Why is Tesla getting more expensive?

Why is Tesla getting more expensive?

Tesla Elon Musk

U.S. taxpayers have already invested tens of billions of dollars in supporting the electric vehicle part of the green revolution, and Tesla  (TSLA) – Get Free Report has been one of the biggest beneficiaries.

Buyers can qualify for up to $7,500 in tax credits under the IRS program if they buy a new plug-in EV or fuel cell vehicle for use primarily in the U.S. if they are under certain income thresholds.

The program has been a boon for Tesla, especially the company’s Model 3 — its cheapest vehicle — as Tesla says all versions of the vehicle are eligible for the full $7,500 credit.

However, Tesla’s website is also saying now that reductions in that tax credit are likely to occur after December 31.

While the website doesn’t give a reason for the expected reduction, Twitter users have their theories.

To reach the full credit, 40% of the vehicle’s minerals must be “extracted or processed in the United States or a U.S. free-trade agreement partner,” according to the IRS. Half of the vehicle’s components must also be manufactured or assembled in North America.

And the program becomes more strict about its component thresholds each year. By 2027, the program dictates that 80% of a vehicle’s battery minerals and components must meet domestic production requirements.

The Model 3, Tesla’s most popular model, has especially benefitted from the program as the Model 3 is now cheaper than the Toyota Camry — by far the country’s top selling sedan– in California.

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