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Tesla warns that the Model 3 is about to lose half of its tax credit in the US

Elon Musk at the Tesla Model 3 launch in 2017. | Photo by Lauren Goode / The Verge

A federal tax credit funded through the Inflation Reduction Act can currently shave up to $7,500 off the price of Tesla’s Model 3, but that’s about to drop in half. The tax credit will fall to $3,750 by January 1st, 2024 for the Model 3 Rear-Wheel Drive and Model 3 Long Range, the company warned.

Elon Musk’s company made the announcement via a banner on Tesla’s website, TechCrunch reports. Starting at around $36,000, the Model 3 comes with the lowest cost of any Tesla vehicle. Now, Tesla says the full tax credit will only be available to deliveries made through December.

Why? It looks like Tesla will be unable to meet sourcing requirements under the Inflation Reduction Act (IRA). That might also affect tax credits for the Model Y and…

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