After Tesla announced a $7,500 tax credit, the Model 3 is cheaper than a Toyota Camry in California.
The all-electric vehicle costs $25,240 after the refund and a $7,500 California tax credit based on income and other factors.
The Japanese-made Camry has a minimum advertised price of $26,320.
Tesla amended its website on Friday to reflect the tax cut, and the Biden administration confirmed on Tuesday that all Tesla Model 3 vehicles are now eligible for consumer tax credits for electric vehicles.
Previously, only two of the three models were eligible for half of the credits.
Analysts who specialize in the raw materials markets for lithium-ion batteries told Reuters that Tesla may have been required to modify its battery mineral procurement and component selection to qualify for the subsidy.
When the Biden administration’s new battery sourcing regulations were implemented in April, Tesla’s Model 3 Standard Range Rear Wheel Drive and Long Range All-Wheel Drive suddenly qualified for only a half credit, saving each buyer only $3,750.
This past March, Tesla was in talks with Contemporary Amperex Technology Co. Ltd. (CATL), China’s dominant electric vehicle battery manufacturer, to construct a new battery plant in the United States.
The signing by President Biden of the $430 billion Inflation Reduction Act, which imposed North American assembly and new mineral requirements on vehicles for EV credits, hampered these efforts.
The new regulations were enacted as part of an effort by the Biden administration to achieve energy independence from China’s electric vehicle (EV) battery supply chains and encourage greater adoption of EVs and plug-in hybrids in the United States.
Tesla had previously used lithium iron phosphate (LFP) battery cells from CATL for its Model 3 Rear Wheel Drive and a nickel-based cell from an unidentified supplier for its Model 3 Long Range.
Benchmark Mineral Intelligence (BMI) analyst Caspar Rawles told Reuters that Tesla may have abandoned CATL in favor of Panasonic batteries for the company’s entry-level Model 3 Rear Wheel Drive manufactured in the United States.
‘It is very likely Panasonic,’ Rawles said. But there may be cell availability concerns if they need to supply enough for all US Model 3s.
Panasonic, unlike CATL, has a Nevada-based battery cell facility that satisfies federal requirements for locally sourced battery components.
Analyst Adam Jonas of Morgan Stanley stated, “Tesla may have shifted production of those battery packs to the United States while continuing to use Chinese cells.”
A spokesperson for CATL, however, stated that the “strategic partnership” between the company, Tesla. And EV consumers “has not changed and will continue to deepen and improve.”
Only eleven models, including plug-in hybrid vehicles, qualify for the total amount. An additional seven will earn purchasers $3,750.
The vast majority of vehicles eligible for credits are manufactured by General Motors, Tesla, or Ford Motor Co.
The discounts do not apply to “used” vehicles, which are defined as previously possessed automobiles older than two years.
The proportion of components sourced from North America or countries with US free-trade agreements determines the eligibility of automobiles.
It indicates that electric vehicles produced by Volkswagen, Hyundai, Nissan, BMW, Volvo, and Rivian Automotive are ineligible for any credits.
