Tesla sets Monday deadline for 2018 delivery—and $7,500 tax credit

Enlarge / A Tesla Motor Inc. vehicle is displayed outside the company’s Gigafactory in Sparks, Nevada, US, on Tuesday, July 26, 2016. (credit: Troy Harvey/Bloomberg via Getty Images)

Back in July, Tesla became the first company to sell 200,000 plug-in electric vehicles in the United States. It was a major milestone for Tesla, but it was also a bittersweet one, as it meant the beginning of the end for the $7,500 tax credit that the federal government offers to buyers of plug-in electric cars. This week, Tesla let customers know that they should act quickly if they want to claim the credit.

When Tesla crossed the 200,000 threshold in July, it started the clock on an 18-month phase-out process. All vehicles sold in the second half of 2018 are eligible for the fully $7,500 credit. On January 1, the credit will drop in half to $3,750. Then on July 1 it will drop in half again to $1,875, before going away altogether at the end of the year.

So anyone thinking about buying a Tesla car has a powerful incentive to take delivery of the vehicle before the end of 2018. The problem is that it takes a few weeks for Tesla to deliver vehicles, and the exact delivery time isn’t certain. That gave customers reason to worry that they could order a car in October and not have it arrive until January, costing them $3,750 in tax breaks.