Tesla Model 3 Long Range Now Qualifies for $7,500 Tax Credit, Undercutting Average New Car Price by Nearly $15K

The Tesla Model 3 Long Range has become fully eligible for the $7,500 federal tax credit for electric vehicles (EVs) in the . This credit applies to EVs with batteries originating from the U.S. and is taken off at the point of sale.

With this change, the Long Range is now only $1,000 more expensive than the Model 3 Rear Wheel Drive (RWD), as the RWD model uses LFP batteries from CATL in , making it ineligible for the credit. At a price of $40,000 after the tax credit, the Model 3 Long Range is now nearly $7,500 less than the average new car price in the United States, which stands at $47,338 as of January 2024.

In , dropped the Model 3 RWD price by CA$1,000 (US$729) in response to British Colombia reducing the upper limit of their EV credit MSRP range. As a result, the Model 3 RWD is the only Tesla vehicle covered under the new BC rebate. However, due to a classification quirk, the is considered a sedan by the Government of BC and is completely ineligible for the additional rebates, although the CA$5,000 (US$3,645) federal EV rebate still applies.

Tesla vehicles accounted for an impressive 80% of federal EV rebate applications in Canada in 2023, up from 60% the previous year.

EVXL’s Take

The increased affordability of the Tesla Model 3 Long Range, thanks to its eligibility for the $7,500 federal tax credit, is a significant development in the EV market. With a price nearly $15,000 below the average new car in the U.S., the Model 3 Long Range is poised to attract even more buyers to the electric vehicle segment.

This move aligns with Tesla’s mission to accelerate the world’s transition to sustainable energy and demonstrates the company’s commitment to making EVs more accessible to a wider audience. As continues to advance and production costs decrease, we can expect to see further price reductions and increased adoption of electric vehicles in the coming years.

Photo courtesy of Tesla Motors.


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Haye Kesteloo
Haye Kesteloo

Haye Kesteloo is the Editor in Chief and Founder of EVXL.co, where he covers all electric vehicle-related news, covering brands such as Tesla, Ford, GM, BMW, Nissan and others. He fulfills a similar role at the drone news site DroneXL.co. Haye can be reached at haye @ evxl.co or @hayekesteloo.

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