Electric-car maker Tesla (NASDAQ:TSLA) doesn't report monthly U.S. sales like other automakers do, believing that industry observers would overthink the figures. That's historically made it murky when trying to figure out when the company would reach 200,000 units in U.S. sales, the key threshold that triggers the phaseout of the U.S. federal tax credit of $7,500 that is available to electric car buyers.

Tesla just quietly confirmed that it delivered its 200,000th electric vehicle in the U.S.

White Model 3 next to a mountain

Model 3. Image source: Tesla.

The phaseout begins

Tesla has now updated its support page that details incentives within the U.S., noting that the full $7,500 credit is available for the remainder of 2018. As currently structured, the full credit is available for the quarter in which the 200,000th qualifying vehicle is delivered, as well as the subsequent quarter. For the next two quarters, 50% of the credit is available, followed by 25% of the credit for the two quarters after that.

Federal Tax Credit

For Vehicles Delivered


On or before Dec. 31, 2018


Jan, 1 to June 30, 2019


July 1 to Dec. 31, 2019

Data source: Tesla.

As the company only sells electric vehicles, Tesla is the first automaker to hit the 200,000 threshold, but Nissan and General Motors aren't too far behind. It's worth noting that many states also offer various incentives in addition to the federal credit, and that GM is currently lobbying to have the credit expanded or extended.

There had been some speculation that Tesla was strategically delaying some deliveries in order to postpone hitting the 200,000 threshold. CEO Elon Musk tweeted in 2016 that the company would try to help as many people get the credit as possible.

The company did report a remarkably high number of vehicles in transit at the end of the second quarter, comprised of nearly 3,900 Model S and Model X vehicles and over 11,100 Model 3 cars, fueling the theory that Tesla was trying to push the triggering event into July -- and into the third quarter.

Chart showing vehicles in transit

Data source: SEC filings. Chart by author.

However, the spike in vehicles in transit could also be attributable to progress in ramping Model 3 production.

Potential effect on demand

The news has considerable impact on prospective Tesla customers that are factoring the hefty incentive into their purchasing decisions, particularly those interested in the most affordable $35,000 base Model 3, which Tesla is not yet producing. The full federal credit would theoretically bring the starting price of that base model down to $27,500, for instance, comparable with many mainstream midsize sedans from non-luxury brands.

Tesla expects to begin producing the base Model 3 with a standard battery in six to nine months, at which point half the federal credit will still be available. There are signs that Model 3 demand may not be as strong as hoped, potentially because many reservation holders are waiting for the more affordable version, and losing the federal tax credit is an incremental negative for demand.