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Alexey Razin
Next week, the US authorities are expected to enact new tax deduction rules for buyers of American-built electric vehicles that will require some localization of the production of traction batteries. As a result of these changes, buyers of low-end US-built Tesla models will lose up to $3,750 in tax credits, since the batteries for them are shipped from China.
Image Source: Tesla
It is believed that the $3,750 tax deduction from April will be available only to buyers of those electric vehicles whose battery materials up to 40% are sourced or recycled in the United States or any of the countries that have a free trade agreement with them. In the case of Tesla products, this condition can be met if the raw materials for the production of traction batteries are supplied from Canada or Australia.
An additional $3,750 in tax credit is available under the new rule for buyers of EVs with at least half of their traction battery components made in North America. Tesla electric vehicle traction batteries that are shipped from China cannot fall under this condition. The lower trim levels of the Tesla Model 3 (Standard Range) assembled in the US are also equipped with Chinese-made LFP batteries, so they may lose the same $3,750 deduction that a buyer in the US could return from the country’s budget.
According to information Electrek, Tesla is already outreach to staff who are involved in sales planning for electric vehicles in the event that new U.S. tax deduction rules come into effect from the second quarter. In this case, it will be important for the client to receive their car by March 31st, since on April 1st, they may already lose half of the maximum tax deduction of $7,500.
Older modifications of the Tesla Model 3, assembled in the US, are already equipped with locally produced batteries, which are supplied by Tesla itself or by Panasonic from factories in Nevada, California or Texas. For more expensive versions of the Tesla Model 3, the date of entry into force of the new rules is not particularly critical. Such conditions for providing a tax deduction for buyers of electric vehicles were planned to be introduced back in December, but some hitches forced lawmakers to postpone their introduction for three months. This gave market participants, especially suppliers of South Korean-made electric vehicles, a certain head start, which they now risk losing due to the lack of large localized traction battery production in the United States.
