Tesla Scrambles to Sell Cars Before a Tax Break Fades

But not for much longer. Under federal rules, the full tax credit is available only on the first 200,000 cars that a manufacturer sells in the United States; two quarters later, the credit is reduced. Tesla reached that threshold in July. As a result, the credit available to Tesla buyers will fall to $3,750 for cars delivered on or after Jan. 1, then will be halved again on July 1 and go away completely in 2020.

The phaseout could hurt Tesla’s ability to reach a broader group of car buyers. The company’s lineup starts at nearly $50,000, before incentives, for the Model 3 and climbs to $140,000 for a top-of-the-line Model X sport utility vehicle. Tesla has long promised an entry-level Model 3 that would cost $35,000, but the company has acknowledged that it could not sell that car profitably right now.

“How many buyers are there out for a $60,000 car?” asked Karl Brauer, executive publisher of the auto information providers Autotrader and Kelley Blue Book. “There’s always the possibility Tesla is going to hit the saturation point.”

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