Tesla stock rises as all Model 3 sedans now qualify for full EV tax credit
Tesla ( TSLA ) shares are surging today, up as much as 4% in early trading and hitting highs not seen since early October of last year, as investor bullishness increases following news that all Model 3 sedans now qualify for the full federal EV tax credits. Tesla shares are on track for their ninth consecutive day of gains, the longest winning streak since January 2021.
Earlier this week, Tesla announced on its website that all versions of the Model 3 sedan qualify for the full $7,500 federal tax credit; previously, the cheaper Model 3 Rear-Wheel Drive (RWD) version qualified for half the amount. The federal government confirmed the announcement on its fueleconomy.gov website.
The federal government̵[ads1]7;s EV tax credit requirements require 40% of the critical minerals to be mined in the US or a country with a free trade agreement, and 50% of the value of the battery components to be manufactured or assembled in North America.
Although no reason was given for the change, it can be assumed that Tesla has updated where it sourced the materials for the Model 3 RWD batteries or where it assembled the packs. Prior to the announcement, Tesla reportedly used LFP (lithium ion phosphate) battery cells made by China’s CATL.
Nonetheless, inclusion of the full federal tax credit means the Tesla Model 3 RWD now costs $32,740 if buyers meet criteria including income restrictions and MSRP caps ($55,000 for cars; $80,000 for trucks and SUVs).
While $32,740 is a relative deal in a new car market where the average price is around $45,000, you can get more incentives on electric cars like the Model 3 that pull prices down even lower. New York State offers up to a $2,000 rebate on electric vehicles through its Drive Clean rebate for which the Model 3 qualifies.
In California, the state offers an even bigger incentive — a $7,500 tax credit that depends on income and other requirements. Including both the federal and California state incentives brings the Model 3 down to $25,240 — which Reuters notes is below the price of a new Toyota Camry (starting price $26,320).
Furthermore, Tesla has local incentives in states like California for specific vehicles. Tesla is currently offering a $2,410 incentive for the Model 3 RWD in Southern California, which means that the price of this car including all tax incentives is reduced to an astounding $22,830 if the buyer meets all eligibility requirements.
Tesla investors and analysts are looking for its gen-3 vehicle platform to open up a whole new market of middle-class and younger buyers for electric cars. It turns out that some of those buyers, especially in California, can get a Tesla cheap right now — at least while incentives last.
—
Pras Subramanian is a reporter for Yahoo Finance. You can follow him further Twitter and on Instagram.
Read the latest financial and business news from Yahoo Finance
