It’s been widely debated whether General Motors or Tesla would be the first automaker to reach the threshold for the $7,500 federal tax credit. Now, we know Tesla is first.
The Silicon Valley-based carmaker sold its 200,000th car in the United States, according to a Jalopnik report on Thursday. Green Car Reports also confirmed the news with Tesla. Buyers in the near future will no longer receive the $7,500 subsidy when purchasing a Tesla electric car.
Instead, the credits now enter a phaseout period. Buyers will be eligible for the $7,500 until December 31. Then, the credit drops to $3,750 for the first six months of 2019. In the final six months of 2019, the credit will fall to $1,875. The news may leave many Model 3 reservers in the cold as the base Model 3 with an advertised $35,000 price has not entered production yet. Some 400,000 individuals still have a Model 3 on order.
Every automaker in the U.S. is given the 200,000 threshold, but GM and Tesla became early adopters. The credit is based on a car’s battery pack size, and has included the Chevrolet Volt and Chevrolet Bolt EV. GM will likely reach the cap later this year.
CEO Mary Barra has called Congress to expand the electric-car tax credits, and currently, a bill is working its way through the House of Representatives to remove the cap. The bill would also extend the credits for at least another 10 years and turn them into an instant rebate at the time of purchase. The law was first created as a way to make electric cars more affordable and comparable to gasoline-powered vehicles. The thought process behind the regulation was battery prices would plummet and eventually, the cars would not need subsidizing. Electric cars likely won’t reach cost parity with traditional automobiles until sometime next decade.