When Will the Tesla Tax Credit Disappear? [highlight]

– This begs the question, then, when will they hit their 200,000th car delivered in the US You see, because once they do that, if you're not in the US this may sound foreign to you, but there is a tax incentive here in the US, and once they hit that the phase out begins of that tax incentive

So, for the current quarter, whatever quarter they hit it in, and the following quarter, everybody that takes delivery of a Tesla still qualifies for 100% of that federal tax incentive which is $7,500, and I won't get into the complexities of how it works, just know that you need to have at least that amount in a tax liability in order to take advantage of it So, it's a tax credit It's not a rebate They're not gonna send you a check Yo're just gonna reduce the amount of taxes you owe

So, there you have that Okay, so that's a big question, because a lot of people are really hoping to take advantage of that Now, there are also states that have other incentives on top of it Like California, we have a $2500 state rebate that you get Now, this is an actual check they send you

So, that's a big, big question Now, with the data we have, which is based in fact Right, we know how many they produced in January We know, essentially, how much they're producing as of the last week in March, and we know that this S-curve, this log-growth curve, is how the manufacturing world works The big question is the peak

We can take this data, add it up to what they already have, and see exactly how many cars, or when they might make that 200,000th car delivered in the US So, let's talk a little bit about where I got my data for this I really love this website called Inside EVs, and on here they have something There's a big green button in the corner, you can see, which is their Plug-in Scorecard Now these guys have been painstakingly looking at VIN registrations and everything for years to see exactly how many Model 3s and how many Model Ss and Xs and, in fact, every car have been delivered And so, you can see here the numbers that they've shared So, 1875 in January, 2500 in February, 3800 in March, which is about 82 thousand

Now, these are delivered versus you may hear close to 10,000 in other reports, that's produced So, there's a gap there, obviously, and then you have the Model S and Model X So, I've worked with these guys before They're super helpful I've taken this data, the new data, as well as all the older data that they've given, and I've plugged that into a spreadsheet here, and I've created a few different scenarios

Now, I'm not gonna make you look at a spreadsheet this whole time because, obviously, our brains don't work that well But, basically, the one thing I want to point out is that up until March, and let me see if I can go bigger on this, for March I have actuals These are real numbers that we know of, for the US only Then, from then on, I'm projecting the rest of the year So, let's look at this in kind of a more visual way to make sense of it

So, currently, Tesla is at 175,000, if you add up the S, X, and 3 Now, I don't have Roadster in here, which does count because I believe the federal tax credit for EVs began starting after 2009 So, all the Roadsters, which I only think they made like 1500 or 2500 of, count towards this as well So, there's definitely some, you know, margin of error, here, and these aren't official numbers from Tesla They don't actually share those

They only share the total deliveries They don't break it down by region and they only share them quarterly So, this is kind of difficult, but we're doing our best to come up with these numbers and see, you know, predict these things So, as of the end of Q1, they're at 175,907 So, 176,000, basically

The 200,000 mark is quickly, quickly approaching I was able to take the S and X from the historical data and, then, use a forecast to predict what the rest of 2018 would look like for X and S, alone And then, I could also do that for Model 3 So, let me see if you're seeing that at all It doesn't look like you're seeing that, but there's a filter that I applied, here, just for S and X, and then I also did this same thing for the Model 3 and that one looks like this

So, this may look just a little wonky, but what I'm able to do is essentially copy the forecast model data, and then, from there, add that back into that spreadsheet that you saw So, these are the monthly deliveries and this is how I came up with my forecast And, if you want in the description, I can actually post the details of the forecast model used I'm using Tableau software, which has a pretty cool way that it goes through and comes up with the best model using the historical data, here So, that's where that comes from

Now, the projections look like this I have three scenarios in which Tesla could operate, and this is kind of the full view of what it looks like and you can see the dark red line is the actual numbers and, then, you know, when they kind of diverge, that's where we have the different scenarios, here So, let's run through these scenarios really quickly First, when you zoom in, you can kind of see that one of them skyrockets up, one of them kind of hangs out until it hits 200K, then skyrockets up, and then one of them just kind of steadily increases Now, the first one I want to talk about is basically no change

Model 3 ramp continues at, you know, marching its way up towards that 10,000 mark, as we just saw, and all of the deliveries for them are still in the United States This means that by June, Tesla will have delivered about 230,000 Model 3s, or I'm sorry, cars total, which means that in Q2, the current quarter we're in, in the US, they will hit that number That would be a problem for a lot of people, because that means then only folks in Q2 and Q3 will get that full tax credit So, this likely will be avoided if they can So, there's that

Now, the next scenario is if basically the Model 3 ramp slows or deliveries are outside of the US become a priority Now, if that were to be the case, then we're looking at all the way til August when they hit that 200,000 mark which is close to the end of Q2 which, at that point, you may just want to push it I'm sorry, of Q3, you may just want to push it to Q4 if you can

So, yeah, this is becoming a difficult scenario, here So, the one that I think, I hope, is closer to reality, and I hope what they actually do, is this scenario three, here And, scenario three is that they start to deliver 75% of the Model 3s outside of the USA Now, that likely would be Canada for most of them, maybe some in Europe, but it's hard to really say, but, hopefully, you know, if you guys are in Canada or Europe, maybe that means some of them are coming, you know, are coming, to you very soon We'll obviously hear about that when that happens

And then, after they hit that 200,000 mark, which using this kind of math, here, would happen in early July, the beginning of Q3, then they ratchet it back and they dump 100% of their cars, Model S, X, and 3 into the US Now, obviously, they won't do that entirely, but what they could do, then, is truly maximize the tax credit-incentive here in the US Now, there is another scenario, here, which I didn't cover because it's not a graph or a chart It's that a lot of major utilities in the United States have recently banded together and written a letter to the government to try to get them to continue with this program beyond the 200,000 mark, beyond whatever the current sunset date is, and that's because, ironically, renewable energy is taking such a big chunk out of the grid, as it is, and people are becoming self-reliant with solar and home batteries and electric cars Electric cars are actually driving up demand for electricity giving them more money, more revenues

So, electric companies, even though, you know, they may be using coal or natural gas or whatever, you know, fossil fuels to power their grid, like electric cars because it increases demand So, a lot of them got together recently and they wrote a letter So, you know, in theory, they could, if that letter is effective or, you know, they're able to convince the powers that be, they could, this whole thing could be a moot point because they could say, "Ah, you know, forget it "Let's take away the 200,000 car limit "and let's just let it ride, as many as you can make" In which case, I think, more likely, you know, that first scenario where the Model 3 ramp continues and most of them are delivered in the US starts to rise

So, lots of scenarios, here I hope you guys enjoyed this little path down here because it was really fun pulling this together