Tesla EV buyers may soon find themselves stripped of the tax benefit that the entry-spec Model 3 sedan is supposed to be eligible for. The issue is in the traction battery components produced outside of the USA – in China.
For starters, let us be clear: it looks like only the Standard Range spec of the Tesla Model 3 is affected. Buyers of all other Model 3 variants (and Model Y, at that) will continue to enjoy benefits of up to $7,500.
So, why did the Model 3 Standard Range fall out of grace in the USA? The incentive program it is eligible for has been running in the country since the beginning of the year and applies to all vehicles assembled in North America using either locally manufactured components or components imported from free-trade countries. China, where the Model 3 Standard Spec batteries are sourced from right now, has never signed a free trade agreement with the USA. All other versions of the car utilize batteries made by either Tesla or Panasonic in Nevada, so they appear safe.
The tax incentive was introduced in January on the conditions described above, but administrative errors prompted the authorities to postpone enforcing the battery origin clause until Q2 2023. With March already reaching its end, however, any Model 3 buyers who take delivery of their Standard Range saloon after March 31 will have to fork over an additional $7,500 before they can drive it.