Friday, April 8, 2016

Not All Tesla Customers Will Get Expected Tax Rebates on Model 3

Tesla's new electric vehicle, the Model 3, is making waves throughout the market. Thousands of buyers are looking to get their hands on the luxurious, energy-efficient, affordably-priced car. At $35,000 before any governmental rebates, the Model 3's price can't be beaten by other electric vehicle producers. Thousands of dollars in state and federal rebates are offered to buyers, thus making the car an even better deal, but the rebates are not as easy to get as a buyer might think. According to Rob Nikolewski's article in the L.A. Times, buyers shouldn't count on the rebates when determining whether they can afford to purchase Tesla's Model 3.

Just this week, Tesla allowed potential customers from around the world to put down a $1,000 deposit in order to reserve their Model 3, which won't actually hit the market until December 2017. In the first 3 days, over 270,000 customers reserved their future vehicle, drawn in by its price, appearance, and the Tesla brand name. Many also took into account potential rebates that they expect to receive from the government, which Nikolewski considers an unfortunate oversight. According to him, most of the government rebates could run out by the time people get behind the wheel of their Model 3.

Southern Californians can receive $7,500 from federal subsidies and $2,500 from state subsidies when purchasing one of Tesla's electric vehicles. Unfortunately, the subsidies are only allowed for a certain number of customers. After 200,000 Tesla vehicles have been sold, the government will start to phase out the subsidies until, eventually, there will be none left. Additionally,  the state recently announced that wealthy buyers (a head of household income of greater than $340,000 or a single filer income greater than $250,000) will not qualify for the state rebates at all. So, some buyers are trying to play the odds to have the greatest chance of getting the $10,000 in tax rebates.

One customer in Santa Monica, Paul Scott, decided to go for the $50,000 version of the Model 3, which comes "fully loaded." Scott's logic in ordering the most expensive model is that he assumes that Tesla will produce their more expensive models earliest, which means that he will have a greater chance of getting the rebates before they run out. Either way, Scott asserts, he is fully willing to buy the car, whether he gets the tax credit or not. Other buyers, however, don't even seem to realize that the tax rebates are not a definite source of income. They are assuming that the price will automatically be $10,000 less, and are making their purchasing decisions with incorrect numbers, a mistake that they will regret.

Tesla needs to make the terms much more clear for customers. While $35,000 is still an incredibly low price, especially for a high-end, energy-efficient vehicle that grants owners the use of Tesla's supercharger stations, customers will not be happy if they find out that they won't be able to get the $10,000 in tax credits that they had expected. For all we know, California may decide to raise the number of individuals to which they will grant rebates, in order to encourage more potential buyers into greener vehicles. So, it is possible that a lot more than 200,000 customers will get tax credits. Either way, Tesla needs to make the situation as transparent as possible so as to avoid upsetting customers and losing potential customers forever.

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