Tesla's Model 3 is expected to lose half of its tax incentive
Tesla
Tesla has sounded the alarm bells once again regarding the potential reduction in the federal tax credit. As the year-end approaches, potential buyers may want to make a decision and possibly save some money, as there may be a significant impact on the final price tag of their electric car.
All new Model 3 vehicles currently qualify for a federal tax credit for eligible buyers. $7,500 tax credit expected to reduce to $3,750 on Dec 31, pending federal guidance. Take delivery to guarantee full incentive.
Changes to the Tax Credit
The 2024 tax credit's eligibility criteria will tighten. Specifically, the requirement for critical minerals used in batteries, such as those extracted or recycled within the U.S. (or nations with a U.S. free trade agreement), will increase from 40% to 50%. Furthermore, the mandate for battery components will also intensify, with 60% of these components needing domestic manufacturing or production within free trade agreement nations. Vehicles that don't meet these more stringent guidelines will only access half the credit, $3,750 USD.
A Flashback to July's Warning
We've heard the warning before. In July, Tesla made a somewhat ambiguous warning about the impending decrease of the coveted $7,500 tax credit on some of its vehicle models. Back then, while all Model Ys were eligible for the full credit, the base version of the Model 3 faced a restriction due to its use of Chinese battery cells. This particular battery choice made it eligible for just half the credit. The higher-end models, Model S and Model X, didn't qualify because of their premium pricing. In an exciting twist, Tesla announced that even the base Model 3 would be eligible for the full tax credit.
The Highland is Coming
Fast forward to the present, Tesla is again cautioning its consumers. It is worth noting that Tesla plans to roll out the new Model 3 Highland to North America in 2024. While it hasn't reached the U.S. shores yet, this development could be strategic. Clearing out stocks of the older design Model 3s before the Highland's U.S. debut could be why Tesla urges consumers to capitalize on the current tax incentives by taking delivery soon.
Also, Tesla missed its third-quarter projections. There are plenty of valid reasons behind having fewer deliveries. However, the point remains that the numbers were down. If we have learned anything about Elon Musk over the years, he likes to show constant improvement. We saw this late last year when Tesla rolled out some significant price decreases as the end of the year approached.
As we venture into 2024, some pivotal shifts are expected in the electric vehicle federal tax credit framework. The most notable change is the point of access - it will transition from a tax rebate to an immediate discount at the dealership.
Tesla reiterates concerns about the potential tax credit reduction, and prospective buyers must be proactive. The clock is ticking, and decisions made in the next few months could save some cash or be a moot point.
Subscribe
Subscribe to our newsletter to stay up to date on the latest Tesla news, upcoming features and software updates.
Tesla China has outlined some features in Tesla’s latest update in the region, which is version 2024.26.9. In the list of features, Tesla mentions many of the features we’re already aware of, including Automatic Emergency Braking Improvements, YouTube Music and more, but they also reveal one additional feature that’s exclusive to China. The new feature allows the new blind spot indicator to light up if there’s something in the way when you’re opening your door. The blind spot indicator is exclusive to the new Model 3 and Cybertruck, which features little red LEDs in the front speaker grills next to the mirror.
Blind Spot Door Warnings
With update 2024.26.9, Tesla says that if any vehicle door handle button is pressed on vehicles with a Blind Spot Warning Light (currently just the 2024 Refreshed Model 3 Highland and the Cybertruck), the blind spot warning indicator in the vehicle’s front speakers will illuminate.
This object detection includes cars, pedestrians, cyclists, and “other objects”. We’re not quite sure what fits into the “other objects” category, but likely things that FSD picks up on normally – including traffic cones, bollards, and other large obstacles.
According to Tesla’s description, there appears to only be a visual warning for the driver and front passenger, with nothing displayed on screen or an audible tone. We’re sure Tesla will continue to expand and refine this feature like they’ve done with various features in the past, but for now, it's only available in China. Blind Spot Door Warnings need to be enabled under Controls > Safety before this feature will function.
We’d love to see Tesla use the ambient light strip in the vehicle to warn passengers and drivers when their door is obstructed – it would be a fantastic use of a luxury feature for utilitarian safety – rather than just the single red LED inside the door speaker. Additionally, an audio warning would be excellent for those who may not see the red dot.
Tesla appears to be making progress on FSD in China, with the latest update available in the region now displaying the FSD button in the vehicle. Tesla makes no note of the change in the release notes, nor does it appear to be available in any other regions that are expected to receive access to FSD in the future.
FSD in the UI
In the Autopilot options in China, users could previously select Traffic-Aware Cruise Control or Auto Steer (Beta), however, as of 2024.26.9, the Full Self Driving (Supervised) button is now visible – but greyed out. Tapping on the option doesn’t do anything just yet, but the addition of the button could be a hint that Tesla is planning to enable the feature soon.
Underneath the Autopilot selection, Tesla also has a phrase that says, “Full Self-Driving (Supervised) needs to use an updated version of navigation maps. Connect to Wi-Fi to download” (Thanks, Luis Zhu). It’s possible the option is greyed out because the software needs updated maps to work. There are no reports yet of what happens when the navigation map is downloaded.
We previously reported that FSD was on hold in China, even after Tesla received approval to start testing FSD in China. This flip-flopping is interesting but could be due to regulatory issues between China and Tesla regarding data collection and where the data is stored. Now that the button is in the UI – Tesla is clearly confident that it either has received approval or will in short order.
It certainly appears that Tesla is going to be opening up FSD in the region fairly soon. It’ll be interesting to see if Tesla uses the same Safety Score feature they used in the U.S. when choosing drivers to beta test the program.
Elon Musk previously mentioned that FSD (Supervised) would be rolling out to global markets, including Europe and China, as Tesla received approvals from governments in those nations.
