Please ensure Javascript is enabled for purposes of website accessibility

West Bank Town Becomes ‘Big Prison’ as Israel Fences It In

3 days ago

Trump Says He’s Willing to Let Migrant Farm Laborers Stay in US

3 days ago

US Electric Vehicle Tax Breaks Will Expire on Sept. 30

4 days ago

Eyeing Arctic Dominance, Trump Bill Earmarks $8.6 Billion for US Coast Guard Icebreakers

4 days ago

Trump’s Sweeping Tax-Cut and Spending Bill Wins Congressional Approval

4 days ago

Americans Celebrate Their Independence With Record-Breaking Travel Numbers

4 days ago

US Supreme Court to Decide Legality of Transgender School Sports Bans

4 days ago

Nvidia Set to Become the World’s Most Valuable Company in History

4 days ago

Poll: 41% in US ‘Extremely Proud’ to Be American, Near Historic Low

4 days ago
Tesla Model 3 Buyers Lose Patience and Maybe Tax Credits
gvw_ap_news
By Associated Press
Published 7 years ago on
July 18, 2018

Share

DETROIT — In March of 2016, Keith Reynolds flew from California to Atlanta so he could claim his spot in line at 4 a.m., and get a three-hour head start on his West Coast competitors. Tesla was taking $1,000 deposits for its new electric car, the Model 3, priced starting at $35,000. And Reynolds had to have one. He managed to land near the top of the waiting list.
Flash forward more than two years, through much-publicized production delays. Reynolds is still waiting.
And now, like others in the U.S. on a waiting list of about 420,000 worldwide, he worries that the looming phaseout of a $7,500 federal tax credit will put the cost of the car out of his reach.
“The tax credit was going to be huge,” says Reynolds, 45, who works in digital advertising, lives in Laguna Hills, California, and drives a 9-year-old Audi A3 compact car.
Last week, Tesla sales hit 200,000 since the start of 2010 — the point at which federal law requires the credit for rechargeable electric vehicles to be phased out. Tesla buyers will continue to get the full credit through the end of the year. Then it drops to $3,750 for six months and $1,875 for another six months before ending entirely on Dec. 31, 2019.
That means buyers need to be behind the wheel of a new Tesla by the end of the year to get the full $7,500 tax break — essentially a 21 percent discount off the base model’s sticker price.

Many Model 3 Customers Will Grow Tired of Waiting

Many Model 3 customers will tire of waiting and drop out, predicted Dave Sullivan, manager of product analysis at AutoPacific Inc., an auto research and consulting firm. “By then they will have been waiting for three years possibly,” he said.
Tesla wouldn’t comment on the possibility of losing buyers from the waiting list.
But if buyers bail, it could put the company’s future in peril, costing sales and desperately needed cash flow for Tesla at a critical time in its 15-year history. Tesla is using the Model 3 to move from a niche maker of expensive electric cars for the wealthy to an automaker for the masses.
CEO Elon Musk has promised to turn a profit in the second half of this year, but Tesla has lost money in all but two quarters in its eight years as a public company. In the first three months of this year it burned $1 billion as it ramped up Model 3 production at a Fremont, California, factory. The company had $2.7 billion in cash at the end of March.

Moody’s Downgrades Tesla Debt to ‘Junk”

In March, Moody’s Investor Service sounded an alarm, downgrading Tesla’s debt into junk territory and warning that it won’t have cash to cover $3.7 billion for normal operations, capital expenses and debt that comes due early next year. Tesla has said Model 3 sales will generate cash and drive profits.
Musk began sleeping at the factory in an effort to fix automation and other problems that much of the year held output to around half of the goal he set last summer of 5,000 Model 3s per week. The company built a heavy-duty tent to add space to make more Model 3s and said it reached 5,000 per week at the end of June.
Like many of those still on the waiting list, Reynolds wants to order a Model 3 priced closer to the $35,000 base. The cheapest version only comes in black, with other colors costing at least $1,000 more.
At present, Tesla is selling only pricier versions with longer-range battery packs. The last time Reynolds configured one on Tesla’s website, the lowest price was $49,000, beyond what he can afford.
He wants the car badly enough that he’ll spend over $40,000, as long as California and federal credits still cut the price to around $35,000. He’ll hang on until the end of this year. Beyond that, he said he’ll likely drop out if there’s no federal credit and “if no configuration options are made for the frugal, penny-pinchers like myself.”

Others on the Waiting List Are Worried About Losing the Tax Credit

Others on the waiting list interviewed by The Associated Press said they were worried about losing the tax credit. Several recent buyers and customers on Tesla internet forums expressed similar concerns.
Most Tesla buyers who already got the tax credit — about 120,000 — are wealthier people who didn’t need it to buy Tesla’s more expensive Model S and Model X, which can cost over $100,000, said Navigant Research analyst Sam Abuelsamid. He said the tax law should have had an income limit for eligibility. “If you can afford to buy a $140,000 Tesla, you don’t really need the incentive,” he said.
The only other automaker that’s close to losing the tax credit is General Motors, which has sold about 185,000 electric cars and should hit 200,000 early next year, according to the Edmunds.com auto pricing site. (Edmunds regularly provides content, including automotive tips and reviews, for distribution by The Associated Press.)
Kelley Blue Book analyst Rebecca Lindland put down a refundable $1,000 deposit on a Model 3 in April of 2016 because she believes in Musk’s crusade to cut auto emissions to zero. Three months ago, she canceled her order, partly because of the delays, partly because she now wants a hatchback.
Lindland also wondered if she’d ever get the car. “I’ve already been on the list for two years,” she said. “I need all-wheel-drive, and I would have to wait another year.”
She doesn’t think Tesla will be able to keep making 5,000 cars per week, and she is skeptical of the cars’ quality and worried that Tesla could run out of money, unable to service vehicles.

Photo of Christian Kingery and his Audi
Christian Kingery poses next to the Audi he is driving until he can take delivery of a long-awaited Tesla Model 3. Tesla has told him it could take until between September and November of 2018 for his car to be delivered, but he fears it might be even longer. (AP Photo/Ted S. Warren)
Christian Kingery, a Seattle-area web developer, was among the first to order a Model 3 in 2016. He wanted a loaded version with all-wheel-drive for rainy weather but was troubled by the prospect of losing federal and Washington state tax credits.
He compromised and ordered a rear-drive version in April. But his delivery date was delayed, costing him the Washington credit, which he says was worth $3,000 before it expired in May.
When all-wheel-drive became available, he switched his order, pushing delivery to September.
Although Kingery is frustrated, he still wants the car. “Tesla is doing something that no other carmaker is doing, in a way that no other carmaker is doing,” he said.
Like Reynolds and Lindland, he knows about the Model 3’s impressive handling, 310-mile battery range and futuristic interior with all the controls on a touchscreen.
He will just have to wait a little longer to drive one.

DON'T MISS

What Are Fresno Real Estate Experts Predicting for 2025 and Beyond?

DON'T MISS

First California EV Mandates Hit Automakers This Year. Most Are Not Even Close

DON'T MISS

How Trump’s ‘Big, Beautiful Bill’ Will Make China Great Again

DON'T MISS

What’s Caitlin Clark Worth to the WNBA? A Lot More Than Her $78,066 Salary.

DON'T MISS

Trump to Sign Tax-Cut and Spending Bill in July 4 Ceremony

DON'T MISS

Madre Fire Spurs Evacuations Across 3 Counties, Grows to More Than 70,000 Acres

DON'T MISS

Clovis, Sanger, Madera, and Bass Lake Will Light the Sky With Fireworks Shows Tonight

DON'T MISS

Oil Dips Ahead of Expected OPEC+ Output Increase

DON'T MISS

613 Killed at Gaza Aid Distribution Sites, Near Humanitarian Covoys, Says UN

DON'T MISS

Fresno County Authorities Investigating Suspicious Death of Transient Man

DON'T MISS

West Bank Town Becomes ‘Big Prison’ as Israel Fences It In

DON'T MISS

Israeli Military Kills 20 in Gaza as Trump Awaits Hamas Reply to Truce Proposal

UP NEXT

Fresno Crash Involving Unlicensed Teen Driver Sends Woman to Hospital

UP NEXT

Madre Fire Burns More Than 52,000 Acres in San Luis Obispo County

UP NEXT

Americans Celebrate Their Independence With Record-Breaking Travel Numbers

UP NEXT

San Luis Obispo’s Madre Fire Grows to 35,000 Acres, More Evacuations Ordered

UP NEXT

Poll: 41% in US ‘Extremely Proud’ to Be American, Near Historic Low

UP NEXT

Poorest Americans Dealt Biggest Blow Under Senate Republican Tax Package

UP NEXT

CHP Officer Dies in Line of Duty After Medical Emergency While on Patrol

UP NEXT

Downtown Housing Could Rise in Many California Cities, but Barriers Remain

UP NEXT

Poll: Most Americans Say National Divide, Political Violence Threaten Democracy

UP NEXT

Trump Pulls Back 150 Guard Troops From Federal Duties in California

Wanted Fugitive Found Hiding in Attic Arrested in Chowchilla

50 minutes ago

Trump Says US Will Impose 25% Tariffs on Japan, South Korea

2 hours ago

Wall Street Knocked Lower by Tariff Jitters, Musk’s Political Plan Hurts Tesla

2 hours ago

Trial Over Free Speech on Campus, and Trump’s Student Crackdown, Begins

2 hours ago

Planned Parenthood Sues Trump Administration Over Planned Defunding

2 hours ago

San Luis Obispo’s Madre Fire Injures 1 Firefighter, Burns Over 80,000 Acres

2 hours ago

Two Border Patrol Officers Injured After Gunman Opens Fire in Texas

2 hours ago

Fresno Police Arrest 9 at Independence Day DUI Checkpoint

2 hours ago

Schumer Wants Probe of National Weather Service Response in Texas

3 hours ago

Israeli Guilt Over Gaza Lurks Beneath Silence and Denial

3 hours ago

Man Dead After Firing at US Border Patrol Station in Texas

WASHINGTON – A 27-year-old Michigan man was shot dead by police after opening fire with an assault rifle on a U.S. Border Patrol stati...

15 minutes ago

Photo of caution tape
15 minutes ago

Man Dead After Firing at US Border Patrol Station in Texas

The Flume Fire in Sequoia National Forest has burned 65 acres near Highway 190 with no containment as of Monday, July 7, 2025, prompting evacuations in Tulare County. (CalFire)
26 minutes ago

Tulare County Flume Fire Burns 65 Acres in Sequoia National Forest, Evacuation Order Issued

Firefighters stopped the forward progress of the Fish Fire near Avocado Lake after it burned 15 acres Monday, July 7, 2025, reaching 50% containment. (CalFire)
41 minutes ago

Fresno County Fish Fire Burns 15 Acres Near Avocado Lake, 50% Contained

Gary White, 42, a wanted fugitive, was arrested in Chowchilla after deputies found him hiding in an attic and he surrendered without incident on Thursday, July 3, 2025. (Madera County SO)
50 minutes ago

Wanted Fugitive Found Hiding in Attic Arrested in Chowchilla

Containers on a cargo ship are pictured at an industrial port in Tokyo, Japan, July 2, 2025. (Reuters File)
2 hours ago

Trump Says US Will Impose 25% Tariffs on Japan, South Korea

Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., June 30, 2025. (Reuters/Brendan McDermid)
2 hours ago

Wall Street Knocked Lower by Tariff Jitters, Musk’s Political Plan Hurts Tesla

Protesters march near the campus of Columbia University in upper Manhattan to demand the release of Mahmoud Khalil, a Palestinian activist and former Columbia student, on March 14, 2025. A federal judge in Boston on Monday, July 7, 2025, will hear opening statements in a trial expected to present the foremost challenge to the Trump administration’s aggressive posture toward foreign students who espoused pro-Palestinian views. (Dave Sanders/The New York Times)
2 hours ago

Trial Over Free Speech on Campus, and Trump’s Student Crackdown, Begins

Activists for Planned Parenthood demonstrate as the U.S. Supreme Court hears oral arguments in South Carolina's bid to cut off public funding to Planned Parenthood, in Washington, D.C., U.S., April 2, 2025. (Reuters File)
2 hours ago

Planned Parenthood Sues Trump Administration Over Planned Defunding

Help continue the work that gets you the news that matters most.

Search

Send this to a friend