Two quarters after a company reaches 200,000 sales in the US, the incentive is cut in half to $3,750.
A Tesla spokesman confirmed that the company delivered its 200,000th vehicle in the US this month, so the full $7,500 tax credit will remain in place until December 31. Despite this anti-selling, however, Model 3 reservations remained high, with Tesla most recently confirming that it still has a backlog of 420,000 orders for the electric vehicle. The Palo Alto, California-based carmaker is the first to trigger the reduced incentive in the U.S.
Tesla has also started changing its strategy for the Model 3.
Neither Tesla nor GM have said if they have plans to reduce the upfront prices of their cars as the credits wind down.
The Model S sedan and Model X sport-utility vehicle can each cost more than $100,000.
Many of those same buyers who have not yet received their cars have waited for Tesla to follow through on its promise to build a vehicle for $35,000.
Other media outlets have reported that Musk has slept under his desk and on a couch at the Fremont plant this year as the company faced what Musk called "production hell" for the Model 3.
For example, a buyer today who purchases a Model 3 for $50,000 (representing a long-range battery, rear-wheel drive vehicle with the required Premium Package), would get a tax credit that will bring the effective price down to $42,500.
The Model 3, billed as a more affordable vehicle with a starting price of $35,000, is now delivered only in more expensive versions.
Tesla has delivered 200,000 vehicles in the United States, exceeding the threshold above which federal tax credits for EVs start to phase out, a spokesperson for Tesla said on Thursday-and its website has updated its incentives schedule.
Tesla opened the taps on Model 3 sales this week by dropping the exclusive reservations list it established previous year, allowing anyone in the U.S.to order one of the small sedans with a $2,500 deposit.
Sales reports show that the company pulled out all the stops to avoid selling its 200,000th auto in the USA until after July 1, to maintain the full tax credit for one extra quarter, by pushing more sales to Canada among other things. The Model 3, after all, would likely determine whether Tesla could achieve its target of becoming profitable this third or fourth quarter.