The demand side of the equation for electric vehicles seems to have plateaued for the time being, and EV makers are feeling the pinch.
Polling from S&P Global Mobility has shown that the number of respondents open to purchasing an EV dropped to 67% earlier this year from 86% in 2021.
Related: New Biden proposal could have a chilling effect on EV adoption
To combat this issue, Tesla has relied on slashing prices in order to maintain market dominance. Average Tesla prices are down about 25% year-over-year, according to Kelly Blue Book, with Elon Musk saying “The thing that must be solved is to make the car affordable for the average person.”
But a new proposal from President Joe Biden’s administration could potentially make certain versions of the Model 3 more expensive, and Tesla seems ready to warn its customers of the potential change ahead of time.
As pointed out on InsideEVs, Tesla’s official website now contains language warning customers that they won’t be able to qualify for the same tax credit for some versions of the Model 3 starting in January.
“Customers who take delivery of a qualified new Tesla and meet all federal requirements are eligible for a tax credit up to $7,500. Tax credit will reduce to $3,750 for Model 3 Rear-Wheel Drive and Model 3 Long Range on Jan 1, 2024,” Tesla’s website states.
But like any good marketer, the company is turning the news into a call to action.
“Take delivery by December 31 for full tax credit,” the website states.
Tesla did not immediately return a request for comment.
Language in the Inflation Reduction Act excludes certain EVs from qualifying for the full tax break if battery components were made by a foreign entity of concern.
Last week, the Energy Department proposed a new rule saying that EVs containing batteries containing any parts from companies in FEOC countries will become ineligible for the tax credit starting in 2024. By 2025, clean vehicles may not contain any critical minerals that were extracted, processed, or recycled by a foreign entity of concern in order to eligible for a tax credit.
The move comes as the Biden administration steps up its regulatory enforcement of U.S. businesses doing business with China.
Get exclusive access to portfolio managers’ stock picks and proven investing strategies with Real Money Pro. Get started now.
