Energy Department Confirms All Tesla Model 3 Variants Qualify For $7,500 EV Tax Credit

All versions of EV giant Tesla Inc‘s (NASDAQ:TSLA) Model 3 is now eligible for an EV tax credit of $7,500, the U.S. Department of Energy confirmed on Tuesday.

What Happened: After the U.S. treasury department issued fresh guidance on battery sourcing in March, Model 3’s Rear-Wheel Drive (RWD) and Long Range versions were qualified only for a tax credit of $3,750 given that its batteries come from China. The Performance range, however, was eligible for a full tax credit.

The government on Tuesday updated its official website listing the vehicles eligible for tax credit to add Model 3 RWD and Long Range versions under vehicles that qualify for $7,500 tax credit. There are presently 22 battery electric vehicles eligible for a full tax credit from automakers including Volkswagen, Ford and General Motors.

Over the weekend, Tesla had updated on their website that all new Model 3 vehicles in the U.S. qualify for full EV tax credit of $7,500. Tesla and its CEO Elon Musk also retweeted a Twitter post flagging the change by Tesla investor Sawyer Merritt.

Why It Matters: While the Model 3 RWD version is priced at $40,240, Long Range starts at $47,240 and Performance at $53,240. With the incentives, Model 3 now starts at $32,740.

As per the guidelines issued by the Treasury in March, the EV tax credit amount will depend on whether the vehicle meets the critical mineral and/or battery component requirements. If a vehicle meets both requirements, it may qualify for the full $7,500 credit.

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