Tesla Model S Buyers Face Year-End Deadline: $7,500 At Stake

2013 Tesla Model S

2013 Tesla Model S

Enlarge Photo

More than 13,000 people have put down deposits to join the waiting list for the Tesla Model S electric sports sedan.

Each of us eagerly awaits delivery of our much-decorated, cutting-edge car.

But as 2012 winds down, several hundred of us at the front of the queue are especially antsy. 

It's not just a question of whether we'll get a cool new car under the Christmas tree.

There's real money at stake: Will we get our cars by December 31, in time to qualify for the $7,500 Federal tax credit this year?

Or will we end up on the wrong side of  the 2012 delivery bubble, and have to wait an agonizing 15 months--until April 2014--to reap the tax benefit?

When I signed my purchase agreement, back in September, I was told Tesla Motors [NSDQ:TSLA] would deliver my car in "November or December."

But production snags have slowed deliveries, and November is clearly out of the question. And December is looking dicey.

Signatures Okay

It appears that customers who ordered the more expensive Signature cars--the first 1,200 or so cars off the line--will all get their cars this year.

Roughly 600 Signature cars have been delivered so far, and Tesla says it will ramp production rates from 200 a week at the start of November to 400 by the first week in December.

With production of Signature cars winding down--most likely by the end of November--the factory is expected to start building standard models early in December. 

My reservation for a regular Model S is Number 717. If Tesla indeed builds 400 cars a week by December 1, it appears my car would roll off the production line in mid-December.

But hold the Champagne.

A number of complicating factors could delay my delivery until after the first of the year:

*The delivery process. I live outside New York City, 2,500 miles from the Fremont factory. My Tesla rep tells me delivery takes one to two weeks.

*Production batching. Signature cars have not been produced in sequence order, but rather in batches based on options and equipment. Back-ordered parts and post-production correction of quality flaws also scrambled delivery order. So there's no guarantee my car will be built or delivered in sequence.

*The 60-kWh factor. I ordered my car with the mid-size 60-kWh battery. Tesla hasn't yet certified the EPA range numbers for the 60-kWh or 40-kWh cars. Until it does, production of those vehicles can't start.  So Tesla is likely to start building  a batch of already-certified 85-kWh production versions before starting on 60-kWh and then 40-kWh models.

2012 Tesla Model S, brief test drive, New York City, July 2012

2012 Tesla Model S, brief test drive, New York City, July 2012

Enlarge Photo

A Tesla spokesman told me that 60-kWh cars will go into production in "late December," followed by 40-kWh cars in January. My place in the 60-kWh queue--and the number of 85-kWh models to be built first--is unknown.

It all boils down to a stew of uncertainty worthy of Heisenberg.

No Refund

My own odd financial situation makes this uncertainty all the more nettlesome.

IRS rules say that the $7,500 tax credit for an electric car purchase may only be applied to Federal taxes owed.  In other words, if you owe less than $7,500 in tax, there's no refund of the difference. You can only reap the full benefit if your actual tax bill totals at least $7,500.

Due to odd circumstances, my Federal income tax bill may be substantially less than $7,500 this year.  My tax guy advised me to cash in about $20,000 from my IRA, to bring my tax liability up to the $7,500 level so I can take full advantage of the credit.

But if I make the IRA withdrawal and then the car isn't delivered until after December 31, I've just screwed myself out of several thousand dollars.

If the car is delivered in the last few days of 2012--as looks quite possible--I won't have time to make the IRA withdrawal, which I'm told takes several days.

It appears that I--and several hundred other owners on the December 31 delivery bubble--can only sit tight, cross our fingers...and await our fates.

David Noland is a Tesla Model S reservation holder and freelance writer who lives north of New York City.


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Comments (15)
  1. very agonizing end of the year :(

  2. Keep in close communication with Tesla. I imagine they don't just show up one day and leave a car at the house if you're at work, this isn't UPS...

  3. FYI; anyone receiving a refund who waits until the last second to file only waits till April as THEIR choice. I pay in April, but get refunds usually the 2nd week of Feb at the latest (have not had a refund in 10 years since I chose to hold my own money...)

  4. "Stuff happens" in new tech production. I was in the same boat relative to our orders for both the 2011 Volt and Leaf. My Leaf order was on "day 1" of their accepting orders, and my projected delivery date was initially Nov. 2010, but the car did not arrive until February of 2011. Ditto for our Volt, ordered as the first car to be delivered from a Northern California major Chevy dealer, and ordered in the first week of actual Volt orders, but that still got us delivery in the SECOND week of 2011. Because of missing that direct tax credit to claim, we ended up leasing both cars to use the tax credit in that format.

    Hope you have better luck than we did. OTOH, our Model S order is timed for mid-2013 delivery, so that should be OK.

  5. I would suggest that you play it safe and tell Tesla that you do not want to take delivery until after Jan 1. Even if the car is built 2 weeks before, they do not have to bill you, and you do not have to pay until you are ready. Of course this means that you don't get the tax credit for another year, but in your circumstances, taking money out of your retirement now to gain the tax credit is an unwarranted risk.

  6. Instead of cashing out your IRA, do a Roth conversion for the appropriate amount. If you don't get the car you can then recharacterize the conversion to undo it. This gives you maximum flexibility and minimum risk.

  7. You never know...

    Some people thinks that Obama might be able to push the $10K fed tax credits through somehow... So, it might be even better for you in the next couple year.

  8. i'm wiht the Roth conversion fellow. That's the ticket, you can convert, and recharacterize. Also, aim for the 85 KWH battery, you just so want that range

  9. Thanks a lot, David. I too have a 60 kWhr Model S on order, but I have #3902 and I have spent weeks speculating about build-rates, dropouts and second shifts. You have crushed my dream...but if the 40s are built AFTER the 60s...

  10. The author is not alone on this issue. Perhaps as many as 1/3 of all Model S buyers may not qualify for the tax credit. Folks erroneously assume that the typical Model S buyer is rich and has high income, and therefore can take the tax credit. Many Model S reservation holders have never paid more than $40K for a car. There are many ways to buy an expensive car and not be rich. For example, the sale of a car you inherited could pay for at least half the cost of Model S. I personally sold 2 cars to raise half the money. Frankly, a point of purchase tax credit would be more effective, and easier for the IRS to deal with. Even if it was for a lesser amount.

  11. The author is very unlikely to get his Telsa S this year. More revenue is received for the 85KW S models so why would Telsa stop fulfilling those orders till they were exhausted just to fill out orders for less costly model S cars? There will likely be some other snag in production due to weather, parts, or some other minor problem in the S models that have already been built.

    Best suggestion was from fellow commentors to just contact Telsa and tell them you want yours in 2013. Likely too many bugs in the first batches of the model S for my tastes...I'll probably get a 2014 MY Telsa S w/ 60KW pack.

  12. Either tell Tesla you don't want delivery until after the new year, or come to CA to sign paperwork/take delivery before the end of the year and still have them deliver to you two weeks later in NYC.

  13. I'm driving a 23 year old Dodge pickup truck and trying to pay my bills every month. Explain to me why I'm helping you buy a $100,000 automobile??

  14. So that in 10 years time, you'll be able to drive an EV car that is much cheaper to drive than your pickup.

  15. Nick... did any of you guys have any math classes in school?
    My truck: (Purchase Price + Motor Fuel + Repairs + Taxes + Expendables (Tires, etc.)+ Insurance)/260,000mi = 7.8 cents/mile
    You're telling me that in 10 years I can buy an EV with an operating cost much less than 7.8 cents/mile over a 20+ year lifetime. Pray tell Sir, show me the numbers and I shall be convinced.
    Unfortunately, the EV won't be a Tesla or Fisker. At the rate they are burning through their financing and losing money on each vehicle they manage to build, the investors will "pull the plug" in the next year or so. When a company fails to deliver what they promised on time more than once, investors see the writing on the wall.

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