Tesla customers will start losing a $7,500 tax credit in 2019

Reuters/Bobby Yip

Tesla Chief Executive Elon Musk stands on the podium as he attends a forum on startups in Hong Kong, China.

• Tesla has sold 200,000 electric vehicles in the US, Electrek first reported, which means its customers will start to lose access to a $7,500 tax credit.
• Tesla confirmed it had passed the 200,000 vehicle threshold to Business Insider.
• The credit will begin to phase out for Tesla customers in January 2019 and will no longer be available in January 2020.

Tesla has sold 200,000 electric vehicles in the US, Electrek first reported, which means its customers will start to lose access to a $7,500 tax credit.

Tesla confirmed it had passed the 200,000 vehicle threshold to Business Insider.

The federal government gives people who buy electric vehicles a tax credit between $2,500 and $7,500, depending on the vehicle's size and battery capacity. As Tesla wrote in an annual report filed with the US Securities and Exchange Committee in February, its customers get the full $7,500. But two calendar quarters after a company sells its 200,000th electric vehicle in the US, the tax credit begins to phase out.

For the six months beginning in the second calendar quarter after the 200,000th vehicle is sold, customers are eligible for 50% of the credit. That falls to 25% during the six months after that. Once the second six-month period ends, the company's customers are no longer eligible for that tax credit.

That means Tesla customers will be able to receive the full credit until January 2019, at which point they will be eligible for 50% of the credit until July 2019. From July 2019 to January 2019, they will be able to get 25% of the credit. The credit will expire for Tesla customers in January 2020.

Tesla is the first automaker to begin the phase-out process for the credit, which will affect some customers of its Model 3 sedan. The Model 3, which starts at $35,000, was designed to broaden Tesla's customer base beyond the luxury segment and accelerate the pace of electric vehicle adoption.

On July 2, the company said it had around 420,000 pre-orders for the vehicle that had not been fulfilled. Since the vehicle was launched in July 2017, the company had made 41,029 Model 3s through the end of June.

At the end of June, Tesla allowed all Model 3 reservation holders to configure and order their vehicles, though the $35,000 base model is not currently available. It will be available in six to nine months for current reservation-holders, a Tesla representative told Business Insider. But, according to a timeline given by CEO Elon Musk in May, the $35,000 option could become available between September and December.

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