Tesla Inc‘s TSLA Model 3 sedan’s rear-wheel drive and long-range versions became ineligible for any federal EV tax credit this year following the White House’s guidance aimed at cutting down on Chinese reliance. However, the EV giant never explicitly said how much its vehicles relied on China.
What Happened: According to a new filing from the U.S. auto safety regulator National Highway Traffic Safety Administration (NHTSA), less than 50% of the content in the 2024 Model 3 is from North America. Only 35% of the Long Range and 40% of the rear-wheel drive is from either the U.S. or Canada. A majority of the remaining content comes from China for both vehicles.
This is not the case with any other Tesla vehicle. For all other Tesla vehicles, the U.S./Canada content exceeds 50%. For the Model Y Long Range and Performance version, the North American parts content is at 70%, for the Model S at 65%, and for the Model X at 60%.
For Tesla’s new stainless steel Cybertruck, the North American parts content is at 65%, higher even than Ford’s F-150 Lightning electric truck, which has only 24% components from either the U.S. or Canada.
Why It Matters: As per guidance issued by the Biden administration in December, an electric vehicle may not contain any battery components manufactured or assembled by a ‘foreign entity of concern’ (FEOC) starting in 2024 if they are to receive a federal tax credit. FEOC is an entity that is owned by, controlled by, or subject to the jurisdiction and direction of China, Russia, North Korea, or Iran.
Further, in 2024, 60% of the battery components in the vehicle eligible for tax credits must be manufactured or assembled in North America and about 50% of the critical minerals contained in the battery must be extracted or processed in the U.S.
Teslas Eligible For Tax Credit: Currently, all versions of Tesla’s Model Y SUV as well as the Model X dual motor version are eligible for an EV tax credit of $7,500.
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