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Tesla’s cheapest Model 3 with the 2024 tax credit might surprise you
The U.S. Treasury’s updated guidance on the federal electric vehicle (EV) tax credit has officially taken effect, as of January 1. With some of Tesla’s vehicles losing access to the credit in 2024, one Model 3 configuration is currently looking more appealing than ever.
The Tesla Model 3 Long Range (LR) and Rear-Wheel-Drive (RWD) configurations are no longer eligible for the $7,500 tax credit as of January 1. However, the Performance model is still eligible and can be purchased for less than the Model 3 LR, as can be seen on the Model 3 order configurator at the time of writing.
With the use of the tax credit, the Performance Model 3 option has now become the second most affordable configuration, though the RWD trim remains Tesla’s cheapest sedan even without the federal rebate.
Tesla’s current Model 3 prices, including the tax credit, are listed below:
- Model 3 RWD: $38,990 (no longer eligible)
- Model 3 LR: $45,990 (no longer eligible)
- Model 3 Performance: $43,490 (after $7,500 federal tax credit)
The change to Model 3 eligibility comes as the redesigned “Highland” has been delivering in auto markets around the world, though it hasn’t yet become available in North America. However, sightings of the Model 3 Highland in the U.S. seem to indicate that its U.S. launch could be imminent, and some have reported that Tesla could make a related announcement sometime this month.
Despite the Performance variant being the only one of Tesla’s Model 3 trims to remain eligible, many of the automaker’s other vehicles still qualify.
- Model X AWD: $72,490 (after $7,500 federal tax credit)
- Model Y RWD: $36,490 (after $7,500 federal tax credit)
- Model Y LR: $41,490 (after $7,500 federal tax credit)
- Model Y Performance: $44,990 (after $7,500 federal tax credit)
The tax credit has a maximum MSRP on purchases of $80,000 for vans, SUVS and pickups, and another max of $55,000 for other EVs, as can be seen on the IRS website. Additionally, modified adjusted gross income (AGI) can’t exceed $300,000 for married couples filing jointly, $225,000 for heads of households or $150,000 for all other filers.
In certain areas, buyers can stand to gain even more savings, like in Colorado, where new EV purchases are eligible for up to $5,000 in tax incentives that can be stacked with the federal credit.
Currently, the Tesla Cybertruck is not eligible for the federal incentive, and while it’s not clear why, it’s worth noting that the Cyberbeast is above the IRA credit’s MSRP price cap. Meanwhile, it will take some time for the Cybertruck AWD to begin deliveries, though it’s possible that this variant could eventually qualify.
Updated 8:01 p.m. MT: Corrected Model X price after incorrectly listing the pre-tax credit price.
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Elon Musk
What is Digital Optimus? The new Tesla and xAI project explained
At its core, Digital Optimus operates through a dual-process architecture inspired by human cognition.
Tesla and xAI announced their groundbreaking joint project, Digital Optimus, also nicknamed “Macrohard” in a humorous jab at Microsoft, earlier this week.
This software-based AI agent is designed to automate complex office workflows by observing and replicating human interactions with computers. As the first major outcome of Tesla’s $2 billion investment in xAI, it represents a powerful fusion of hardware efficiency and advanced reasoning.
At its core, Digital Optimus operates through a dual-process architecture inspired by human cognition.
Macrohard or Digital Optimus is a joint xAI-Tesla project, coming as part of Tesla’s investment agreement with xAI.
Grok is the master conductor/navigator with deep understanding of the world to direct digital Optimus, which is processing and actioning the past 5 secs of…
— Elon Musk (@elonmusk) March 11, 2026
Tesla’s specialized AI acts as “System 1”—the fast, instinctive executor—processing the past five seconds of real-time computer screen video along with keyboard and mouse actions to perform immediate tasks.
xAI’s Grok model serves as “System 2,” the strategic “master conductor” or navigator, providing high-level reasoning, world understanding, and directional oversight, much like an advanced turn-by-turn navigation system.
When combined, the two can create a powerful AI-based assistant that can complete everything from accounting work to HR tasks.
Will Tesla join the fold? Predicting a triple merger with SpaceX and xAI
The system runs primarily on Tesla’s low-cost AI4 inference chip, minimizing expensive Nvidia resources from xAI for competitive, real-time performance.
Elon Musk described it as “the only real-time smart AI system” capable, in principle, of emulating the functions of entire companies, handling everything from accounting and HR to repetitive digital operations.
Timelines point to swift deployment. Announced just days ago, Musk expects Digital Optimus to be ready for user experience within about six months, targeting rollout around September 2026.
It will integrate into all AI4-equipped Tesla vehicles, enabling parked cars to handle office work during downtime. Millions of dedicated units are also planned for deployment at Supercharger stations, tapping into roughly 7 gigawatts of available power.
Oh and it works in all AI4-equipped cars, so your car can do office work for you when not driving.
We’re also deploying millions of dedicated Digital Optimus units in the field at Superchargers where we have ~7 gigawatts of available power.
— Elon Musk (@elonmusk) March 12, 2026
Digital Optimus directly supports Tesla’s broader autonomy strategy. It leverages the same end-to-end neural networks, computer vision, and real-time decision-making tech that power Full Self-Driving (FSD) software and the physical Optimus humanoid robot.
By repurposing idle vehicle compute and extending AI4 hardware beyond driving, the project scales Tesla’s autonomy ecosystem from roads to digital workspaces.
As a virtual counterpart to physical Optimus, it divides labor: software agents manage screen-based tasks while humanoid robots tackle physical ones, accelerating Tesla’s vision of general-purpose AI for productivity, Robotaxi fleets, and beyond.
In essence, Digital Optimus bridges Tesla’s vehicle and robotics autonomy with enterprise-scale AI, promising massive efficiency gains. No other company currently matches its real-time capabilities on such accessible hardware.
It really could be one of the most crucial developments Tesla and xAI begin to integrate, as it could revolutionize how people work and travel.
News
Tesla adds awesome new driving feature to Model Y
Tesla is rolling out a new “Comfort Braking” feature with Software Update 2026.8. The feature is exclusive to the new Model Y, and is currently unavailable for any other vehicle in the Tesla lineup.
Tesla is adding an awesome new driving feature to Model Y vehicles, effective on Juniper-updated models considered model year 2026 or newer.
Tesla is rolling out a new “Comfort Braking” feature with Software Update 2026.8. The feature is exclusive to the new Model Y, and is currently unavailable for any other vehicle in the Tesla lineup.
Tesla writes in the release notes for the feature:
“Your Tesla now provides a smoother feel as you come to a complete stop during routine braking.”
🚨 Tesla has added a new “Comfort Braking” update with 2026.8
“Your Tesla provides a smoother feel as you come to a complete stop during routine braking.” https://t.co/afqCpBSVeA pic.twitter.com/C6MRmzfzls
— TESLARATI (@Teslarati) March 13, 2026
Interestingly, we’re not too sure what catalyzed Tesla to try to improve braking smoothness, because it hasn’t seemed overly abrupt or rough from my perspective. Although the brake pedal in my Model Y is rarely used due to Regenerative Braking, it seems Tesla wanted to try to make the ride comfort even smoother for owners.
There is always room for improvement, though, and it seems that there is a way to make braking smoother for passengers while the vehicle is coming to a stop.
This is far from the first time Tesla has attempted to improve its ride comfort through Over-the-Air updates, as it has rolled out updates to improve regenerative braking performance, handling while using Full Self-Driving, improvements to Steer-by-Wire to Cybertruck, and even recent releases that have combatted Active Road Noise.
Tesla holds a unique ability to change the functionality of its vehicles through software updates, which have come in handy for many things, including remedying certain recalls and shipping new features to the Full Self-Driving suite.
Tesla seems to have the most seamless OTA processes, as many automakers have the ability to ship improvements through a simple software update.
We’re really excited to test the update, so when we get an opportunity to try out Comfort Braking when it makes it to our Model Y.
News
Tesla finally brings a Robotaxi update that Android users will love
The breakdown of the software version shows that Tesla is actively developing an Android-compatible version of the Robotaxi app, and the company is developing Live Activities for Android.
Tesla is finally bringing an update of its Robotaxi platform that Android users will love — mostly because it seems like they will finally be able to use the ride-hailing platform that the company has had active since last June.
Based on a decompile of software version 26.2.0 of the Robotaxi app, Tesla looks to be ready to roll out access to Android users.
According to the breakdown, performed by Tesla App Updates, the company is preparing to roll out an Android version of the app as it is developing several features for that operating system.
🚨 It looks like Tesla is preparing to launch the Robotaxi app for Android users at last!
A decompile of v26.2.0 of the Robotaxi app shows some progress on the Android side for Robotaxi 🤖 🚗 https://t.co/mThmoYuVLy
— TESLARATI (@Teslarati) March 13, 2026
The breakdown of the software version shows that Tesla is actively developing an Android-compatible version of the Robotaxi app, and the company is developing Live Activities for Android:
“Strings like notification_channel_robotaxid_trip_name and android_native_alicorn_eta_text show exactly how Tesla plans to replicate the iOS Live Activities experience. Instead of standard push alerts, Android users are getting a persistent, dynamically updating notification channel.”
This is a big step forward for several reasons. From a face-value perspective, Tesla is finally ready to offer Robotaxi to Android users.
The company has routinely prioritized Apple releases because there is a higher concentration of iPhone users in its ownership base. Additionally, the development process for Apple is simply less laborious.
Tesla is working to increase Android capabilities in its vehicles
Secondly, the Robotaxi rollout has been a typical example of “slowly then all at once.”
Tesla initially released Robotaxi access to a handful of media members and influencers. Eventually, it was expanded to more users, so that anyone using an iOS device could download the app and hail a semi-autonomous ride in Austin or the Bay Area.
Opening up the user base to Android users may show that Tesla is preparing to allow even more users to utilize its Robotaxi platform, and although it seems to be a few months away from only offering fully autonomous rides to anyone with app access, the expansion of the user base to an entirely different user base definitely seems like its a step in the right direction.
What is Digital Optimus? The new Tesla and xAI project explained
Tesla adds awesome new driving feature to Model Y
