We take a look at the new EV tax credit and which Teslas qualify

The new EV tax credit will only apply to some Teslas

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The Inflation Reduction Act (a sweeping $750 billion health care, tax and climate bill) was signed into law by President Joe Biden.

Included in the package are some incentives that will make buying electric cars in the US more affordable. The caveat is some of the most popular EVs being sold won’t see any difference.

A tax credit of up to $7,500 will be offered to purchasers of new all-electric vehicles and hybrid plug-in vehicles through 2032. For used versions of these vehicles, the plan would also establish a supplementary tax credit worth a maximum of $4,000.

However, the legislation also introduces additional restrictions on who can be eligible for the credit and which vehicles are eligible for it.

For brand-new cars, the manufacturer's suggested retail price for sedans must be less than $55,000 in order to qualify for the tax credit. For SUVs, trucks and vans, the maximum price would be $80,000.

That price cap effectively leaves out the Tesla Model X and Model S, which start at over $100,000, alongside other premium vehicles like the Mercedes EQS, Porsche Taycan, and GMC Hummer. Some of the more expensive configurations of the Tesla Model 3 won't qualify either.

Which Tesla Models Qualify

The only Model 3 that would currently qualify is the entry-level, rear-wheel drive model, which costs around $47,000. This model would be able to take full advantage of the federal tax credit.

Tesla recently discontinued orders for the all-wheel drive Model 3 Long Range model, which could have made the $55,000 cutoff if it received a small price reduction. It'll be interesting to see if Tesla begins to offer that model again in the near future.

The Model 3 rear-wheel drive is the only Tesla that is currently sold for under $55,000. Luckily Tesla's Model Y vehicles are classified as SUVs and will also classify under the truck, vans and SUV portion of the tax credit.

Since SUVs can cost up to $80,000 USD and still qualify for the full tax credit, both Model Ys will qualify as well, including the Performance model which currently comes in at just under $70,000.

This is significant, given that the Model Y and Model 3 are currently the most popular EVs in the United States. In the first half of 2022, more Model Y and Model 3s were sold in the United States than the combined sales of the next ten most popular EVs.

Used electric vehicles must be at least two model years old in order to qualify. The price cap would be $25,000 and the credit would be limited to the lesser of $4,000 or 30% of the cost of the vehicle.

Other hurdles include a requirement for the final assembly needs to be in North America. That should exclude EVs manufactured by Hyundai Motor, Kia, Audi, and Polestar Automotive. Those firms assemble EVs sold in the U.S. in Asia and Europe.

Additionally, the criteria for the EV purchase credit will alter. For instance, there are specifications for the locations of battery pack assembly and the sourcing of battery components. Those specifications appear to be intended to strengthen the American EV supply chain. Around 2024, these new complexities go into effect. The list of approved automobiles is maintained by the Treasury Department.

It's important to note that the existing $7,500 tax credit, which was established in 2008 and 2009 in order to encourage the adoption of electric cars, included a phase-out provision that would apply if a manufacturer sold 200,000 of the vehicles. 

Tesla reached that mark in 2018, and as of right now, its electric vehicles are not eligible for the tax credit. The same applies to General Motors and Toyota (including its Lexus brand). But thanks to the revised bill's removal of the 200,000 sales cap, their electric cars would once again be eligible for the credit.

Additionally, single taxpayers with modified adjusted gross income beyond $150,000 would not be eligible for the credit. This income cap would be $300,000 for married couples filing jointly and $225,000 for single people filing as heads of household.

It might seem like a smart idea to purchase an electric vehicle right now given all the changes to the EV tax credit. However, bear in mind that several benefits, such as the removal of manufacturer limitations and the application of the credit at the time of sale, won't take effect until 2024 or the next year.

Even though this modification to the tax incentives will make the already difficult to navigate EV market much more complicated in the immediate term, in the long term it will be great news for customers, especially middle-class mainstream consumers who later on can purchase more affordable EVs.

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Tesla Increases Price of Model S; Starts Offering Free Lifetime Supercharging

Not a Tesla App

For the first time in quite a while, Tesla has increased the price of one of its vehicle offerings. The Model S Long Range and the Model S Plaid have both received a hefty price increase. However, not all is bad - as Tesla also added a new benefit for buyers.

Price Increase

The price increase for the Model S is $5,000 - currently only in the United States. This price increase will likely impact other markets, including Canada, in the coming days.

The Model S Long Range now starts at $79,990, while the Model S Plaid now starts at $94,990. The Model S and Model X now have the same starting price. Interestingly, that’s also the same pricing point for the Cybertruck AWD and Cyberbeast Trimotor non-Foundation Series. 

The vehicle configuration does not appear to have changed, so the new pricing is simply an increase rather than the addition or removal of features. Tesla previously cut the price of the Model S and Model X by 15% in 2023, so this could simply be an adjustment to ensure that the vehicle pricing stays in line with inflation and other factors.

Free Lifetime Supercharging

For those on the fence about ordering a Model S, Tesla has brought back Free Lifetime Supercharging when you order a new Model S on or after December 13, 2024. As always, Free Lifetime Supercharging is restricted to the buyer’s Tesla account and to that specific vehicle. It cannot be transferred to another vehicle or another owner after ownership transfer. It’s worth noting, that it also doesn’t exclude the owner from receiving Supercharger idle fees or congestion fees. There is currently no end date for this promotion.

There are currently no changes to the Model X, neither a price increase nor the addition of Lifetime Superchargering. However, when Tesla makes changes to one of their premium vehicles, it usually affects the other one as well. So be on the lookout for potential changes to the Model X offering in the coming days.

We’ve seen Tesla value Lifetime Supercharging at $5,000, so this falls in line with the price increase we’re seeing. It’s possible that Tesla will begin to bring back Lifetime Supercharging as a perk for buying into their more premium Model S and Model X cars, or this could be another temporary promotion to get buyers who are on the fence to go ahead and make their purchase while this promotion lasts.

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Tesla’s Optimus Robot Learns to Walk Without Vision [VIDEO]

Optimus Falls - but catches itself!

Not a Tesla App

Tesla recently showed off a demo of Optimus, its humanoid robot, walking around in moderately challenging terrain—not on a flat surface but on dirt and slopes. These things can be difficult for a humanoid robot, especially during the training cycle.

Daily walks help clear your mind pic.twitter.com/dUsW58trS6

— Tesla Optimus (@Tesla_Optimus) December 9, 2024

A Look Behind the Curtain

Most interestingly, Milan Kovac, VP of Engineering for Optimus, clarified what it takes to get Optimus to this stage. Let’s break down what he said.

Optimus is Blind

Optimus is getting seriously good at walking now - it can keep its balance over uneven ground - even while walking blind. Tesla is currently using just the sensors, all powered by a neural net running on the embedded computer. 

Essentially, Tesla is building Optimus from the ground up, relying on as much additional data as possible while it trains vision. This is similar to how they train FSD on vehicles, using LiDAR rigs to validate the vision system’s accuracy. While Optimus doesn’t have LiDAR, it relies on all those other sensors on board, many of which will likely become simplified as vision takes over as the primary sensor.

Today, Optimus is walking blind, but it’s able to react almost instantly to changes in the terrain underneath it, even if it falls or slips. 

What’s Next?

Next up, Tesla AI will be adding vision to Optimus - helping complete the neural net. Remember, Optimus runs on the same overall AI stack as FSD - in fact, Optimus uses an FSD computer and an offshoot of the FSD stack for vision-based tasks.

Milan mentions they’re planning on adding vision to help the robot plan ahead and improve its walking gait. While the zombie shuffle is iconic and a little bit amusing, getting humanoid robots to walk like humans is actually difficult.

There’s plenty more, too - including better responsiveness to velocity and direction commands and learning to fall and stand back up. Falling while protecting yourself to minimize damage is something natural to humans - but not exactly natural to something like a robot. Training it to do so is essential in keeping the robot, the environment around it, and the people it is interacting with safe.

We’re excited to see what’s coming with Optimus next because it is already getting started in some fashion in Tesla’s factories.

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