Tesla (TSLA) shares are soaring higher today, up as much as 4% in early trade and hitting highs not seen since early October last year, on investor confidence rising after news revealed that all sedans of the Model 3 are now eligible for the full federal tax on EV credits. Tesla stock is on track for a ninth straight day of gains, its longest winning streak since January 2021.
Earlier this week, Tesla announced on its website that all versions of the Model 3 sedan are now eligible for the full $7,500 state electric vehicle tax credit; Previously, the lower-priced rear-wheel drive (RWD) version of the Model 3 was eligible for half the amount. The federal government confirmed the announcement on its Fueleconomy.gov website.
Federal government requirements for the EV tax credit dictate that 40% of critical minerals must be mined in the United States or a Free Trade Agreement country and 50% of the value of battery components must be manufactured or assembled in North America.
While no reason was given for the change, it’s safe to assume that Tesla has updated where the company sources the materials for the Model 3’s RWD batteries or where it assembled the packs. Prior to the announcement, Tesla reportedly used LFP (Lithium Ion Phosphate) battery cells made by Chinese manufacturer CATL.
Tesla Model 3 US order page (6/6/2023)
Still, the inclusion of the full federal tax credit means the Tesla Model 3 RWD now costs $32,740 if buyers meet criteria such as income restrictions and MSRP caps ($55,000 for cars; $80,000 for trucks and SUVs) .
While $32,740 is a relative deal in a new car market where the average price is around $45,000, EVs like the Model 3 can have other incentives that drive prices down even further. New York State is offering up to a $2,000 rebate on eligible Model 3 electric vehicles as part of its Drive Clean Rebate.
In California, the state offers an even bigger incentive — a $7,500 tax refund that depends on income and other requirements. Including both federal and state incentives brings the Model 3 down to $25,240 — which is less than the cost of a new Toyota Camry (starting price $26,320), according to Portal.
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Additionally, in states like California, Tesla offers local incentives for certain vehicles. Tesla is currently offering a $2,410 incentive for the Model 3 RWD in Southern California, which means the price of this car, including all tax incentives, drops to a staggering $22,830 if the buyer meets all eligibility requirements.
Tesla investors and analysts are looking for the third-generation vehicle platform to open up a whole new market for EVs for mid-range and younger buyers. It turns out that some of those buyers, particularly in California, could currently get a Tesla for a bargain price — at least while the incentives last.
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Pras Subramanian is a reporter for Yahoo Finance. You can keep following him Twitter and further Instagram.
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