Tesla’s Model 3 vehicle is now cheaper than a Toyota Camry in California, as the company owned by Elon Musk has confirmed that the sedan qualifies for a $7,500 tax cut.
The all-electric vehicle starts at $40,240, but the rebate — combined with another $7,500 California tax credit, depending on income and other requirements — brings it down to $25,240.
The Japanese-made Camry is listed at $26,320 or higher.
Tesla updated its website on Friday to reflect the tax cut, and on Tuesday the Biden administration confirmed that all Tesla Model 3 vehicles are now eligible for electric vehicle tax credits.
Only two of the three models previously qualified for half of the credits.
That’s according to analysts specializing in the commodity markets for lithium-ion batteries Reuters that Tesla may have been required to change its sourcing of battery minerals and components in order to qualify for the subsidy.
The all-electric vehicle starts at $40,240, but the discount brings it down to $25,240
With state and federal tax credits, a California-bought Model 3 is more than a thousand dollars cheaper than the Japanese-made Toyota Camry, which costs $26,320 or more
When the new battery procurement rules were introduced by the Biden administration last April, Tesla’s Model 3 Standard Range Rear Wheel Drive and Long Range All-Wheel Drive were suddenly only eligible for half of the credit, leaving buyers with only $ saved 3,750 each.
Last March, Tesla was in talks with China’s dominant electric vehicle battery maker, Contemporary Amperex Technology Co. Ltd. (CATL), to build a new battery factory in the US.
But those efforts have run into hurdles thanks to new EV rules with President Biden’s signing of the $430 billion Inflation Reduction Act, which imposed North American assembly and new mineral requirements on vehicles for EV credits.
The new rules were introduced as part of the Biden administration’s effort to gain energy independence from China’s electric car supply chains and to encourage wider adoption of electric cars and plug-in hybrids in the U.S. .
Tesla had previously used CATL’s lithium iron phosphate (LFP) battery cells for its Model 3 Rear Wheel Drive and a nickel-based cell for its Model 3 Long Range from an unidentified supplier.
Benchmark Mineral Intelligence (BMI) analyst Caspar Rawles told Reuters that Tesla may have dropped CATL in favor of batteries sourced from Panasonic for their US-made Model 3 rear-wheel drive, the company’s budget option.
“It’s very likely it’s Panasonic,” Rawles said, “but there could be some concerns about cell availability if they were to supply enough for all US Model 3s.”
Industry analysts specializing in the lithium-ion battery commodity markets believe Tesla may have struck a deal with Panasonic to buy their EV batteries domestically to meet new US tax credit requirements
Motorists can recoup up to $7,500 in tax credits when they purchase one of these ten EVs — Telsa’s Model 3 sedan is not included in this image
Panasonic, unlike CATL, has a battery cell manufacturing facility in Nevada that meets federal requirements for local battery components.
Morgan Stanley analyst Adam Jonas said: “Tesla may have moved to manufacturing those battery packs in the US while still using Chinese cells.”
However, a CATL spokesperson clouded that the “strategic partnership” between himself, Tesla and EV consumers “has not changed and will continue to deepen and improve.”
Only 11 models – including plug-in hybrid cars – are eligible for the total amount. Another seven will entitle buyers to $3,750.
Of the vehicles eligible for the credits, nearly all are produced by General Motors, Tesla, and Ford Motor Co.
The deals do not apply to “used” cars – defined as any previously owned vehicle over two years old.
Eligibility of cars depends on the proportion of components sourced from North America or countries with US free trade agreements.
This means that electric vehicles from the manufacturers Volkswagen, Hyundai, Nissan, BMW, Volvo and Rivian Automotive are not eligible for credits.