Tesla Puts Incentives On Blast, As Tax Credit Comes Under Threat

Tesla's inventory page underscores the critical role the federal tax credit plays in driving sales. The price with the incentive is now displayed front and center in bold print before you click through to buy or lease. The inventory page often offers some of the best deals on new Teslas.

The $7,500 federal tax credit — now in the crosshairs of the incoming administration — in practice serves as an instant, point-of-sale discount for many buyers. On the inventory page, as of mid-November in California, Tesla bundles the $7,500 tax credit with "5-year gas savings" to render a promotional price. In the case of leases, the credit is typically applied over the course of the lease as a discount on monthly payments. Tesla is also aggressively pushing leases on its order (non-inventory) landing page.

This is in contrast to General Motors dealers — now selling a wide variety of relatively pricey new EVs — who don't always broadcast the federal incentive and sometimes bury it deeper in the website.

Incentive drives pricing for Tesla Model Y and Model 3

Both the Model Y and Model 3 get hefty discounts courtesy of the federal tax credit. Long-range all-wheel drive Model Ys can be found for under $40K in inventory and Model 3s drop to around $35K with the incentive. That can be the difference between affordability and unaffordability for many buyers. More broadly speaking, the $7,500 can serve as a down payment, paving the way to an EV purchase. In October, the average sticker price for EVs was $63,901 compared to $45,620 for ICE (gas-powered) vehicles, according to a research note released this past week by Edmunds.

GM offers the tax incentive on most of its EVs but it's not always obvious

In 2025, GM is positioning itself to become a major force in EVs. But dealers sometimes still struggle to make an effective sales pitch for GM's electric lineup. More than a few Chevy dealers in Los Angeles, for instance, don't make it clear up front that the buyer can shave $7,500 off the price of an EV. Dealers tend to show conventional "savings" or incentives that are not related to the tax credit. Only drilling down on dealer websites will reveal the federal tax credit. That's ironic because GM is now flooding the market with a raft of new electric vehicles, including the Chevrolet Blazer EV, Chevrolet Equinox EV, Cadillac Lyriq, Cadillac Optiq, and Cadillac Escalade IQ. A redesigned Chevy Bolt is also due later and possibly a Buick EV.

For instance, some Los Angeles dealers are offering heavy discounts on the Chevy Blazer EV. With the federal tax credit, that can bring the down price to under $35,000 (as of mid-November 2024) The $7,500 credit becomes the difference between a pricey $42K+ Blazer and an affordable sub-$35K one.

The end is near?

But it's also possible that GM dealers don't want to push this incentive too hard in light of its possible elimination. If and when the incentive goes away, as President-elect Trump has hinted at , it could be a reset for the EV market. Trump spoke out frequently against EVs in campaign speeches, claiming that an " EV mandate " has the effect of coercing consumers to buy EVs. "The potential elimination of the federal tax credit for electric vehicles by the Trump administration — without another form of incentive to replace it — could derail the trajectory of EV sales in the United States," said Jessica Caldwell, Edmunds' head of insights, in a statement this past week.

Edmunds added that tax credit can be the critical factor in closing the price gap between EVs and gas vehicles. "Although the average sticker price for EVs is nearly $20,000 ($18,281 to be exact) more than ICE vehicles, Edmunds analysts note that average monthly payments for both EVs and ICE vehicles are nearly the same due to heavy incentives being placed on EVs like the federal tax credit," she said. ICE refers to Internal Combustion Engine, aka, gas vehicles.

If the tax credit disappears, leases stand to take a hit too. Any may have unintended consequences. "Regarding pricing, this is a huge issue...Currently there are a lot of attractive lease deals out there, and they are driving lease sales forward," said Tom Libby, an analyst at S&P Global Mobility. "But what if the actual value three years from now is below the residual agreed to in the current lease contract?"