Looking To Buy A Tesla Model 3? Here's Why You May Want To Do It Before March Ends

EV maker Tesla Inc TSLA expects tax credits to be reduced for its Model 3 rear-wheel drive by Friday.

What Happened: Tesla updated its Model 3 configuration page in the U.S., saying that the $7,500 EV credit is “anticipated to be reduced for Model 3 Rear-Wheel Drive by March 31.”

“Customers who take delivery of a qualified new Tesla and meet all federal requirements are eligible for a tax credit up to $7,500. The credit is anticipated to be reduced for Model 3 Rear-Wheel Drive by March 31,” the website read.

Last week, it was reported that Tesla told its employees that it expects to lose the full $7,500 federal tax credit on the Model 3 Standard Range as the batteries come from China. 

The Model 3 Standard Range, though manufactured in the U.S., employs battery packs made using LFP battery cells built in China.

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To be eligible for up to half the tax credit under the recently introduced tax credit scheme, batteries must be made in North America. The materials must also be sourced from countries with a free trade agreement with the U.S.

However, the U.S. Treasury Department did not issue guidance on battery sourcing requirements in time for the new tax credit system, which came into effect in January. 

Instead, the guidance was postponed until the second quarter and is now expected by Friday. This gave a few EVs that do not meet the new requirements, including Model 3, a few months of eligibility for the tax credit.

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