High Tesla sales trigger tax credit phase-out

Tesla Inc. has sold more than 200,000 vehicles eligible for the plug-in electric drive motor vehicle credit during the third quarter of 2018, crossing the threshold that, according to the Internal Revenue Service, triggers a phase-out of the tax credit available for purchasers of new Tesla plug-in electric vehicles beginning Jan. 1.

Qualifying vehicles by the manufacturer are eligible for a $7,500 credit if acquired before Jan. 1. Beginning on that date, the credit will be $3,750 for Tesla’s eligible vehicles. On July 1, 2019, the credit will be $1,875 for the remainder of the year. After Dec. 31, 2019, no credit will be available.

The plug-in electric drive motor vehicle credit was enacted in the Energy Improvement and Extension Act of 2008. By law, five quarters after reaching the sales threshold, the credit ends for the manufacturer.

Tesla is the first manufacturer whose sales have crossed the phase-out threshold.

A Tesla Motors Inc. Model S electric vehicle on display at the company's showroom in Beijing, China
A Tesla Motors Inc. Model S electric vehicle stands on display at the company's showroom in Beijing, China, on Tuesday, Nov. 11, 2014. Photographer: Tomohiro Ohsumi/Bloomberg

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