Tesla Model 3 costs $45K but is $35K after tax incentives

Elon Musk claims a new $45,000 version will cost $35,000 — the original target for Model 3 — after federal and state tax incentives.

The federal $7,500 electric-vehicle tax credit will be phased out starting in 2019. Buyers who take delivery from Jan. 1 to June 30, 2019, the credit will drop by half to $3,750, and halved again for the period from July 1 to Dec. 31, 2019, then eliminated entirely in 2020.

Tesla expects to start delivering the Model 3 with the new mid-range batteries in six to 10 weeks.

Only the mid-range battery Tesla Model 3’s delivered in 2018 will have the $7500 federal tax credit.

Tesla has said the $35,000 base price standard version would begin selling in four to six months. The tax credit phase-out and the reduction in base price will the post-tax credit price of the least expensive Tesla model will be staying relatively constant. California has indicated that they would increase state tax credits to off-set reduced federal tax credits. This would only help reduce the prices of Tesla and other electric cars sold in California.