The Tesla Cybertruck’s base model has officially qualified for the $7,500 federal tax credit in the United States. This development could provide a significant boost to Tesla’s sales, especially as the electric truck faces waning demand. This will bring down the starting price of the truck to $72,490 for those who qualify. However, the tax credit’s future is uncertain, with both Tesla CEO Elon Musk and incoming President Donald Trump expressing intentions to end the electric vehicle (EV) incentive program.
A Price Tag Designed for Incentive Eligibility
When Tesla unveiled the production version of the Cybertruck in late 2023, it surprised many with a price significantly higher than the originally promised $39,900. Despite the increase, Tesla strategically priced the dual-motor variant just below $80,000—the eligibility cap for the EV tax credit for SUVs and pickup trucks.
Initially, Tesla began delivering the higher-end Foundation Series Cybertruck, priced at least $20,000 more than the base model, making it ineligible for the tax credit. However, in October 2024, deliveries of the sub-$80,000 non-Foundation Series models began, yet these vehicles initially did not qualify for the tax incentive.
IRS Approval Clears the Path
An update to the IRS website has now confirmed that both the Cybertruck Dual Motor and Single Motor versions (though the latter is not yet in production) qualify for the $7,500 federal tax credit. The reasons behind the initial delay in eligibility remain unclear, but EV tax credit requirements extend beyond pricing. Vehicles must also meet stringent criteria regarding the sourcing of parts and materials.
The Cybertruck is the only Tesla model featuring the automaker’s in-house manufactured battery cells, and it’s possible that obtaining regulatory approval for these cells delayed the eligibility.
Will the Tax Credit Revive Cybertruck Sales?
This tax credit could make the Cybertruck more attractive to buyers, especially as Tesla has struggled to meet its initial demand projections in the US. Reports indicate that Tesla has even rebranded Foundation Series models as standard Cybertrucks to boost sales and has redirected trucks intended for the US market to Canada.
However, the effectiveness of the tax credit in driving sales remains to be seen. Buyers must meet income requirements to claim the incentive: annual earnings must not exceed $150,000 for single filers or $300,000 for joint filers. This restriction may exclude many potential buyers of the luxury electric truck.
A Political Battle on the Horizon
The tax credit’s long-term availability is also in question. The incoming Trump administration, supported by Musk, has openly called for the elimination of EV incentives. While removing the tax credit would require Congressional approval, the timeline and specifics of such a decision, including whether a phase-out period would apply, are uncertain.
For now, the $7,500 tax credit presents an opportunity for Tesla to reinvigorate Cybertruck sales. How long that opportunity lasts, however, remains an open question.