Tesla CEO Elon Musk recently made a somewhat vague tweet stating that the company would be bearing in mind the expected phase-out of the federal electric vehicle tax credit — following the 200,000th Tesla sale in the US — when deciding on future Model 3 production and delivery schedules.
That’s an important factor to take into consideration, considering that many Model 3 reservation holders are probably banking on the receipt of the tax credit. Especially given the way that it will be phased out, a bit of tweaking to delivery or production timing could make a big difference in how many buyers end up receiving the full credit.
With there now being well over 325,000 Model 3 reservations (over $14 billion in implied sales, if we’re being optimistic about conversion rates) the maximization of tax credit eligibility would likely be prudent — as it would probably notably increase conversion rates.
Our buddies over at Gas 2 provide some more on that:
All this interest in the Model 3 is making people nervous about whether the federal tax credit will still be available when their Model 3 is manufactured. The answer lies buried deep within IRS Code Section 30D. I won’t burden you with the actual language. As usual, it is unintelligible to mere mortals. But here’s the gist of it.
Once Tesla sells its 200,000th car in America, the federal tax credit shifts from a focus on how many cars have been sold to when they are sold. For example, let’s assume Tesla sells it 200,000th car on January 1, 2018. During the rest of that quarter and for the entire quarter following, every car it sells will get the tax credit. If it could build and deliver 200,000 cars during those 2 quarters, every one of them would be eligible for the federal tax credit.
That would represent quite a production increase for the company, as compared to current figures. That said, all signs point towards the Model 3 being a relatively simple car to manufacture, as compared with the Model S and Model X. The vehicle was reportedly designed to be simple to produce (while still making use of the company’s now decade and a half of experience). So maybe 200,000 units produced in only 6 months is a possibility 2 years from now?