Tesla Model 3 variants delayed; will some buyers lose $7,500 tax credit?

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2017 Tesla Model 3 "first production" car, in photo tweeted by Elon Musk on July 9, 2017

2017 Tesla Model 3 "first production" car, in photo tweeted by Elon Musk on July 9, 2017

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"Overall, I think, while there were challenges associated with Model 3 ramp, we were in a deeper level of hell than we expected, so a few levels deeper than we'd like to be, but swiftly exiting, I think."

Those chastened but seemingly optimistic words came from the CEO of Tesla, Elon Musk, during a conference call discussing the company's full-year 2017 financial results on Wednesday afternoon.

Following that call, however, customers who had put down reservations for the Tesla Model 3 noticed their projected delivery dates had changed.

DON'T MISS: Tesla Model 3: what parts breakdown says about high-volume electric car

Most notably, those who had reserved the base Model 3 rather than the Long Range version saw their dates pushed back to late 2018 and early 2019.

As covered that day by InsideEVs, "It appears as though Day 1 reservation holders are seeing the late 2018 timeline for the standard Model 3, whereas those who reserved on Day 2 are receiving the early 2019 notice."

Unhappy comments on a forum for Model 3 reservation holders indicated that those who had signed up for the "D" all-wheel drive option were pushed back to "late 2018."

Tesla Motors CEO Elon Musk at Tesla Store opening in Westfield Mall, London, Oct 2013

Tesla Motors CEO Elon Musk at Tesla Store opening in Westfield Mall, London, Oct 2013

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We reached out to Tesla for comment on these reports, and received the following statement from the company, to be attributed only to "a spokesperson":

We’ve made significant progress in Model 3 production, having delivered Model 3 to customers in more than 20 states, and we continue to target weekly production rates of 2,500 by the end of Q1 and 5,000 by the end of Q2.

We have been inspired by the response to the car and appreciate the continued support of our reservation holders. We are working hard to deliver more cars soon.

That response obviously provides no confirmation, denial, or detail about the delays we asked about, but that tends to be par for the course for Tesla (and corporate responses to media questions on awkward topics in general).

CHECK OUT: When do electric-car tax credits expire? (updated for 2018)

Buyers waiting for the base Model 3 may well be more sensitive to price than those buying the more expensive Long Range and all-wheel-drive versions, which poses an awkward conundrum.

If Model 3 production for the balance of the year is confined to the Long Range versions, that means they'll all be priced $9,000 higher than comparable standard models.

The concern, of course, is that if the buyers seeking the lower-cost version don't take delivery until the end of this year or early 2019, they may lose out on the full $7,500 federal income-tax credit for purchase of a plug-in electric car.

As of the end of last year, Tesla is estimated to have sold 155,000 to 170,000 vehicles in the U.S. Not every buyer will be eligible for the credit, but the vast majority likely will.

2017 Tesla Model 3 and Model S in Tesla assembly plant parking lot, Fremont, CA, November 2017

2017 Tesla Model 3 and Model S in Tesla assembly plant parking lot, Fremont, CA, November 2017

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Total Model 3 cars built last year were only 2,685, but if it achieves its weekly production rate of 2,500 cars a week by March 31, its U.S. sales could likely chew through the remaining supply of credits well before the end of the year.

What follows is a complicated phaseout period with unlimited credits at reduced rates in successive quarters.

What will happen depends entirely on the company's rate of increase in its Model 3 production, most of which is likely to be delivered in the U.S. this year.

As always, Tesla buyers and reservation-holders will simply have to wait and see—which the bulk of them have seemed happy to do thus far.

 
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