The models from Tesla have given a freshness to the automotive market that we haven’t seen before. With propulsion systems that use only electric motors with no gasoline backup some have thought Tesla was too bold to be taken seriously. Not only dies this company offer vehicles that are powered by electricity only, they have a completely different sales process than nearly every other company in the market which may be enough to make them the bastard child of the automotive industry. If you asked Elon Musk that may be exactly how he wants his company to be viewed, but there is a problem brewing that needs to be addressed.
While the Model S is amazing on all levels as a great luxury EV there are two new models getting ready to hit production which stand to give Tesla a unique problem. The Model X will be an EV SUV that is offered and the Model 3 will be the most affordable car offered by Tesla thus far. Both of these vehicles are expected to be outstanding performers so what is the problem; currently there is a limited number of the $7,500 federal tax incentives offered for any manufacturer.
This number has a limit of 200,000 units which Tesla projects it will reach sometime late in 2017 or early in 2018. While the incentive might not steer many shoppers away from the Model S ( they just might not be able to afford all the incentives they want) this could have a huge impact on the Model 3. Another aspect of this being an issue is the fact Tesla uses a reservation system for their sales process.
Why would the Model 3 cause such a spike in sales? There are two reasons this car will increase sales enough to cause alarm. First, the Model 3 has the lowest price of the three and is meant to be an affordable everyday EV. Second the reservation price for the Model 3 is only $1,000 compared to the $5,000 a customer has to put down to reserve the Model S or Model X. Because of this affordability more customers can enjoy driving a Tesla brand product, but not as many will experience the federal tax credit.
Of course the new Executive Branch of the government could very well extend and increase the numbers for this credit or lift the limit altogether, but that would be hard to bank on considering we are about to have a new President. Tesla was well aware this could happen when they offered a lineup of vehicles that ran solely as EV models, but preparing a way to offset the expiration is something they still have to figure out. With this expiration in mind, if you do want to buy a Model S or a Model X and enjoy the incentives offered, now is the time, don’t hesitate any longer.
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