Electric automaker, Tesla (NASDAQ:) revealed on their website late Tuesday that the company’s Model 3 Rear-Wheel Drive and Long Range EV will no longer qualify for a $7,500 federal tax credit starting December 31st based on new guidance under the U.S. Inflation Reduction Act.
The U.S. Treasury, earlier this month, released guidelines outlining fresh battery sourcing restrictions set to take effect on January 1. These restrictions are designed to steer the U.S. electric vehicle supply chain away from dependence on China.
“Tax credit will end for Model 3 Rear-Wheel Drive and Model 3 Long Range on Dec. 31, 2023 based on current view of new IRA guidance. Take delivery by Dec. 31 for full tax credit,” the company said in a notice on its website.
Back in April, the Treasury announced updated guidelines that would halve the credits for the EV maker’s Model 3 RWD to $3,750. However, other Tesla models are expected to maintain the full benefit.
In July, Tesla indicated that the $7,500 federal tax credits for its Model 3 electric vehicles might face a reduction at the end of the year.
As of now, the U.S. EV credit mandates that 50% of the battery components’ value must be manufactured or assembled in North America to qualify for a $3,750 credit. Additionally, 40% of the critical minerals’ value used in the batteries need to originate from the United States or a country with which the U.S. has a free trade agreement in order to qualify for the credit.
Shares of TSLA are down 1.12% in pre-market trading on Wednesday.
