Tesla hits 200,000 U.S. sales, tax credit phase-out to commence

The Tesla showroom in Newport Beach California. Bloomberg

Tesla told Reuters on Thursday that it has officially delivered 200,000 electric cars in the USA, which means its electric-vehicle tax credit will begin to phase out.

The announcement was first discovered by Jalopnik. As of next January, subsidies will be cut in half before being phased out completely a year later. 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.

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That means we now know how much the Model 3 costs with all the options-and "affordable" is kind of a stretch.

Those automakers like Tesla who were early to market would have a head start not only in building electric cars, but also in reducing their battery costs. The new vehicle identification registrations come at a time when Tesla is actively pushing its deliveries for the Model 3.

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.

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Hundreds of customers are on the waiting list for the lower-priced Model 3 sedan, which becomes available in 2019, and the reduction of the tax credit could impact some buyers' ability to afford the vehicle.

The Model 3, billed as a more affordable vehicle with a starting price of $35,000, is now delivered only in more expensive versions.

It finally happened. After bringing up Model 3 production to Elon Musk's self-imposed quota, Tesla has hit the point where its vehicle sales are high enough to begin the EV tax credit phase-out.

Tesla is the first auto manufacturer to hit the threshold in the U.S., and the end of subsidies could slow sales as the company ramps up production of.

However, under changes to subsidies for electric cars introduced previous year, the support is gradually phased out after a company has sold 200,000 vehicles. The Model 3, after all, would likely determine whether Tesla could achieve its target of becoming profitable this third or fourth quarter.

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