Many consumers are aware of the $7,500 consumer tax credit. What is less known, is the Inflation Reduction Act has incentives for manufacturers also via a direct pay credit paid to U.S. battery manufacturers. Tesla have joint battery plant with Panasonic operating in Nevada and qualifies for battery from that plant.
How much credit does Tesla get? To find out, let’s go directly to the law. Search or jump to “SEC. 45X. <> ADVANCED MANUFACTURING PRODUCTION CREDIT.” in the text of the IRA text. Here’s the text from the bill describing the amount of credit:
(K) in the case of a battery cell, an amount equal to the product of-- (i) $35, multiplied by(ii) subject to paragraph (4), the capacity of such battery cell (expressed on a kilowatt-hour basis), (L) in the case of a battery module, an amount
equal to the product of–(i) $10 (or, in the case of a battery module which does not use battery cells, $45), multiplied by (ii) subject to paragraph (4), the capacity
of such battery module (expressed on a kilowatt-
hour basis), and
“(M) in the case of any applicable critical
mineral, an amount equal to 10 percent of the costs
incurred by the taxpayer with respect to production of
such mineral.
This text means a battery pack gets $35/kW for the cells and $10/kW for the module for a total of $45/kW.
EPA’s website for Model Y AWD shows the car consumes at the rate of 28kWh/100 miles. At that rate, it has a range of 279 miles. If we multiply 279 miles * 28kWh/100 mile = 78.12 kWh. This is an estimate. EV cars will reserve a small portion of the battery to improve battery health and extend its useful life. The battery size will likely be a little more than 78.12 kWh.
The manufacturing credit that goes to Tesla + Panasonic would be 78.12 kWh * $45 = $3,515. Tesla has to share that with Panasonic but we don’t know what that split is. Assume it is half, Tesla would get $1,758.
Tesla can pass this on to consumers in the form of lower prices or to increase demand or use it as capital to reinvest in plant expansion.
https://www.congress.gov/bill/117th-congress/house-bill/5376/text
https://www.energy.gov/sites/default/files/2022-10/IRA-Energy-Summary_web.pdf
https://www.autoblog.com/2023/06/03/tesla-price-cuts-ira-tax-credits/