But the credits vary, depending on manufacturer – and issue is more eminent for some car makers, especially Tesla, which was recently hammered at gonzo finance blog Zero Hedge for experiencing a big quarterly sales drop when tax incentives in Denmark were phased out.
The Department of Energy and the IRS break down the rules in the US, but here’s a basic rundown (and remember, at the federal level we’re dealing with a tax credit here, so you only get to use it if you if you owe taxes, and you can only reduce your tax liability to zero, no lower, so there’s no carryover).
For Tesla, the federal credit for all three of its eligible vehicles, including the discontinued Roadster, is $7,500. That’s the maximum the IRS allows, and the Tesla credit is at that level because its vehicles have such large batteries.
The minimum federal credit is $2,500. Substantially, you can individually claim the credit as a vehicle owner, but not as a leaser. At the low-end of vehicles that qualify, you’ll find the gas-electric plug-in hybrid BMW i8, at $3,793.
A diversified range of manufacturers are presently selling vehicles qualified for the federal credit. Their numbers may shrink if the EV market improves (it currently stands at about 1% of global sales) and car makers bump up against a 200,000-vehicle limit, at which point the credit enters a phase-out period when buyers can no longer claim the full credit value before it diminishes altogether.
The state situation is justifiably more of a mishmash and includes refunds alongside the tax breaks, with Maryland offering the lowest of 37 states at $1,000 and Colorado the highest, at $6,000.They’re summarized at the National Conference of State Legislatures.
On balance, the tax credits are fairly modest when considered against vehicle costs, although they lively move the needle more when the car in question is priced on the lower side.
The federal credits and state incentive could make more of a difference with the forthcoming $35,000 Model 3, but with 400,000 per-orders on the books, this is also the vehicle that will take Tesla to the limit for the federal phase-out trigger.