Tesla Model 3 Long Range gets access to federal tax credit, now starts at $40,000

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Tesla Model 3 Long Range has now officially become eligible for the $7,500 federal tax credit for electric vehicles.

With increasing restrictions on battery material and component sourcing limiting the eligibility of some electric vehicles to the up to $7,500 federal tax credit, it has sometimes been difficult to track which cars have access as automakers are trying to adjust to meet the standards.

For example, when Tesla launched the new Model 3 Performance, we noted that it made more sense to get it over the cheaper Model 3 Long Range since the former was eligible to the tax credit – that’s assuming that the buyer is also eligible ($150,000 yearly income or $300,000 for dual filers).

Now, Tesla and the IRS have both confirmed that the Model 3 Long Range is now eligible for the full tax credit.

After the tax credit, the Model 3 Long Range now starts at roughly $40,000 – only $1,000 more than the Model 3 Rear-Wheel Drive, which is not eligible to the tax credit because it uses LFP battery cells from China.

Tesla doesn’t comment on changes, but it is presumed that the automaker has changed the batteries in the model in order to be eligible for the tax credit.

Batteries coming from China are the main reason for electric vehicles built in the US not to be eligible for the tax credit.

Electrek’s Take

$40,000 Model 3 Long Range? That’s a pretty good deal if you are eligible for the federal tax credit.

That’s about $7,000 less than the average new car sale price in the US.

I think that will help Tesla boost Model 3 sales, which have been lagging behind Model Y despite the recent refresh.

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