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

By Jorge Aguirre
The new EV tax credit will only apply to some Teslas
The new EV tax credit will only apply to some Teslas

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.

Model Price Qualifies
Model 3 RWD $46,990
Model 3 Performance $62,990
Model Y Long Range (AWD) $65,990
Model Y Performance $69,990
Model S $104,990
Model S Plaid $135,990
Model X $120,990
Model X Plaid $138,990

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.

Tesla internal email indicates major end-of-quarter push

By Kevin Armstrong
Tesla's Fremont lot is practically full
Tesla's Fremont lot is practically full
Met God in Wilderness/YouTube

Tesla wants everyone on its payroll to pitch in and help with a frantic end-of-quarter push. An internal email leaked to Electrek indicates that employees, even those not tasked with sales and delivery, to assist in getting as many vehicles out the door as possible. The email says there is “a very high volume of vehicles,” and management requests additional support.

This push should come as no surprise after a disappointing second quarter. The company delivered 18 percent fewer vehicles than in the previous reporting period. Tesla delivered 254,695 compared to 310,048 just three months prior. The decline broke a two-year streak in which the company continued to break its delivery record. The drop in numbers was not due to failures at Tesla, but due to COVID-related shutdowns at its Gigafactory in Shanghai, China.

Nevertheless, Tesla is adamant about righting the ship immediately. This quarter, like no other before, has seen significant competition enter the electric vehicle space and challenge the king of the sector. As a result, Tesla would like nothing more than to get back on track with another record-breaking delivery of its highly sought-after vehicles.

According to Electrek, the company-wide email stated: We will be delivering a very high volume of vehicles to eagerly waiting customers during the final days of Q3. To help ensure we can delight as many customers as possible, the delivery team is requesting additional support with key delivery-execution tasks.

For weeks Tesla’s careers page has listed dozens of Seasonal Advisor positions. The postings say these positions are “essential support at the end of the quarter, operating alongside our Sales and Delivery team to execute record-breaking delivery results.” The jobs were expected to last for two to three weeks.

Analysts predict that Tesla will get back on track and deliver more than 310,000 cars this quarter. In fact, one analyst has gone much further than that. Trip Chowdhry with Global Equities Research has publicly stated that he forecasts the carmaker will exceed 500,000 deliveries in the fourth quarter. In addition, he estimates that the time to produce a Tesla has decreased by 10 percent, and he notes other factors like the Semi coming online and increased capacity at factories worldwide.

Tesla is expected to report its quarterly earnings in mid-October.

Tesla is showing suggested destinations in update 2022.28.2

Future Feature
By Lennon Cihak
Suggested destinations in 2022.28.2
Suggested destinations in 2022.28.2
Not A Tesla App

Tesla's rolling out another unique feature with suggested destinations in version 2022.28.2. This comes off the heels of a previous announcement where Tesla was offering alternate routes.

Tesla's new suggested destinations show up under the Recents tab when you tap on the 'Navigate' button.

Tesla will list up to three destinations before displaying your recent destinations below them. Several owners have reported seeing this new feature in Tesla update 2022.28.2, but it's not clear whether it's available to everyone yet.

Tesla's suggestions appear to be a combination of recent destinations and favorites, but it's not clear exactly how Tesla is determining these.

A user by the name of Randall on the Tesla Discord noticed the new feature.

He was offered three suggestions, but after taking a short drive he noticed that the next set of suggestions was completely different.

Tesla may be using AI to determine your suggestions, so things like the number of times frequented, time of day, day of the week, the vehicle's location and more may be taken into account when Tesla is determining your suggestions.

Like everything Tesla, this is the first iteration of this feature and we're likely to see improvements on this feature in the near future.

For example, Randall noticed that although one of his suggestions was one of his favorites, the suggestion just showed the address of the destination and not the name Randall that given the destination.

The placement of suggested destinations could potentially be improved as well, instead of being displayed under Recents. Each of these suggestions likely has a probability score that Tesla determines and Tesla then displays any suggestions that are over a certain threshold.

It could be helpful if Tesla displayed suggestions directly in the middle of the screen when you first entered the car. If Tesla thought you were highly probable of visiting one of these suggestions they could display it more prominently, making it easier for you to enter the destination.

In recent updates, Tesla has focused quite heavily on navigation improvements. Alternate routes is a welcomed feature, as well as a quieter Joe Mode, and a revamped Energy App and time graph for Supercharger popularity. This suite of features is well overdue and much needed.

As the Austin-based automotive company continues to address various bugs and add features, owners are gaining more data for insight into their vehicle so they can better use it.

CEO Elon Musk has stated that any input into the vehicle should be considered (as a possible) error, so by adding yet another feature that the car tries to calculate your destination is a step in the right direction in Musk’s eyes. This is why there is no gear physical shifter in the refreshed Model S and Model X vehicles.

Instead, Tesla replaced them with an “Auto Shift” feature. This function works based on your vehicle’s understanding of which direction it needs to go. For example, if you’re in a grocery store parking lot, the car will see that it’s wedged between a few cars and know that it needs to reverse, or vice-versa. This feature is reportedly coming to all Teslas.

“I think generally, all input is error,” Musk explains at the unveiling of the Model S and Model X refresh. “If you have to do something that the car could’ve done already, that should be taken care of. The software should just do it.”

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Although we share official Tesla release notes, we are not affiliated with Tesla Motors. We are Tesla fans and supporters.

Tesla News

Upcoming Release

View the release notes for the upcoming version 2022.36.

Confirmed by Elon

Take a look at features that Elon Musk has said will be coming soon.


Subscribe to our weekly newsletter.