Bob Lutz in person has already said that the Model 3 has excellent fit and finish, but you will still hear people criticizing exactly these aspects of the car. Anyway, most of us complain about the price. And of not being able to buy one. Supposedly in our rescue, the WhiteBoard Finance YouTube channel presented a situation in which it is possible to drive a Model 3 for free. But only for some months. And only in the US.
The video shows the example of Chandler David Smith, an entrepreneur. And this is where the specifics of the free Tesla start to appear. If you do not have a company, you will not get that advantage, called bonus depreciation.
More Tesla Model 3 Pricing News:
As a company asset, the US government allows the entrepreneur to write off up to US$ 18,000 for the car in its first year of use. That is because your "work tool" will depreciate, so you get to pay fewer taxes. But that is not the end of the free driving thesis.
Smith bought the Tesla Model 3 with a US$ 2,500 deposit and by paying more US$ 5,000 to get financing. He would have to pay an installment of US$ 1,251 per month.
By the end of 2018, when Smith bought his car, he was still able to apply for the US$ 7,500 federal tax credit – which translates into money back to your pocket. That said, he would have spent solely the money the government would later return.
But that no longer works: Tesla delivered more than 200,000 cars in the US. That makes tax credits be reduced until they no longer apply. In the first half of 2019, they amounted to US$ 3,750. If you buy one Tesla now or until the end of the year, you get US$ 1,875 back.
Since the entrepreneur also owns a Ford F-150 Raptor, he only gets the chance to write off US$ 7,290 of the original US$ 18,000. Mostly because he has the right to write off all the US$ 78,000 he spent on the pickup truck.
Those almost US$ 8,000 are equivalent to six months with no installment payments. If Smith did not have the truck, he would possibly be able to write off US$ 18,000. That corresponds to 14 months of the installments he has to pay each month.
Bottom line, if you own a business and want a Tesla, you may buy it for your business – as a company asset – and write off US$ 18,000. Having paid US$ 7,500 in deposit and finance and with a US$ 1,875 tax credit, you would “drive your Tesla for free” for almost 10 months.
When the tax credit ends, you will get 8 months of some sort of relief in payments. With the care not to use the car apart from business. Do otherwise could eventually be considered tax fraud. An unnecessary burden for “driving a Tesla for free”. We’d rather be sorry just for not being able to afford one.
Video Description via Marko - WhiteBoard Finance on YouTube:
In this video, Chandler David Smith and I will show you how you can drive a Tesla Model 3 for FREE!
Chandler achieved this by taking advantage of tax credits and tax write-offs made possible by owning a business and using his Tesla Model 3 for business use.
Although the title of this video may seem like clickbait, he truly got to drive this Tesla for free for 6 months. There are a TON of valuable nuggets that Chandler shares during our drive together, so be sure to watch the entire video.
Owning your own business is a powerful way to take advantage of government incentives and tax laws.
Watch the entire video to see me kick Chandler’s butt in the Tesla racing game!
FAQs
As part of the 2023 Inflation Reduction Act, eligible businesses and tax-exempt organizations can claim up to a $7,500 credit when purchasing new Tesla vehicles with a gross vehicle weight rating (GVWR) of up to 14,000 pounds. All Tesla passenger vehicles qualify for this incentive: Model S. Model 3.
What are the tax benefits of buying a Tesla? ›
You may qualify for a credit up to $7,500 under Internal Revenue Code Section 30D if you buy a new, qualified plug-in EV or fuel cell electric vehicle (FCV). The Inflation Reduction Act of 2022 changed the rules for this credit for vehicles purchased from 2023 to 2032.
Why does Tesla Model 3 not qualify for tax credit? ›
Tesla reportedly informed its employees that its least expensive EV may lose eligibility for the newly revamped US federal EV tax credit soon. This is because the cheapest Model 3 features a different battery chemistry, and those batteries are sourced and manufactured in China.
Why is Tesla not eligible for $7,500 tax credit? ›
In order to qualify for a tax credit of up to $7,500, a new EV or eligible plug-in hybrid vehicle (PHEV) must meet certain rules: A vehicle's MSRP must not exceed certain limits, so pricey EVs, such as the GMC Hummer EV, Lucid Air, and Tesla Model S and Model X, won't qualify.
Can you write off a Tesla on your taxes? ›
Yes. The government allows for various tax credits for the purchase of plug-in electric vehicles (EV) or fuel cell vehicles (FCV). Tesla, arguably the most famed EV in the game, is on that list. The amount of tax credits you may qualify for depends on when you bought the Tesla.
How does the $7,500 tax credit for Tesla work? ›
The new tax credit, worth up to $7,500, is made up of battery and sourcing requirements, each adding up to half of the credit. If the car meets both requirements, it is eligible for the full credit. If it meets only one requirement, it may be eligible for a partial credit of $3,750.
Why cant you get a tax break on a Tesla? ›
According to EPA classifications, all versions of the Tesla Model Y are supposed to be under the “small SUV” category. But it would seem the IRS is treating five-seater and seven-seater models differently for tax eligibility, the former being treated as a car and the latter as an SUV.
How do I claim $7500 EV tax credit? ›
How do I claim the EV tax credit? To claim the tax break, known as the Qualified Plug-In Electric Drive Motor Vehicle Credit, you will need to file IRS Form 8936 with your tax return.(You will need to provide the VIN for your vehicle.) You can only claim the credit once, when you purchase the vehicle.
What is the income limit for the Tesla tax credit? ›
The EV tax credit income limit for married couples who are filing jointly is $300,000. And, if you file as head of household and make more than $225,000, you also won't be able to claim the electric vehicle tax credit. For all other filing statuses, the EV credit income limit is $150,000.
Is Tesla lowering prices? ›
Tesla has slashed prices in numerous markets worldwide to stay ahead of legacy U.S. competitors such as Ford Motor (F.N), while it strives to catch up with Chinese automakers such as BYD Co Ltd (002594.SZ) in its second-largest market.
With the EV tax credit the $7500 is applied as a credit towards what you owe, so in this instance you originally owed $16,290, but then the EV credit got applied and reduced what you owed by $7500, making your tax owed $8790 instead of $16,290.
Which Tesla can I write off? ›
Tesla's Model Y and other EVs will now qualify for $7,500 tax credit, IRS says.
Is Tesla considered a luxury car for tax purposes? ›
Given all its technological features, a Tesla is absolutely considered to be a luxury car. While they may not look like much from the outside, it's more so about what's inside than anything. In fact, Tesla has some features that most automakers do not.
Which Tesla qualify for Section 179? ›
2022 Tesla Model X
This crossover SUV comes equipped with a 1,020 peak horsepower (hp) electric motor. Its MSRP starts at $79,990, and it has a 6,800-pound GVWR. Qualifying business owners can take a section 179 deduction under the SUV Section of $26,200.
