The EV maker didn't provide an explanation, however.
Tesla has announced that the $7,500 tax credit for some of its models could be reduced starting next year. The EV marker didn't explain why that would be the case, but it likely has something to do with the more stringent policies on battery manufacturing.
The announcement is currently displayed on Tesla's customer-facing website, brought to the public's attention by Twin Birch co-founder and Tesla investor Sawyer Merritt through Twitter.
According to the Inflation Reduction Act (IRA), batteries should contain 40% of critical minerals mined in North America or any country with which the US has a free trade agreement. Meanwhile, 50% of battery components must be manufactured in these regions to qualify for the tax credit. These figures rise by 10% annually.
https://twitter.com/SawyerMerritt/status/1678987213726523392
Since the Tesla Model 3 uses China's CATL batteries, the compact EV sedan's qualification for the tax credit will likely be affected starting next year.
Ford has also partnered with CATL to reduce the prices of its EV models and is building a $3.5 billion battery plant in Michigan, where the automaker will utilize technologies licensed from the Chinese company. But with so much uncertainty continuing to surround the implementation of Inflation Reduction Act rules, there's a possibility that neither Tesla nor Ford will be affected for some time to come.
It's also worth remembering that these pricing changes could be region-dependent, as various states have different tax incentive programs.
Some have theorized that because the facelifted Model 3 is in the works, Tesla is finding ways to empty its inventory. Warning prospective buyers that the model would become more expensive next year should encourage them to place an order in the reservation books immediately.
That said, company CEO Elon Musk has been having talks over tax credits with several government officials, so he may know more about battery restrictions from next year than we do.
Either way, a reduction in tax credits could affect Tesla's impressive sales performance following a series of price cuts. In Tesla's second-quarter earnings for 2023, the company delivered 466,140 units, almost a 100% increase over the same timeframe last year. Will it be able to maintain that form next year? We'll have to wait and see.
Keyword: Tesla Has Stark Warning For Future Of EV Tax Credits