NEWS

Tesla Cuts Prices by $2K to Take Sting Out of EV Tax Credit Loss

01-tesla-model-3-2018-angle--exterior--front--red.jpg Tesla Model 3 | Cars.com photo by Christian Lantry

If you want to buy a Tesla electric car, it will cost more in the new year — but not as much as expected thanks to Tesla’s across-the-board price cut of $2,000 today for its three vehicles.  The company announced the cut for U.S. cars as the federal tax credit for Tesla buyers dropped from $7,500 to $3,750. The credit will drop again to $1,875 in July and then to zero at the end of 2019.

Related: Tesla Tax Credit Is Expiring: Here’s Everything Shoppers Need to Know

Shop the 3 Tesla Model near you

Used
2019 Tesla Model 3 Performance
26,609 mi.
$55,800
Good Deal
Hot Car
Home Delivery
Virtual Appointments
Used
2018 BMW 430 Gran Coupe i
46,515 mi.
$31,699 $300 price drop
Good Deal
Home Delivery
Virtual Appointments
Used
2019 Hyundai Santa Fe Limited 2.4
27,850 mi.
$32,789
Good Deal
Hot Car
Ford Certified
2020 Ford Explorer Platinum
27,330 mi.
$50,998
Great Deal | $4,714 under
CPO Warrantied
Used
2020 Subaru Outback Limited
23,761 mi.
$32,997
Good Deal | $577 under
Home Delivery
Virtual Appointments
Used
2020 Land Rover Defender 110 HSE
29,698 mi.
$90,000
Great Deal
Home Delivery
Virtual Appointments
Used
2020 Hyundai Palisade SEL
26,230 mi.
$40,992
Good Deal
Home Delivery
Virtual Appointments
Used
2016 Porsche Macan S
76,862 mi.
$31,900 $2,000 price drop
Great Deal | $1,702 under
Used
2019 Audi Q8 Premium
72,060 mi.
$58,995
Used
2020 Toyota Highlander XLE
42,199 mi.
$42,989 $510 price drop
Good Deal | $320 under
Hot Car
Home Delivery
Virtual Appointments
Used
2020 Tesla Model X Long Range
19,394 mi.
$105,000
Home Delivery
Virtual Appointments
Used
2019 Hyundai Tucson Limited
16,987 mi.
$26,798 $200 price drop
Good Deal | $282 under
Home Delivery
Virtual Appointments
Used
2018 Ford F-150 Platinum
15,510 mi.
$48,900 $345 price drop
Good Deal
Home Delivery
Virtual Appointments
Used
2021 Hyundai Palisade Limited
8,308 mi.
$42,700
Great Deal
Home Delivery
Virtual Appointments
Audi Certified
2019 Audi Q8 3.0T Premium
9,591 mi.
$83,995 $1,000 price drop
Fair Deal
CPO Warrantied
Home Delivery
Virtual Appointments
Used
2016 Dodge Dart SXT
41,181 mi.
$14,495
Fair Deal
Hot Car
Used
2019 Mazda CX-5 Touring
10,013 mi.
$31,444 $500 price drop
Fair Deal
Home Delivery
Virtual Appointments
Used
2019 Land Rover Range Rover Velar P380 S
56,021 mi.
$56,999 $1,000 price drop
Fair Deal
Home Delivery
Virtual Appointments
Used
2020 Acura TLX A-Spec
33,848 mi.
$34,288
Good Deal
Hot Car
Home Delivery
Virtual Appointments
Used
2006 Lexus RX 400h 400h
203,171 mi.
$6,777
Fair Deal
Hot Car

The cut is because the federal battery vehicle tax credit begins to phase out when an automaker passes 200,000 in sales of eligible cars. The subsidy drops by half for six months, to a  fourth for another six months and then zero. The maximum federal tax credit is $7,500 for full electric cars, such as the Teslas, and is less for others, such as plug-in hybrids.

The price cut drops the cheapest Tesla Model S to $76,000 and the base Model X to $82,000. The least-expensive Model 3 currently available to order is now $44,000 for a rear-wheel-drive car with the mid-range battery, while a Model 3 with the long-range battery and all-wheel drive starts at $51,000. See the EPA range ratings for these vehicles here.

GM confirmed that it passed 200,000 sales in the fourth quarter, and the credit on its electric vehicles, such as the Chevrolet Bolt EV, will be cut in half on April 1. Nissan, which makes the Leaf electric, may pass the threshold sometime this year. The three, along with a collection of environmental groups and others, such as EV-charging-network companies, have formed the EV Drive Coalition to lobby Congress to lift the vehicle limit for the tax credit. Some states and cities offer EV subsidies in addition to the federal tax credit.

Related: 2018 Tesla Model X Review: A Polished Electric Car Meets an Eccentric SUV

Separately, Tesla said today that it delivered 245,240 vehicles in 2018, including 145,846 Model 3 cars and a combined 99,394 Model S and X vehicles. It also said that it delivered Model 3s only in North America, and that it only delivered mid- and higher-priced variants. It said that three-fourths of Model 3 orders in the fourth quarter were from new customers, rather than from people on its reservation list, and all sales were cash or loans. That indicates that many reservation holders may be waiting until Tesla begins making the promised $35,000 base model with a smaller battery or offers leasing for the Model 3.

Cars.com’s Editorial department is your source for automotive news and reviews. In line with Cars.com’s long-standing ethics policy, editors and reviewers don’t accept gifts or free trips from automakers. The Editorial department is independent of Cars.com’s advertising, sales and sponsored content departments.

 

Latest expert reviews