Tesla Inc’s swift alteration of its battery supply chain has allowed all models of its Model 3 vehicle to be eligible for federal US credits. Coupled with other tax breaks, this could reduce the price of Tesla’s vehicle to be below that of a Toyota Camry.
The Biden administration confirmed that all Tesla Model 3 cars now qualify for $7,500 in electric vehicle consumer tax credits. Previously, only two out of three versions were eligible for half the amount.
New battery regulations implemented in April reduced the credit for the Model 3 Standard Range Rear Wheel Drive and Long Range All-Wheel Drive to $3,750. However, Tesla announced last week that all Model 3 versions once again qualify for the full credit, a change confirmed on the government’s fueleconomy.gov website.
With the application of the $7,500 federal tax credit and an additional $7,500 from the California tax rebate, depending on income and other criteria, the starting price of a Model 3 could potentially drop from $40,240 to $25,240; by comparison, Toyota’s Camry is priced from $26,320.
Analysts suggest this change in subsidies, combined with aggressive discounts, could aid Tesla in boosting sales of its flagship Model 3, which has been impacted by a significant revamp this year, economic instability, and increased competition.
Insiders have proposed that Tesla might have adjusted its battery supply chain to fulfill battery mineral and battery component requirements for the federal subsidy.
According to Caspar Rawles, an analyst at Benchmark Mineral Intelligence, Tesla might have replaced CATL with Panasonic or LG Energy Solution for the cheapest Model 3 Rear Wheel Drive version made in the U.S.
Tesla previously used CATL’s LFP battery cells for its Model 3 Rear Wheel Drive and nickel-based cells from LG Energy Solution for its Model 3 Long Range.
In response to queries about Tesla and any changes to its supply arrangements in North America, CATL asserted that its strategic partnership with its customers remains unchanged and will continue to deepen and improve.
