Tesla offers $3,750 discount for Model 3, Model Y deliveries in December

Tesla is offering Model 3 and Model Y buyers in the U.S. a $3,750 credit if they have their vehicle delivered in December 2022, according to an update on the company’s inventory page and several posts on Reddit.

Tesla didn’t share the reason for such generosity or publish the news widely — customers received the offer through messages from their dealers. It’s possible the automaker wants owners to take their deliveries before the year is out so it can boost its fourth-quarter sales numbers, which might be dwindling as customers push their delivery times out to 2023 in order to be eligible for the electric vehicle tax credit.

Tesla’s cars haven’t been eligible for an EV tax credit for some time — since the automaker reached the previous cap of 200,000 vehicles sold. But with President Biden’s Inflation Reduction Act (IRA), that cap will be waived by January 1.

Under the new legislation, zero emissions vehicles will be eligible for up to $7,500 in tax credits if automakers can show that their battery components were made or assembled in North America and that a certain percentage of battery critical materials were extracted or processed in countries with which the U.S. has a free trade agreement. If an automaker can only show half, then they’ll only get half of the rebate, which will probably be the case for the next few years, considering most critical materials are still sourced from China.

Which brings us back to the $3,750 discount — the same amount of money a Tesla buyer is expected get back as a rebate next year. But instead of waiting for tax season, Tesla’s offer allows customers to reap the benefits now.

Tesla’s discount also doesn’t discriminate based on income or vehicle manufacturer suggested retail price (MSRP), according to messages received by Tesla customers. Under the IRA’s tax incentive, single tax filers are eligible if their income is below $150,000; heads of households if income is below $225,000; and joint filers’ if income is below $300,000. Additionally new electric cars and SUVs that cost more than $55,000 and $80,000, respectively, don’t qualify for the tax credit.

The Model 3, a compact car, starts at around $47,000 but can easily go over $66,000 depending on model, trim and year. And the 2022 Tesla Model Y starts at $64,990, but a fully loaded performance model can go for more than $80,000.

It’s not common for Tesla to provide discounts — in fact, it’s more like the automaker to increase its price. So the upcoming tax credit might not be the only reason Tesla is dangling discounts. A new report from S&P Global Mobility found that Tesla’s market dominance in the U.S. is waning. The company still dominates the EV sector with its 65% market share, but that’s down from 79% in 2020 and might drop below 20% by 2025. The loss of market share comes as other automakers roll out more affordable EVs.