” The price limit to qualify for the tax credit differs by $25,000: $55,000 for All Others, and $80,000 for SUVs.
Tesla Model Y’s complete lineup now qualifies for EV tax credits through Inflation Reduction Act
The inclusion is obviously a good thing for consumers, and events that transpired afterward are good for the investors. With Tesla’s $13,000 price cut on Model Y configurations in early January, the automaker had quadrupled the vehicle’s addressable market. At the same time, it had offered a substantial discount to some who could already justify the purchase, and if they were on the fence, there’s no denying that this inevitably won them over.
Lower prices mean more sales. The Model Y was already making waves in terms of Tesla’s total concentration of sales by model, and it has routinely competed with the Model 3 in various markets and won in many of them. However, the cuts meant Tesla would have to eat some of its margins, which were incredibly high, trailing only Ferrari and BMW in that category. Analysts and more hellbent investors who are obsessed with the company making as much money as possible may not have loved the price cuts, and Tesla obviously will not be making as much of a profit per vehicle. However, on Saturday, following the Model Y’s inclusion to the qualifying vehicles list, Tesla bumped up prices by $1,500.
Is it the $13,000 the automaker trimmed in January? No, absolutely not. But Tesla is already making considerable money on each unit, and the company’s industry-leading tech and Supercharging network are inevitably what will win consumers over, especially as the vehicle is still vastly more affordable than before. With Tesla reaching 1.313 million deliveries last year in 2022, the company has pulled out all the stops to get sales figures off to a fast start in 2023, with various discounts and other programs to push vehicles out the door.
Credit: Tesla
The old saying goes that one’s trash is another’s treasure, and in this instance, the competition is getting the trash while consumers are getting the treasure. Tesla’s massive price cuts and now qualifying tax credits make it a pretty simple choice for consumers. Without a doubt, one of the biggest issues with EV ownership, or at least in the broad consensus of the average consumer, is “Where will I charge my EV?” While this question still makes me chuckle to myself and want to say, “That thing you live in can do it. You know? Your house?” It’s much more complex than that.
A charging network is really what sets Tesla apart from the others. Some consumers may have been willing to spend a little extra to have the confidence that they could be surrounded by charging options, and Tesla is really the only automaker that has such broad options in terms of charging that it really doesn’t have a current competitor. If Tesla does end up opening up its network to other EVs, then this conversation changes. Of course, other companies out there have a robust infrastructure that is quickly growing. Still, these companies are often plagued by maintenance issues, rising costs, and a less-than-desirable experience.
Tesla is already controlling a majority of the U.S. market for electric vehicles, and there are worthy competitors. Volkswagen, Ford, and General Motors all have a wide variety of strategies in their plans to dethrone Tesla. Meanwhile, Polestar, Rivian, Lucid, and other startups are still working through their issues, which are usually money-related.
Tesla is well ahead of the curve, especially as it has already figured out mass production and launched a lineup of competitive vehicles with plans of more styles and applications to come. The inclusion of the Model Y, which CEO Elon Musk believes will be the best-selling car in the world one day, to the tax credit program only spells disaster for the companies attempting to catch up. Meanwhile, Tesla sits comfortably in the driver’s seat, and there does not seem to be any true comparison in current sight.
Disclosure: Joey Klender does own Tesla stock.
I’d love to hear from you! If you have any comments, concerns, or questions, please email me at joey@teslarati.com. You can also reach me on Twitter @KlenderJoey, or if you have news tips, you can email us at tips@teslarati.com.
Elon Musk
ARK’s SpaceX IPO Guide makes a compelling case on why $1.75T may not be the ceiling
ARK Invest breaks down six reasons SpaceX’s $1.75 trillion IPO valuation may be justified.
ARK Invest, which holds SpaceX as its largest Venture Fund position at 17% of net assets, has published a detailed investor guide to why a SpaceX IPO may be grounded in a $1.75 trillion target valuation.
The financial case starts with Starlink, SpaceX’s satellite internet constellation, which has surpassed 10 million active subscribers globally as of early 2026, with 2026 revenue projected to exceed $20 billion. ARK’s research puts the total satellite connectivity market opportunity at roughly $160 billion annually at scale, and Starlink is adding customers faster than any telecom network in history. That growth alone would justify a substantial valuation.
Additionally, ARK notes that SpaceX has reduced the cost per kilogram to orbit from roughly $15,600 in 2008 to under $1,000 today through reusable Falcon 9 hardware. A fully operational Starship targeting sub-$100 per kilogram would represent a significant cost decline and open markets that do not currently exist. SpaceX executed a staggering 165 missions in 2025 and now accounts for approximately 85% of all global orbital launches. That infrastructure position took decades to build and would be nearly impossible to replicate at comparable cost.
SpaceX officially acquires xAI, merging rockets with AI expertise
The February 2026 merger with xAI added a layer to the valuation that straightforward financial models struggle to capture. ARK argues that at sub-$100 launch costs, orbital data centers could deliver compute roughly 25% cheaper than ground-based alternatives, without power grid delays, permitting friction, or land constraints. Musk has stated a goal of deploying 100 gigawatts of AI computing capacity per year from orbit.
The $1.75 trillion figure itself is not a conventional earnings multiple. At roughly 95x trailing revenue, it prices in Starlink’s adoption curve, Starship’s cost trajectory, and the orbital compute thesis together. The public S-1 prospectus, due at least 15 days before the June roadshow, will give investors their first complete look at the financials to test those assumptions. ARK’s position is that the track record earns the benefit of the doubt. Fully reusable rockets were considered unrealistic for years. Starlink was considered financially unviable. Both happened on timelines that surprised skeptics.
Elon Musk
Ford CEO Farley says Tesla is not who to look at for EV expertise
Interestingly, Farley has been one of the most hellbent CEOs in terms of a legacy automaker standpoint to push the EV effort. It did not go according to plan, as Ford took a $19.5 billion charge and retreated from its EV push in late 2025.
Ford CEO Jim Farley said in a recent podcast interview that Tesla is not who Americans should look at to beat Chinese carmakers.
The comments have sparked quite a bit of outrage from Tesla fans on X, the social media platform owned by Elon Musk.
Farley said that Chinese automakers are better examples of how to beat competitors. He said (via the Rapid Response Podcast):
“If you’re an American and you want us to beat the Chinese in the car business, you’re all going to want to pay attention, not necessarily to Tesla. Nothing against Tesla—they’ve been doing great—but they really don’t have an updated vehicle. The best in the business for us, cost-wise and competition-wise, supply chain, manufacturing expertise, and the I.P. in the vehicle, was really BYD. In this next cycle of EV customers in the U.S., they want pickups and utilities and all these different body styles. But they want them at $30,000, not $50,000. Like the first inning, they want them affordably.”
Despite Farley’s synopsis, it is worth mentioning that Tesla had the best-selling passenger vehicle in the world last year, and in China in March, as the Model Y continued its global dominance over other vehicles.
Musk responded to Farley’s comments by stating:
“This is before Supervised FSD is approved in China. Limiting factor is production output in Shanghai.”
This is before supervised FSD is approved in China. Limiting factor is production output in Shanghai.
— Elon Musk (@elonmusk) April 19, 2026
Interestingly, Farley has been one of the most hellbent CEOs in terms of a legacy automaker standpoint to push the EV effort. It did not go according to plan, as Ford took a $19.5 billion charge and retreated from its EV push in late 2025.
Ford cancels all-electric F-150 Lightning, announces $19.5 billion in charges
Instead, Ford is “doubling down on its affordable” EVs and said it would pivot from its previous plans.
Reaction from Tesla fans was pretty much how you would expect. Many said they have lost a lot of respect for Farley after his comments; others believe he is the last CEO anyone should be taking advice on EVs from.
Nevertheless, Farley’s plans are bold and brash; many consider Tesla the most ideal company to replicate EV efforts from. It will be interesting to see if Ford can rebound from this big adjustment, and hopefully, Farley’s plans to replicate efforts from BYD work out the way he hopes.
Elon Musk
SpaceX wins its first MARS contract but it comes with a catch
NASA awarded SpaceX a $175 million Mars rover contract while the White House proposes cutting the mission.
NASA just signed a $175.7 million contract with SpaceX to launch a Mars rover that the White House is simultaneously trying to defund. The contract, awarded on April 16, 2026, tasks SpaceX’s Falcon Heavy with launching the European Space Agency’s (ESA) Rosalind Franklin rover from Kennedy Space Center in Florida, no earlier than late 2028. It would mark the first time SpaceX has ever sent a payload to Mars.
Under NASA’s Rosalind Franklin Support and Augmentation project, known as ROSA, the agency is providing braking engines for the rover’s descent stage, radioisotope heater units that use decaying plutonium to keep the rover warm on the Martian surface, additional electronics, and a mass spectrometer instrument, as noted by SpaceNews.
Those nuclear heating units are the reason an American rocket was required at all. U.S. export controls on radioisotope technology mean any payload carrying them must launch on a domestic vehicle, which narrowed the field to SpaceX and United Launch Alliance. Falcon Heavy’s pricing made it the practical choice.
SpaceX is quietly becoming the U.S. Military’s only reliable rocket
Falcon Heavy debuted in February 2018 and has 11 launches to its record. The rocket has not flown since October 2024, when it sent NASA’s Europa Clipper toward Jupiter. The three-core design, built from modified Falcon 9 first stages, gives it the lift capacity needed for deep space planetary missions that a single Falcon 9 cannot reach.
The Rosalind Franklin rover has been sitting in storage in Europe for years. It was originally due to launch in 2022 as a joint mission with Russia, but Russia’s invasion of Ukraine ended that partnership, leaving the rover built but stranded without a launch vehicle or landing hardware. NASA stepped back in through a 2024 agreement with ESA to rescue the mission. The rover is designed to drill up to two meters below the Martian surface in search of evidence of past life, a science objective no previous mission has attempted at that depth.
The contradiction at the center of this story is hard to ignore. The White House’s fiscal year 2027 budget proposal included no funding for ROSA and did not mention the mission at all in the detailed congressional justification document released April 3.
Musk has long argued that reaching Mars is not optional. “We don’t want to be one of those single planet species, we want to be a multi-planet species.” Whether this particular mission survives Washington’s budget fight, the Falcon Heavy contract means SpaceX is now formally on record as the rocket that could get humanity’s next Mars science mission off the ground.
The timing of this contract carries extra weight given that SpaceX filed confidentially with the SEC in early April and is targeting an IPO roadshow in the week of June 8. It would be the largest public offering in history.
ARK’s SpaceX IPO Guide makes a compelling case on why $1.75T may not be the ceiling
Ford CEO Farley says Tesla is not who to look at for EV expertise
