Tesla sets Monday deadline for 2018 delivery—and $7,500 tax credit

Enlarge / A Tesla Motor Inc. vehicle is displayed outside the company’s Gigafactory in Sparks, Nevada, US, on Tuesday, July 26, 2016.Troy Harvey/Bloomberg via Getty Images

Back in July, Tesla became the first company to sell 200,000 plug-in electric vehicles in the United States. It was a major milestone for Tesla, but it was also a bittersweet one, as it meant the beginning of the end for the £7,500 tax credit that the federal government offers to buyers of plug-in electric cars. This week, Tesla let customers know that they should act quickly if they want to claim the credit.

When Tesla crossed the 200,000 threshold in July, it started the clock on an 18-month phase-out process. All vehicles sold in the second half of 2018 are eligible for the fully £7,500 credit. On January 1, the credit will drop in half to £3,750.

Then on July 1 it will drop in half again to £1,875, before going away altogether at the end of the year. So anyone thinking about buying a Tesla car has a powerful incentive to take delivery of the vehicle before the end of 2018. The problem is that it takes a few weeks for Tesla to deliver vehicles, and the exact delivery time isn’t certain.

That gave customers reason to worry that they could order a car in October and not have it arrive until January, costing them £3,750 in tax breaks. This week, Tesla addressed this concern with a notice on its website: “All orders placed by October 15, 2018 will be delivered by the end of the year and eligible for the full £7,500 Federal Tax Credit.” The end of the quarter tends to be a hectic time for Tesla.

At the end of June, Tesla was scrambling to meet its self-imposed goal to manufacture 5,000 Model 3 cars per week. At the end of September, Tesla was suffering through “delivery logistics hell” as the company figured out how to get as many cars into customer hands before the third quarter closed in order to boost the company’s financial results. Tesla already has a strong incentive to deliver a lot of cars before December 31 to improve its fourth-quarter financial results.

The phase-out of the federal tax credit–and the wave of orders that Tesla could see over the weekend–is sure to add pressure to deliver as many cars as possible before the end of the year, guaranteeing the company another hectic end of the quarter.

So far, no other carmaker has announced that it has reached the cap.

General Motors is expected to reach it next, with analysts predicting that GM will hit the limit either this quarter or early next year.

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