Many Tesla Model 3 reservation holders like myself are hoping to get the federal EV tax credit with their purchase. The problem is the credit has a phase out period after each manufacturer reaches 200,000 deliveries in the US. I have an article explaining exactly how the EV tax credit works.

Tesla has now delivered somewhere around 145,000 vehicles in the US and not counting the Model 3 could deliver another 15,000 by the end of the year, and likely the same in the first quarter of next year. That's close to 160,000 deliveries by the end of the year and 175,000 by the end of Q1 2018, not counting the Model 3. That means they are all but guaranteed to hit the magic 200,000 mark in Q1, unless they deliver less than 25,000 Model 3s by then. For reference, they hope to make 20,000 in December alone. 

So that means that the credit will be cut in half as of July 1, 2018. I have expected this date all along. 

Here is where it gets tricky, and will start making people upset, and I realize by writing this I will be called a short, despite preaching for Tesla for over a decade now. 

Tesla announced that in Q3, they only manufactured 260 Model 3s and delivered 220 of them due to a bottleneck in production. They said they figured out what it is and are fixing it, but that already puts them a month behind schedule for ramping up production. Every month they are behind at this point means over 20,000 people will miss the tax credit. To explain, I made this chart.

Tesla Model 3 delivery estimates

As you can see, going by their original timeline, it worked out to around 193,000 Model 3s made through June of next year, when the full amount of the tax credit will end. Since September only saw about as many made as August, that pushes the entire curve one month forward, which means it is very likely those that should have gotten their car in June would not get it in July. Tesla has stated a goal of 20,000 per month in December and 40,000 per month by the end of next year. That means in June the number would be over 20,000 per month. So by pushing the ramp up one month ahead, over 20,000 people are pushed into July and would get the half tax credit.

For every month Tesla doesn't get up to speed, that's over 20,000 people with reservations that will miss out on the full credit. 

I am buying with or without the credit, but for many, this might be a make or break. All we can hope for at this point is that October sees 1500 deliveries, the original estimate for September.