The new EV tax credit will only apply to some Teslas
Tesla
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.
Model
Price
Qualifies
Model 3 RWD
$46,990
Model 3 Performance
$62,990
Model Y Long Range (AWD)
$65,990
Model Y Performance
$69,990
Model S
$104,990
Model S Plaid
$135,990
Model X
$120,990
Model X Plaid
$138,990
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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The feature is now possible thanks to what Wes Morrill, Cybertruck’s lead engineering, points out is a huge rewrite of Tesla’s Trip Planner, which not only makes it much more accurate but will now allow users to choose their arrival charge percentage.
More Accurate Trip Planner
When you navigate to a destination, your Tesla will automatically calculate when, where, and how much you need to charge. While the process seems straightforward, Tesla deserves a lot of credit for creating a simple user experience because a lot goes into accurately determining this information.
Tesla has to calculate many moving pieces in order to accurately predict when and where you should stop. First, it needs to consider your driving efficiency and wind direction, terrain elevation, traffic, vehicle speed, and ambient temperature. It also needs to predict the best Superchargers to stop at, taking into account congestion and charger speed.
Now, according to Wes’ post this morning, Tesla has made backend improvements to the Trip Planner, thanks to a rewrite by several engineers, that bring even more accurate predictions to Trip Planner.
It sounds like these changes are mostly server-side, so thanks to their OTA connection, more accurate predictions should be available to all vehicles—no vehicle update is required.
Arrival State of Charge
Along with Tesla’s improvements to Trip Planner, Wes also stated that these improvements allow for a popular feature request — the ability to select your desired charge level at arrival.
Up until now, Tesla’s Trip Planner tried to get you to your destination as quickly as possible, which usually meant arriving with a low state of charge.
While this was fine if you have a charger at your destination, it’s not great if you don’t, or it could be even worse if there are no chargers nearby.
Max de Zegher said on X that he has heard the requests for a selectable arrival state of charge. Wes later clarified this by saying that these improvements to Tesla’s Trip Planner now allow for additional features to be added, such as “desired arrival charge.”
Actually trip planner got a huge rewrite on the back end. I had a great conversation with one of the engineers working on this over a morning run a few weeks back, it's pretty neat. The rewrite also unlocks additional features, like desired arrival charge.
Given that Max de Zegher’s comments came last night and Wes Morrill commented this morning, this feature request likely won’t arrive with the upcoming Holiday Update. Tesla actually hinted at such a feature being added in their last app update, so it does seem like they’ve already planned for it.
Although ‘Arrival State of Charge’ was on our wishlist for the Holiday Update, it looks like it may arrive soon after the holidays.
As Tesla update 2024.44.3 continues to roll out, we’re seeing more features in this update. While the update doesn’t include many new feature, it either improves existing features or rolls out a feature to new regions. Actually Smart Summon is rolling out to Europe, although with more strict restrictions. AutoPark is also rolling out to the UK and several other countries for the first time, and we’re now seeing improvements to Autopark arriving in North America and Europe.
As Tesla’s 2024.44.3 update continues to roll out, more features in the update are being revealed. While this update doesn’t introduce many entirely new features, it does refine existing features or expand the reach of others.
Notably, Actually Smart Summon is now rolling out in Europe, albeit with stricter regulations. Vision-based AutoPark is debuting in the UK and several other countries, while North America and Europe are receiving updates that further improve Autopark’s functionality.
Improvements to Autopark
As part of the same update, Tesla is making a batch of improvements to Autopark in Europe and North America. In the release notes, Tesla states that Autopark is receiving performance and visualization improvements. Unfortunately, Tesla doesn’t go into more detail here, but it sounds like these improvements could be the faster and more accurate Autopark enhancements Ashok Elluswamy talked about earlier this year.
Those improvements are expected to make Autopark more reliable, let it pick spots faster, move faster into them, and also shift between forward and reverse faster. The improvements would also let the vehicle park in tighter spots than before, with more accurate vision.
We’ll have to wait and see how this improved Autopark compares to the current version.
Your vehicle's Autopark performance and visualizatons have been improved.
Autopark in the UK and Other Countries
Countries in Europe that previously didn’t have access to Vision-Based Autopark, including the UK, will now have access to the new Autopark for the first time with update 2024.44.3 and later. This includes countries such as the UK, Ireland and Malaysia.
While these countries are receiving Autopark, it’s not clear whether it includes the Autopark improvements that other regions are receiving. The release notes don’t include the Autopark Improvements section in these countries, but that could be due to Tesla simplifying the release notes for these countries that are receiving Autopark for the first time.
With Autopark finally introduced in these regions, it’ll be the first time vehicles without ultrasonic sensors are capable of Autopark. Vision-Based Autopark is far more reliable, faster, and easier to use in more situations than the older USS-based solution.
