Why it matters: Tesla and other electric vehicle manufacturers have always used tax incentives as a major selling point for their vehicles. These tax credits normally sit at around $7,500, savings that can make the often-high cost of EVs easier to swallow for budget-conscious customers. Unfortunately, those incentives are disappearing for Tesla vehicles in the coming years.
The primary reason for this development lies in car sales.The IRS' EV tax incentives were only ever intended to be a temporary measure.
They were designed to encourage car makers and the public to move towards zero-emission vehicles.
As such, these incentives have a limit for each manufacturer. In Tesla's case, the company has officially sold well over 200,000 cars in the US, meaning the IRS' tax credit will be on its way out. While it's tough to say how heavily this will impact Tesla's bottom line, it's likely said impact won't be positive.
Tesla's vehicles, even the mass-market Model 3, can get pretty pricey, especially when they're packed full of optional features. With that in mind, losing $7,500 in savings may be enough to deter potential customers from buying the vehicles in the future.
There's some good news, in any case. The IRS' tax incentive system disappears gradually, likely to give companies time to adapt and develop new marketing plans. So, for the remainder of 2018, the $7,500 tax credit will remain intact.
Next year is a different story. At the start of 2019, the tax incentive will be halved to $3,750. During Q2 2019, it will be halved again, dropping the total savings to $1875. Beginning in 2020, the incentive will be gone.
Put simply, if you've considered purchasing a Tesla vehicle for some time, now is the time to do so.