Tesla Model Y “likely” won’t retain full EV tax credit in 2024

Tesla expects the Model Y will no longer qualify for the full $7,500 federal EV tax credit in 2024.

As noted by Electrek, the Tesla Model Y online configurator now includes a note stating that reductions in the tax-credit amount are “likely” after Dec. 31. All Model Y configurations qualify for the full $7,500 credit as long as customers take delivery before that date, Tesla says.

Tesla has also confirmed that Model 3 Rear-Wheel Drive and Model 3 Long Range variants will no longer qualify for the $7,500 tax credit after Dec. 31, leaving the Model 3 Performance potentially still qualifying for the credit. Again, customers who take delivery before the end of the year can still get the credit.

Tesla Model Y to lose $7,500 tax credit after Dec. 31, 2023

Starting in 2024, the federal tax credit introduces far tighter rules on foreign content. Electrek notes that the Model 3 variants listed as no longer qualifying for the credit in 2024 use China-sourced LFP cells. That also may be the case with Model Y variants Tesla plans to sell in the U.S. going forward.

This comes after the base Model 3 Rear-Wheel Drive was announced as fully qualified for the $7,500 credit this past June. It was an indication Tesla must have changed sourcing of its LFP cells to a non-China trade partner—a change that may have been temporary.

On the plus side for Tesla fans, the EPA did add the Cybertruck All-Wheel Drive and Cyberbeast models last week, then this week cut the Cyberbeast—seemingly noticing how much it costs. At $79,990, the Cybertruck All-Wheel Drive comes in just under the $80,000 price cap for qualifying electric trucks. The $99,990 tri-motor Cyberbeast does not.

Certain Tesla Model 3 variants to lose $7,500 tax credit after Dec. 31, 2023

It’s also likely that Tesla leasing—and other EV leases, no matter what the sticker price—will continue to tap into the commercial credit. This allows automakers with captive leasing companies to claim a $7,500 credit and then pass equivalent savings on to customers. So lessees of vehicles that exceed price caps or don’t meet battery-content requirements, can get the same amount off as those purchasing vehicles that do meet those requirements.

Starting in 2024 the tax credit becomes an instant rebate—something that dealership franchises especially are looking forward to. Tesla, though, continues to sell vehicles directly to customers without franchises.