Washington DC
CNN
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Company executives said Wednesday that Tesla buyers may be able to take advantage of new federal tax credits for electric vehicles next year. Credits can be up to $7,500 for new vehicles and $4,000 for used vehicles.
Tesla’s eligibility for previous tax credits expired in January 2020 when it hit the 200,000 limit on cars sold per automaker. The car ceiling of 200,000 cars was raised on January 1 with the new rules, but The new requirements are more stringent than the previous system. Tesla is waiting for the US Treasury to publish detailed guidance by the end of the year.
The legislation is open to some interpretation of how the government calculates the value of battery components, but a significant share of the components must be manufactured or assembled in North America, to qualify for the half of the $7,500 credit. The other half depends on important minerals being mined or processed in the United States or in a country with which it has a free trade agreement. The percentages will gradually increase from 2024 to 2029.
“At this time, it’s difficult to fully determine the eligibility criteria, but we believe Tesla is in a very good position to have a significant share of that for solar storage and electric vehicles as well,” an unidentified Tesla representative said on a call with investors Wednesday. (Tesla often doesn’t specify who speaks on behalf of the company on investor calls.)
The notes are a reflection of some kind for the car maker, like Tesla CEO Elon Musk spoke out against proposed tax credits on electric cars last year.
“We don’t need the $7,500 tax credit. I would say, frankly, I would say I would take the entire bill,” Musk said in December 2021 on the infrastructure bill, citing concerns about the growing US deficit.
And when an early proposal to extend the electric vehicle tax credit included additional money for vehicles made by union workers, Musk was critical again.
“It is not clear how this serves US taxpayers,” Musk said. “This was written by Ford/UAW lobbyists, who are making their electric car in Mexico.”
Musk had a contentious relationship with the Biden administration, and was angered by the White House highlighting its rivals’ electric car efforts rather than his own. Recently, earlier this month, Musk told Republican Senator Lindsey Graham that “we didn’t ask for this,” referring to the tax credit included in the Inflation Reduction Act, “GM and Ford did.”
But Tesla and its executives were more receptive to the tax breaks on Wednesday.
“We view the passage of the Inflation Reduction Act as a major boost toward accelerating our mission while expanding the battery supply chain overall in the United States,” an anonymous Tesla executive said on the call.
Tesla allows the public to vote on the questions its executives must answer. The most voted question asked about Tesla’s ability to meet electric vehicle tax credits in 2023, 2024 and 2025.
Tesla did not address specific years, but Musk said that “at a high level I would say we expect to fully meet the requirements of the IRA.”
Another Tesla representative noted on the call that it manufactures battery units and vehicles in the United States, which will help it qualify.
Half of Tesla’s car lineup will by default be ineligible without a significant price drop. It seems unlikely that a Tesla Model X SUV and a Tesla Model S sedan would qualify, as SUVs should cost no more than $80,000 and sedans shouldn’t exceed $55,000. The most expensive Model X is $120,990, and the cheapest Model S costs $104,990.
Some versions of the Model 3 sedan and Model Y SUV may qualify, but buyers must still meet the income requirements. The income of a single buyer must not exceed $150,000 or $225,000 if he is the head of the household or $300,000 if he is married.
Originally published at San Jose News Bulletin
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