Tesla Model 3 can now officially cost only ~$25,000 in California after incentives

Tesla is bringing the Model 3 to market at $35,000 to be competitive with any other vehicle in its segment without incentives, but that doesn’t mean that buyers can’t take advantage of them.

Yesterday, the Model 3 was officially added to the list of eligible vehicles for California Air Resources Board’s Clean Vehicle Rebate Project (CVRP) – bringing the cost of the vehicle down to $25,000 for most buyers after the federal tax credit, which is expected to start phasing out for Tesla’s vehicles at some point next year.

Some buyers could even get bigger rebates depending on a few criteria, but there are some caveats to those incentives – though technically, most buyers should get away with a Model 3 for around $25,000.

The biggest point to take into account is that applicants with incomes over $150,000 for individuals and $300,000 for joint filers don’t have access to the CVRP.

Secondly, both the federal tax credit and California’s CVRP are taken into account after the purchase.

It means that buyers will have to pay the full price of the car, but they can then apply for the $7,500 federal tax credit, assuming that their tax burden for the current year allows it, and they can apply for a $2,500 CVRP rebate now that the Model 3 was added to the list of eligible vehicles:

The vehicle’s VIN, which Tesla provides during the production process, and the date of purchase are required to apply for the rebate.

Tesla is expected to concentrate Model 3 deliveries in California for the first few months of production, which means CVRP rebates will come in handy, and with the first few deliveries coming on Friday – those Model 3 owners will now be able to apply.

There are a few other things to take into account.

For example, though buyers with income greater than $150,000 per year don’t have access to the rebate, buyers with lower income could potentially get a greater rebate than $2,500 from the CVRP under the current rules. Individuals with incomes below $35,640, and for a household of four, $72,900, will get $4,500. The rule is aimed at cheaper EVs than the Model 3, but it’s still something to take into account.

Also, the CVRP sometimes runs out of funds at which point applicants are put on a waiting list, but it has only so far delayed the rebates and not prevented anyone from receiving them.

Currently, there’s a new proposed bill that would fund the program with $3 billion and change it from a rebate to a direct discount at the purchase.

It would certainly simplify the process, but the amount of the discount is not clear yet and therefore, we don’t know how it would change for Tesla’s Model 3. The bill is still moving through the legislative process.