Tesla’s Sub-$30k EV: Already Here for Californians
Tesla enthusiasts have long awaited the release of a sub-$30k electric vehicle (EV) from the automaker. However, it turns out that for Californians, this dream has already become a reality. While the entry-level, single-motor, rear-wheel drive Tesla Model 3 has a list price of $40,240, residents of California can take advantage of state and federal incentives to reduce the cost by over 35 percent. With Tesla’s recent round of price cuts, the cost of a Model 3 can potentially be lowered to just $25,240. This is less than the price of a Toyota Camry that starts at $26,320, as reported by Reuters.
State and Federal Incentives
California offers a Clean Vehicle Rebate Project (CVRP) that provides rebates to customers who purchase or lease an eligible zero-emission or plug-in hybrid vehicle. The rebate amount varies depending on the vehicle’s battery capacity and the customer’s income level. For example, a single-filer with an annual income of less than $150,000 can receive a rebate of up to $2,000 for a Model 3 with a battery capacity of 75 kWh or more.
In addition to state incentives, federal tax credits are also available for EV buyers. The federal government offers a tax credit of up to $7,500 for the purchase of a new EV. However, the full tax credit is only available for the first 200,000 EVs sold by each manufacturer. After that, the tax credit begins to phase out. Tesla reached this threshold in 2018, which means that buyers of new Tesla vehicles are only eligible for a partial tax credit.
Full Tax Credit for All Model 3s
Previously, some versions of the Model 3 were only eligible for half of the full $7,500 federal tax credit due to new rules about the geographical source of an EV’s battery and its components. However, Tesla was quick to react to the legislation and announced this week that every Model 3 once again qualifies for the full credit. While Tesla has not confirmed what technical changes it has introduced to make all three Model 3s eligible for the full $7,500 tax credit allowance, analysts suggest that the automaker may have swapped the CATL battery in the base car for an alternative from Panasonic or LG. Although the unit cost of those batteries would be higher, it would be more than offset by granting the car eligibility for maximum tax credits.
Prospective Buyers’ Response
The prospect of a $25k Model 3 is sure to entice plenty of prospective Californian EV buyers to a Tesla showroom. However, with a heavily revised version of the now six-year-old sedan on the horizon, others might be tempted to hang on and see what Tesla brings to the table in the second half of 2023.
Conclusion
For Californians, the sub-$30k EV from Tesla is already here. By taking advantage of state and federal incentives, residents can potentially purchase a Model 3 for just $25,240. While Tesla has not confirmed what technical changes it has introduced to make all three Model 3s eligible for the full $7,500 tax credit allowance, analysts suggest that the automaker may have swapped the CATL battery in the base car for an alternative from Panasonic or LG. This move would allow the car to be eligible for maximum tax credits. The prospect of a $25k Model 3 is sure to entice plenty of prospective Californian EV buyers to a Tesla showroom. However, with a heavily revised version of the now six-year-old sedan on the horizon, others might be tempted to wait and see what Tesla brings to the table in the second half of 2023.
