Only a few days to buy a Tesla if you want federal tax credit of $ 7500

Paul Ausick, 24/7 Wall Street

Published at 9:56 AM ET Oct. 12, 2018

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The manuscript was on the wall last July when Tesla Inc. (NASDAQ: TSLA) reached the milestone delivery of its 200,000th fully electric vehicle. That was the good news.

The less good news was that the company's federal tax benefit to buyers of $ 7,500 would be split in two (up to $ 3,750) on January 1, 2019, to be cut in two (up to $ 1,875) by 1 July, and would disappear completely January 1, 2020.

On the website of the company this morning this message appears on the page concerning the three models:

All orders placed before October 15, 2018 are delivered at the end of the year and are eligible for the full federal tax credit of $ 7,500.

Tesla is the first electric car manufacturer to feel the impact of lowering the tax benefits that were implemented in legislation in December 2010 for plug-in vehicles (hybrids like most Toyota Prius models are not eligible).

Earlier this week, a bill was submitted in the US Senate that would immediately end the tax benefits for all car manufacturers. The legislation also includes the imposition of an unspecified user charge for alternative fuel vehicles to mitigate the impact of their non-payment on the federal tax on gasoline.

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In July last year a competing law was introduced in the American house that eliminates the delivery threshold for plug-in vehicles and replaces it with a 10-year period in which the incentive is paid for every car made. Even that would not help Tesla much. The company delivered its first fully electric Roadster in June 2009.

The smart thing to do, of course, would be to increase the gasoline tax to pay for the carbon emissions from the internal combustion engines. The average passenger car on US roads and highways emits 4.6 tons of carbon dioxide per year, according to U.S. Pat. Environmental Protection Agency.

Depending on the target temperature change to meet the climate targets set out in the latest report from the Intergovernmental Panel on Climate Change, US consumers would have to pay between $ 10 and $ 5,500 per tonne of CO2 emissions. That is an essentially meaningless range of $ 46 to $ 27,000, or, in cost per gallon, $ 0.09 to $ 240.

The most important question, of course, is what Tesla CEO Elon Musk (tweet) will say about the loss of the incentive. Neither Bill in Congress does much, or anything, to return the federal incentive to Tesla's buyers. That places Tesla at a clear disadvantage for BMW, Mercedes, GM and the rest when it comes to the price of an electrical plug-in.

Predicting what Musk might say is a crazy game, but he has to say something.

24/7 Wall Street is a USA TODAY content partner that provides financial news and commentary. Its content is produced TODAY independently of the USA.


The CEO of Tesla has tweeted a number of dubious items, and one of them brings a lawsuit to the Securities and Exchange Commission.

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