Tesla Model 3 Long Range's Price Drop: How the EV Tax Credit Changes the Game

June 19, 2024
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Tesla’s popular Model 3 Long Range performance variant now qualifies for the full $7,500 US electric vehicle tax credit.

This news surprises many, as the Model 3 Long Range and Rear-Wheel Drive variants were previously ineligible due to their LFP batteries sourced from China.

The original price of the Model 3 Long Range was $47,490. However, with the $7,500 tax credit, the cost drops to $39,990, making it only $1,000 more expensive than the Rear-Wheel Drive variant, which does not qualify for the credit. This significant price reduction will make the Model 3 Long Range more accessible to a wider range of customers.

While the specific changes Tesla made to the Model 3 Long Range to qualify for the tax credit remain undisclosed, experts speculate that recent modifications to the batteries make them comply with US regulations that favor American-made or locally sourced components. 

This move comes in response to the US government’s stricter stance on tax credit eligibility, which aims to reduce reliance on imported products and promote domestic manufacturing. Significant changes were made to EV tax credit regulations in 2023 to support using American-made parts.

As of April last year, only six vehicles qualified for the tax credits: the Cadillac Lyriq, Chevy Bolt, Chevy Bolt EUV, Tesla’s Model 3 and Model Y, and the Ford F-150 Lightning. Towards the end of 2023, Tesla announced that the Model 3’s rear-wheel drive and Long Range’s eligibility would be split by January 1, 2024.

electric car getting charged at charging station

Tesla claims that with the federal tax credit and estimated five-year gas savings, the starting price of the Model 3 Long Range can be as low as $34,990. 

This price correction makes the Model 3 Long Range more competitive in the market, addressing the previous pricing imbalance. The Performance Model 3 variant, which was eligible for the tax credit, could sometimes be cheaper than the Long Range variant.


The announcement on Tesla’s official “Tesla North America” X Twitter account shows the new financial incentives for future customers.

This development will enhance the competitiveness of the Model 3 Long Range in the electric vehicle market and attract more buyers looking for an affordable, long-range electric car.

As the demand for electric vehicles continues to grow, Tesla’s move to make the Model 3 Long Range eligible for the full tax credit could greatly impact the market. It will be interesting to see how competitors respond and whether this will lead to increased adoption of electric vehicles in the United States.

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