Tesla has announced on its official website that all Model 3 buyers in the United States may once again look forward to a $7,500 federal tax deduction. It did not clarify how it managed to accomplish that; until recently, only those who bought the Performance top spec could expect the biggest discount.
According to the U.S. law on inflation prevention, the maximum deduction amount is divided in two halves. Electric vehicles with traction batteries made largely from locally sourced materials (50% or more in component value) are eligible for a $3,750 deduction. A further $3,750 is provided if the crucial battery components making up at least 40% of its value are sourced in the USA or any country with which it has a free trade agreement.
These regulations entered into force on January 1, 2023. The U.S. Department of Commerce has started actively enforcing them since April 18, 2023. Following an investigation, the cheapest Tesla Model 3 was only found eligible for a $3,750 deduction because its batteries were imported from China. The same fate soon befell the middling Long Range spec, driving the prices up across the board. Now, the most basic Model 3 RWD is once again obtainable at a relatively low $32,740.