Cheapest Tesla Model 3 eligible for the full US$7,500 government subsidy even for cash payment

Despite that the dedicated EV tax credit list of the Internal Revenue Service doesn't reflect it just yet, Elon Musk retweeted a note that all Tesla models now qualify for the full US$7,500 government subsidy. After the Treasury issued its Inflation Reduction Act guidance, the base Tesla Model 3 RWD and Model 3 LR qualified for the full tax credit amount until April 18. Afterwards, their tax credit eligibility was slashed in half on account of the Chinese LFP battery pack inside as it only remained eligible for the 50% of the subsidy given for vehicle assembly in North America.

Now, for some reason, Tesla lists all of its vehicles as eligible for the full federal tax credit of US$7,500, and has changed the wording at the respective buying pages on its website to reflect that. It's hard to fathom that it has reworked the supply chain for its bestselling base Model 3 and Model Y versions away from Chinese LFP batteries in the span of a few weeks, though. The move comes right after Elon Musk was on a rare China visit and met with CATL, the world's biggest EV battery maker whose packs are in half of Tesla's new cars.

Previously, the only workaround for getting the full federal tax credit amount on a base Model 3 was to lease the vehicle, but the subsidy now also goes for cash payments, too, so there must be something else in play. While waiting on Tesla to explain and the IRA to update the Model 3 eligibility list for the US$7,500 tax credit amount, those who purchased a vehicle might see its price fall again.

Used Teslas lost 21% of their value in the span of six months after Tesla started an EV price war, and now that a base Model 3 can be had for under US$30,000 with gas savings and incentives again, the plunge may continue. This would be especially true in places like Colorado which will introduce an extra US$5,000 incentive for purchasing a new EV next month.

That will effectively bring the price of a Model 3 RWD to US$23,000 in the state after subsidies and gas savings, so Tesla will already have its sub-$25,000 car there without even firing up its new Model 2 Mexican Gigafactory just yet.

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