This Simple Tesla Production Trick Could Cost Taxpayers An Additional Half Billion Dollars
The Federal government provides a $7500 tax incentive for the buyers of electric cars. This is an attractive discount on a $100,000 Tesla Model S, but is a huge incentive for a $40,000-ish Tesla Model 3. However, there is a sunset for this incentive. It turns out it begins to phase out for a given company in the first quarter after that company sells its 200,000th eligible electric car (two quarters at $3750, two quarters at $1875, then zero).
By the end of the second quarter, Tesla will be approaching its 200,000th car. The numbers will likely be close enough that Tesla could likely easily manage to move the date for this event either just before or just after the end of the quarter. The obvious incentive for Tesla, if it is going to be this close, is to build inventory at the end of the quarter, but keep actual deliveries under 200,000, then go full speed ahead with deliveries in the third quarter to maximize the last of the full tax credit. Randy Carlson has created a model that looks at the case of Tesla delivering its 200,000th car on June 30 vs, July 1 (ie 2nd quarter or just in the third quarter) and demonstrates that the additional tax incentives by pushing this even into July are as high as a half billion dollars! His model is below.
