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It’s going to cost more to buy a Tesla as carmaker to lose the generous federal tax credit for electric cars

Customers who receive their cars after the end of the year won't be getting a US$7,500 tax credit
A Tesla car
The electric car maker sold its 200,000th car in the US this month triggering a federal tax credit phaseout

The clock is ticking for Tesla Inc (NASDAQ:TSLA) car buyers in the US. Every Tesla is about to become more expensive. That's because Tesla customers who receive their cars after the end of the year won't be getting a US$7,500 tax credit.

Put in place early in the Obama administration, the tax credit was seen as a tool that would encourage US customers to buy plug-in electric or hybrid vehicles in keeping with the former president’s clean energy and climate change goals. However, for car makers the full tax credit for their customers is gradually phased out after a company sells its 200,000th electric car in the US.

A Tesla spokesperson confirmed Thursday that the electric car maker sold its 200,000th car in the US this month.

According to a new schedule posted to its website, the US$7,500 tax credit will still be available — regardless of whether it’s a Model S, X, or 3 — between now and the end of the year. Customers who take delivery of their cars between January 1 and June 30, 2019, will only be eligible for a US$3,750 credit from the IRS. And customers who take delivery of their cars between July 1 and December 31, 2019, will be offered just US$1,875.

After that, the incentive is dead.

READ: Tesla begins taking orders for Model 3 with no reservations required

It’s terrible timing for Tesla, which is ramping up production of the Model 3, its long-anticipated affordable offering. 

“By 2020, Tesla customers won't be able to count on any financial help from the feds. History suggests the extra money makes a real difference: When the state of Georgia axed a $5,000 credit in July 2015, sales of electroc vehicles fell by 90%,” reported the Wired.

Customers holding out for the long-promised US $35,000 model 3 with less bells and whistles will have to wait another six to nine months and will get US$3,750 back from the IRS, at best.

Tesla stock was down 0.21% to US$316.05 in premarket trade Friday.

Contact Uttara Choudhury at [email protected]

Follow her on Twitter: @UttaraProactive

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