The Holy Grail for electric vehicle adoption is said to arrive once conventional electric vehicles can be had for less than $30,000. For some US buyers, that’s now the reality, thanks to government subsidies.
Earlier this week, Tesla ( TSLA ) announced on its website that all versions of the Model 3 sedan now qualify for the full $7,500 federal tax credit; previously, the cheapest rear-wheel-drive (RWD) version of the Model 3 qualified for half the amount. The federal government confirmed the announcement on its fueleconomy.gov website.
The federal government’s requirements for the electric vehicle tax credit require that 40% of the critical minerals be mined in the US or a country with a free trade agreement, and 50% of the value of the battery components has been to be manufactured or assembled in North America.
While no reason was given for the change, it can be assumed that Tesla has updated where it sources the materials for the Model 3 RWD’s batteries or assembled the packs. Before the announcement, Tesla was apparently using LFP (Lithium Ion Phosphate) battery cells made by China’s CATL.
However, the 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 limits ($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, there can be more incentives on electric vehicles like the Model 3 that drive prices even lower. New York State offers up to $2,000 off 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 federal and California state incentives brings the Model 3 down to $25,240, which Reuters notes is below the cost of a new Toyota Camry (starting at $26,320).
Additionally, 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, meaning the price of this car, including all tax incentives, drops to a staggering $22,830 if the buyer meets all the requirements of eligibility
Tesla investors and analysts are looking for its gen-3 vehicle platform to open up a whole new market of middle-class and young buyers to electric vehicles. It turns out that some of those buyers, especially in California, could get a Tesla on the cheap right now, at least while the incentives last.
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Pras Subramanian is a reporter for Yahoo Finance. You can follow it Twitter yen Instagram.
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