Tesla Model 3 cars eligible for $7,500 U.S. tax credit

Tesla has made adjustments to its battery supply chain that bring some of its vehicles within the guidelines qualifying them for federal U.S. credits.

Tesla's Model 3 vehicles now qualify for lower prices than Toyota Camry.

The Biden administration said on Tuesday that all Tesla Model 3 vehicles are eligible for $7,500 electric vehicle tax credits after two of the three versions were eligible for half the credits.

The new battery regulations for the Model 3 standard-range rear-wing drive and long-range all-wheel drive were introduced in April, lowering the credit to $3,750.

The government confirmed the change on its website, fueleconomy.gov.

A model 3 model starts at $40,240 and the price may fall to $25,240 when the $7,500 federal tax credit and another $7,500 from the California tax rebate kick in, depending on income and other requirements.

Toyota's Camry, available in mid-$26,320, is currently listed at $26,320.

In March, the Treasury Department established the sourcing requirements for critical minerals and battery components automakers must use in EV batteries to ensure eligibility for the full $7,500 credit.

The Inflation Reduction Act, passed by President Biden in August, was designed to boost domestic EV battery supply chains and decrease reliance on hostile nations like China.

Tesla may have dropped CATL in favor of Panasonic or LG Energy Solutions for U.S.-made Model 3 Rear-Wheel Drive, the cheapest version of the vehicle, Benchmark Mineral Intelligence analyst Caspar Rawles said.