We take a look at the new EV tax credit and which Teslas qualify

The new EV tax credit will only apply to some Teslas

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The Inflation Reduction Act (a sweeping $750 billion health care, tax and climate bill) was signed into law by President Joe Biden.

Included in the package are some incentives that will make buying electric cars in the US more affordable. The caveat is some of the most popular EVs being sold won’t see any difference.

A tax credit of up to $7,500 will be offered to purchasers of new all-electric vehicles and hybrid plug-in vehicles through 2032. For used versions of these vehicles, the plan would also establish a supplementary tax credit worth a maximum of $4,000.

However, the legislation also introduces additional restrictions on who can be eligible for the credit and which vehicles are eligible for it.

For brand-new cars, the manufacturer's suggested retail price for sedans must be less than $55,000 in order to qualify for the tax credit. For SUVs, trucks and vans, the maximum price would be $80,000.

That price cap effectively leaves out the Tesla Model X and Model S, which start at over $100,000, alongside other premium vehicles like the Mercedes EQS, Porsche Taycan, and GMC Hummer. Some of the more expensive configurations of the Tesla Model 3 won't qualify either.

Which Tesla Models Qualify

The only Model 3 that would currently qualify is the entry-level, rear-wheel drive model, which costs around $47,000. This model would be able to take full advantage of the federal tax credit.

Tesla recently discontinued orders for the all-wheel drive Model 3 Long Range model, which could have made the $55,000 cutoff if it received a small price reduction. It'll be interesting to see if Tesla begins to offer that model again in the near future.

The Model 3 rear-wheel drive is the only Tesla that is currently sold for under $55,000. Luckily Tesla's Model Y vehicles are classified as SUVs and will also classify under the truck, vans and SUV portion of the tax credit.

Since SUVs can cost up to $80,000 USD and still qualify for the full tax credit, both Model Ys will qualify as well, including the Performance model which currently comes in at just under $70,000.

This is significant, given that the Model Y and Model 3 are currently the most popular EVs in the United States. In the first half of 2022, more Model Y and Model 3s were sold in the United States than the combined sales of the next ten most popular EVs.

Used electric vehicles must be at least two model years old in order to qualify. The price cap would be $25,000 and the credit would be limited to the lesser of $4,000 or 30% of the cost of the vehicle.

Other hurdles include a requirement for the final assembly needs to be in North America. That should exclude EVs manufactured by Hyundai Motor, Kia, Audi, and Polestar Automotive. Those firms assemble EVs sold in the U.S. in Asia and Europe.

Additionally, the criteria for the EV purchase credit will alter. For instance, there are specifications for the locations of battery pack assembly and the sourcing of battery components. Those specifications appear to be intended to strengthen the American EV supply chain. Around 2024, these new complexities go into effect. The list of approved automobiles is maintained by the Treasury Department.

It's important to note that the existing $7,500 tax credit, which was established in 2008 and 2009 in order to encourage the adoption of electric cars, included a phase-out provision that would apply if a manufacturer sold 200,000 of the vehicles. 

Tesla reached that mark in 2018, and as of right now, its electric vehicles are not eligible for the tax credit. The same applies to General Motors and Toyota (including its Lexus brand). But thanks to the revised bill's removal of the 200,000 sales cap, their electric cars would once again be eligible for the credit.

Additionally, single taxpayers with modified adjusted gross income beyond $150,000 would not be eligible for the credit. This income cap would be $300,000 for married couples filing jointly and $225,000 for single people filing as heads of household.

It might seem like a smart idea to purchase an electric vehicle right now given all the changes to the EV tax credit. However, bear in mind that several benefits, such as the removal of manufacturer limitations and the application of the credit at the time of sale, won't take effect until 2024 or the next year.

Even though this modification to the tax incentives will make the already difficult to navigate EV market much more complicated in the immediate term, in the long term it will be great news for customers, especially middle-class mainstream consumers who later on can purchase more affordable EVs.

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Tesla’s New Signal Viewer Panel in Service Mode+ Allows You to View Real-Time Data

@scotsrule08 on X

Tesla’s latest software update, version 2025.2, brings new features to Service Mode, continuing the trend of improving in-vehicle diagnostics.

Currently, this feature is only available for vehicles with AMD Ryzen infotainment systems and requires Service Mode+, which is a subscription service aimed at technicians. Intel-powered vehicles aren’t supported yet, but we expect this feature to roll out to them as well unless hardware limitations prevent it.

Thanks to Spencer for providing an image of the panel in action.

Signal Viewer Panel

While update 2025.2.6 adds four service mode improvements, including updates to brake burnishing, charge port calibration, and noise recording panel improvements. In this article, we’ll focus on the new signal viewer panel.

This new panel offers a live data feed from selectable vehicle sensors. You select the signals you’re interested in and it’ll plot the signal on a graph. In addition to allowing you to view real-time signal data, it also allows you to record them.

The signals are searchable and can be easily added or removed from the panel. You can track up to 10 sensors, and the UI allows three of them to be viewable at once.

However, this is Service Mode and it’s more than just pretty looks. You can really dig down into these charts. You can pan them left and right through time, and tapping a specific point shows the exact value of that signal. The panel also supports pinch-to-zoom, enabling you to adjust the time scale across all panels simultaneously.

This feature is exclusive to Service Mode+, which requires a subscription to Tesla’s ToolBox3 software and a connection to a computer. It’s designed to help technicians diagnose issues related to signal quality, noise in the vehicle’s electrical systems, and signal variance in components during driving.

We’re excited to see Tesla’s continued focus on repairability, especially with additions like the Cybertruck’s Interactive Wiring Diagram and the launch of the Tesla Online Parts Catalog, which lets customers purchase parts directly.

Plus, with the reduced cost of ToolBox 3 subscriptions, even DIY enthusiasts now have access to tools that make Tesla repairs more accessible.

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Tesla Introduces New Model Y Variants in Europe; Ends Launch Series

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Tesla has updated its Model Y lineup in Europe, introducing new standard configurations while discontinuing the limited-edition Launch Series. With the new variants now available, European customers will have more choices and cheaper options to pick from.

The Launch Series and some of its exclusive features will no longer be offered—except in the UK, where it remains available alongside the new lineup.

New Models Introduced

Tesla’s new Model Y lineup in Europe includes three main variants. The prices vary slightly from country to country.

• Rear-Wheel Drive (RWD): Priced at €44,990, this model is the most affordable new Model Y, but it also has the shortest range and is missing a few features available on other trim levels.

• Long Range Rear-Wheel Drive (LR RWD): Available for €49,990, this version is essentially the same as the RWD model, but with a larger battery. It has seen a €1,000 price increase compared to the outgoing Long Range RWD model.

• Long Range All-Wheel Drive (LR AWD): At €52,990, this model has seen a price drop of €2,000, making it a better deal than the previous LR AWD Model Y. This is also the only new Model Y to come with most of the same features as the Launch Series, including additional speakers, a subwoofer, premium materials inside the cabin and improved acceleration. Acceleration boost should also become available for this model, letting it match the performance of the Launch Series.

All Model Y variants come with all the improvements that we’ve discussed about the new Model Y, including the new front and rear light bars, improved aerodynamics, ventilated seats, improved heat and sound isolation, and the 8-inch rear touchscreen. Some exclusive options, like the Midnight Cherry Red paint, appear to no longer be available. However, Tesla has already said that they’ll be introducing new paint options for the Model Y in North America.

Compare Model Y Variants

Here’s how the various Model Y variants compare to each other:

Launch Series Ends

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The Launch Series, which debuted just weeks ago in Europe, has now been phased out. This limited-edition model was priced at €60,990 and included a suite of premium features comparable to a bundle deal you may find with other products. It came equipped with Full Self-Driving (FSD), Acceleration Boost, and exclusive badging on the rear liftgate, door sill plates, and puddle lights.

While the Launch Series is no longer available for new orders in most European countries, customers can still get a similar vehicle by opting for the Long Range AWD model and manually adding premium features like FSD. Acceleration Boost, which was standard in the Launch Series, is expected to become available for purchase once these vehicles are delivered or soon afterward. However, some exclusive elements, such as badging and trim details, will remain unique to the discontinued edition.

For now, the UK remains an exception, still offering the Launch Series alongside the newly introduced models.

Performance Model Still to Come

With Tesla now introducing the expected variants of the refreshed Model Y, one notable absence is the Performance model. While the Launch Series was fast due to the Acceleration Boost addon, there’s no doubt the Performance version will be in a league of its own.

What we saw Tesla do with the 2024+ Model 3 Performance variant was more than just using binned motors. The vehicle featured unique bumpers, a spoiler, an improved suspension, sport seats, Track Mode V3 and other features that made the vehicle stand out compared to the Model 3 AWD.

The Performance version of the new Model Y is expected to become available later this year, however, expect it to carry a $5-$8k premium over the AWD model.

Other Regions to Follow

As Europe phases out the Launch Series, other regions are expected to see similar changes. With the other models now revealed, owners in other regions have a better idea of whether they should buy the Launch Series or wait for the additional models to arrive.

Tesla naturally adjusts its offerings based on market demand, and if sales of the Launch Series remain strong in other parts of the world, Tesla will likely wait it out a little longer before offering the other models.

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