Only 1 of Tesla's Models Qualifies for Biden's $7,500 Rebate

President Joe Biden signed the landmark Inflation Reduction Act into law Tuesday, a step that addresses many of his campaign goals, including reducing carbon emissions and creating more jobs in America. The law enhances restrictions on which electric vehicles qualify for tax credits—a win-lose situation for several electric vehicle manufacturers, including Tesla.

Tesla already reached its previous tax credit allotment in 2018 by selling more than 200,000 vehicles. Since then, Tesla buyers haven't qualified for a tax credit. The Inflation Reduction Act removes the manufacturing cap but establishes other stipulations.

"Americans looking to take advantage of the Inflation Reduction Act's electric vehicle tax credit will have multiple cars to choose from right away. And they'll be cars made in America by America's workers," White House Assistant Press Secretary Abdullah Hasan told Newsweek.

To qualify for the tax credit, EVs must cost below $55,000 for sedans, hatchbacks and wagons, and below $80,000 for SUVs, trucks and vans. That makes only one of Tesla's models—the Model 3—eligible for the credit unless the Model Y is classified as an SUV rather than a station wagon.

Joe Biden and Tesla
In this combination image, U.S. President Joe Biden (Left) pictured in in the East Room of the White House on August 9, 2022 in Washington, DC and A Tesla (Right) electric charger is displayed next to a Telsa car. Getty

Many hopeful EV owners also might be required to scale back their EV wish list if they want to qualify for the credit, as add-ons lead to dramatic price hikes. The Model 3 base price is nearly $45,000, but if a purchaser hopes to add enhancements, the price can jump thousands of dollars and disqualify the consumer from receiving the tax credit.

The Model 3 is the world's most popular electric vehicle, according to Statista, which specializes in market and consumer data. The Model Y base price is nearly $59,000, with similar price leaps for enhanced offerings. The Model S has a base price of nearly $90,000 and the Model X has a base price of nearly $105,000. The latter two models don't qualify for the tax credits. Kelley Blue Book estimates the average price of an EV at about $66,000.

Other stipulations also could become an obstacle for Tesla. The law introduces significant changes to the tax credit in a phased approach. Effective immediately, EVs must have final assembly in North America for consumers to qualify for the tax credit.

Further restrictions will begin in 2023 and require the vehicle's battery to be built in North America with minerals mined or recycled on the continent as well. Although Tesla builds many of its batteries at a factory in Fremont, California, it mines most of its minerals needed to build batteries from foreign nations. Common minerals needed to build batteries are cobalt, graphite, lithium, manganese and nickel. China leads in global refining capacity for raw materials needed for batteries, according to, with Australia ranked second. U.S. is ranked 15th.

The tax credit also isn't available for those with a taxable income higher than $150,000, or $300,000 if filing jointly.

For buyers who are eager to purchase an electric vehicle since the law went into effect, they can see a list of eligible 2022 and 2023 vehicles meeting the final assembly requirement at The site lists dozens of electric vehicles assembled in North America, including all four Tesla models. However, the site doesn't list the vehicles' price points.

Consumers that purchase a qualifying electric vehicle must claim the EV tax credit on their annual tax filing. Starting in 2024, the Inflation Reduction Act will establish an option for car buyers to transfer the credit to dealers at the point of sale to immediately reduce a qualifying EV's purchase price.

Consumers who purchased an EV prior to August 16 are not eligible for the tax credit.

Newsweek reached out to Tesla for comment.