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Tesla Will Benefit from the EV Tax Credit Repeal

There is no doubt that if the electric car federal tax credit will be repealed and take effect on January 1, 2018 it will hurt the sales of electric cars in the United States. It may be yet another kick in the butt to those auto makers who have been relying on the tax credit rather than producing cars that can compete¬† with their gasoline equivalents in the same class. Chevy Bolt’s hefty $38,000 starting price is way above a compact 4-door hatchback alternatives that you can find in other gas cars.¬† What happened in the state of Georgia with repealing the EV rebate proved that sales of cars like Nissan Leaf will definitely suffer greatly.

Tesla, however, is different. The Model S and the Model X are not going to be effected that much because $7,500 is at most about 10% of the sticker price and most people shopping for cars in that range will only look at it as a bummer rather than a deal breaker. So will the future Jaguar I-Pace and Porsche Mission E buyers. Model 3, on the other hand, is priced to start at $35,000 so the effect of the tax credit is much higher. However, Tesla has done a smart thing and has gone with the $35,000 sticker price that does not include any incentives or rebates. Let’s not forget that even if the tax credit would stay around, Tesla would be phased out of the program by the end of the next year anyway.

The reason Tesla Model 3 will still be in demand is because this car offers so much more than its competitors, which are BMW 3-series, Mercedes-Benz C-Class and others, while being priced less than those mentioned above. Yes, there will be a good chunk of people who will cancel or delay their purchases but there will be plenty of more joining that list once people will start seeing it on the road and realizing the quality and tech in this car.

At this point we don’t really know if the amendment that was supposed to kill this tax rebate has even made it into the final bill. It’s that messed up. We will find out soon and we’ll see what happens when the House Bill and the Senate Bill are merged together for the final version. Stay tuned!

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