[Last Chance For Model 3 $7,500 Tax Credit] Tesla Massively Slashes Price Of Model X, Making It Eligible For Federal Tax Credit And More!

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Update, 12/13: Tesla is now saying that based on current guidance, the federal tax credit for Model 3 RWD and Model 3 Long Range will be eliminated on 1/1. Of course that guidance is always subject to change…

Update, 12/5: Tesla announced that the federal tax credit for Model 3 RWD and Model 3 Long Range will be reduced from $7,500 to $3,750 on 1/1. The pricing chart below has been updated. Tesla is also offering 3 months free full self driving on all cars and 6 months free supercharging on Model 3 and Model Y via a referral link, though the purchase price is no longer discounted via a referral.

Originally posted on 9/1/23:

Massive Price Cuts:

As Tesla looks to close out Q3 with strong numbers, they have massively slashed the cost of their premium Model S sedan and Model X SUV, with cuts of $18,500 for most trims. The Model X Plaid is now a shocking $50,000 less than it cost just last year!

Additionally, the Model X cut to $79,990 means it now qualifies for the $7,500 EV tax credit! That will knock the price down to $72,490 for eligible buyers.

Stackable Referral Savings:

Plus, Tesla is offering a $1,000 discount on Model S and X and 3 months of free Full Self Driving via my referral link here. That will drop the Model X to $71,490 for eligible buyers.

There is also a $500 discount on Model 3 and Y and 3 months of free Full Self Driving via my referral link here.

I’d highly recommend requesting a demo drive to try out any model for yourself!

Inventory Discounts and Leasing Deals:

You can also search for inventory cars, which have increased savings available that vary based on location, but can make for some incredible bargains.

There are also some great lease deals available on made to order and inventory Teslas, check online and speak to your local dealership for more details on those. Note that while leases don’t qualify for the $7,500 tax credit, those discounts are often reflected in lower lease costs as the credit is available for the lessor to claim.

Free Color Selection:

Tesla is no longer charging for premium color selections for Model S or X, a savings of $2,000-$3,000. For Model 3 and Y, those still cost $1,000-$2,000.

FSD Price Drop and Free Transfers:

Tesla has also lowered the cost of Full Self Driving (FSD) from $15,000 to $12,000. Enhanced Autopilot (EAP), which is the sweet spot in my opinion, remains $6,000.

Tesla is also offering upgraders the ability to transfer their Full Self Driving software from older Teslas to new cars delivered by 9/30.

Phase-out of $7,500 Credit:

The $7,500 credit applies to sedans under $55,000 and SUVs under $80,000. Tesla says that the credits will likely be at least partially phased out for deliveries after 2023 due to stricter requirements that they won’t be able to meet.

$7,500 Non-Refundbale Tax Credit Details:

The tax credit applies in full if you have AGI in the current year or the previous year up to $300,000 for married couples filing jointly, $225,000 for heads of households, or $150,000 for all other filers. As long as your AGI is lower than those numbers in either year, you will qualify for the credit. The credit is non-refundable, so it can’t exceed your federal taxes owed for the year, but it will apply and you will receive a refund if your taxes are automatically withheld by your employer. An FAQ is available here.

Speak to a financial professional for more details about how the tax credit may affect you.

$7,500 Tax Credit For Businesses:

It’s worth noting that if you’re buying a car for business purposes, there is an alternate $7,500 commercial EV credit, that has no income limitations and will be valid on all Tesla models as it has no cost limit either. Speak to a financial professional for more details.

2023 Bonus Depreciation For Businesses:

And if you buy a Model X for business purposes, you may be able to take a first year section 179 20% depreciation, as well as a first year 80% bonus depreciation for cars weighing over 6,000 pounds that are delivered by 12/31/23. That can mean massive tax savings based on your marginal federal and local tax rate. Speak to a financial professional for more details.

State Incentives

Many states also offer incentives for buying an EV.

The most lucrative version is in NJ, where buyers pay no sales tax on EVs and can receive an instant rebate of $4,000 for cars with an MSRP of up to $45,000 or a $1,500 instant rebate for cars with an MSRP from $45,001-$55,000. NJ also has charging installation rebates.

The NJ rebates will even apply as a down payment towards a lease!

NY offers a $2,000 EV rebate and HOV lane stickers.

Colorado offers a $5,000 tax credit for EVs up to $80,000.

See more state incentives here.

5 Years With My Tesla Model 3

I’ve written several articles on Tesla after ordering a Model 3 back in July 2018.

Shortly after I got the car, Tesla accidentally handed over full control over their forums to me, which made national news headlines.

I wrote about my thoughts on the car after 2 years here.

After 5 years, I’m still thrilled with my Model 3 Long Range with acceleration boost, and love the software updates that improve the car as time goes on. There was one software update in that time period that made things worse by requiring more clicks, but that was since rectified.

The car is truly fun to drive on both short-haul and long-haul trips. And I love never having to do an oil change or go to a gas station!

Best of all, I never lose my keys as everything is controlled with your phone. The car automatically locks when you walk away from it and unlocks when you approach it. You can preheat or precool it all via the app.

When you’re stopped at a red light you don’t have to hold the brake and when the light turns green, the car can chime to let you know.

Thanks to 3rd party apps like TeslaFi, you can even prove your speed history to help you get out of a ticket!

If you are buying a Tesla, it’s worth noting that Tesla includes autopilot for free on all cars. I’d recommend getting the Enhanced Autopilot (EAP) for $6,000, which among many features, allows for auto lane changes on highways, which is what makes long-haul driving such a pleasure in a Tesla. I’d recommend against spending $12,000 for full self driving (FSD), which is very much still a beta product that isn’t currently worth the extra $6,000 in my opinion. You can always upgrade to FSD later on, should the product improve.

EAP also turns your car into a remote control car with smart summon. I’ve used that to get into my car by backing it up when someone parks too close to me, or to pick me up from the front door of shul when it’s raining.

Thanks to autopilot and EAP, long-haul driving no longer leaves me feeling fatigued at all!

Tesla Vision: The Bizarre Removal Of Ultrasonic Sensors And Radar

All that being said, I’d be remiss not to note that as of earlier this year, Tesla has removed ultrasonic sensors and radar for all of their new cars being sold, instead relying on cameras for Tesla Vision.

I recently test drove a Model X with Tesla Vision, and it’s noticeably worse in many ways than previous Teslas with those sensors. It can’t do many of the EAP/FSD features like Smart Summon and Autopark and it even struggles with measuring parking obstacle distances. Tesla says they’re working on fixing that, but it seems they may struggle with that, as they struggled to get the windshield wipers to work properly when they switched from a rain sensor to a Vision based system.

I drove in a friend’s new Model Y with FSD beta and Tesla vision earlier this week and it’s significantly worse than my FSD beta with ultrasonic sensors and radar.

I also disliked the new push button turn signal on the steering wheel and the lack of a gear selector. I despised the yoke, though now you can select a wheel now instead of a yoke.

In general, I found that the Model X’s drive felt much less sporty than the Model 3, with poorer handling around corners.

The falcon wing doors are very cool, but those doors and the trunk wouldn’t open all the way in the garage despite there being enough clearance. I tried to override that and save the location to remember, but it didn’t work, so I had to hold a button to manually override each time. Maybe I’m missing something here?

While older Model X cars’ front doors open all the way when you approach, on newer cars without ultrasonic sensors, this feature has been disabled and the door opens just a crack as it can’t tell if there are obstacles in the way. You also have to wait for it to open a crack before you can open it further or close it.

On the other hand, Plaid mode acceleration is amazing, I’ve never experienced anything like that! The seats were very comfy and the cooled seats are a great summer feature.

But the Tesla Vision system makes me hesitant to upgrade my car, despite all of these great incentives to do so.

Refreshed Model 3:

Finally, it’s worth keeping in mind that Tesla will be coming out with a fully refreshed version of the Model 3, nicknamed Highland, likely later this year. It’s expected to have better range, a rear touchscreen, cooled front seats, and more features. However, it’s also expected to have the annoying push button turn signal and lack of a gear selector, and it will likely cost more, so maybe that’s incentive to buy the existing model while it’s still available?

Price History Chart:

Here is a chart showing how Tesla pricing has changed over the past few years, from the lowest prices offered during the pandemic, to the quick increase in pricing due to the chip shortage and inflation, to the rapid drop in pricing now to boost demand as both output and competition increases.

Do you own a Tesla? Will you upgrade it with these incentives?

HT: Leon F.