Tesla gives free hardware upgrades with Full Self-Driving to qualify for tax credit

Tesla is giving free hardware upgrades for people who order the Full Self-Driving package on Model 3 Performance and Model X to qualify the vehicle for the federal tax credit tax credit.

Hardware options contribute to the MSRP limit for an electric vehicle to be eligible to the tax credit, but apparently, regulators haven’t caught up to software options.

Tesla is now taking advantage of this to qualify Model 3 and Model X vehicles with more options and effectively, discounting its Full Self-Driving Package in the process.

On the Model 3 Performance and the Model X, Tesla is now including paint for Model 3 and 7-seat option for Model X for free if you add the Full Self-Driving (FSD) package, which is $8,000 and can be purchased after delivery of a vehicle too – though not in this case if you want to get the free hardware options.

This strategy enables people to buy the Model 3 Performance with different paint colors without breaking the $55,000 price limit to get access to the $7,500 tax credit. Different paint colors can cost as much as $2,000.

For Model X, the 7-seat option costs $3,500 and brings the price over the $80,000 limit for electric SUVs to get access to the tax credit. Adding the FSD package to your order makes the option free and gives you access to the tax credit.

Tesla CEO Elon Musk promised that the price of FSD would keep going up as the features would get better through over-the-air software updates, encouraging owners to buy it early to take advantage of the lower prices.

The price went up to $15,000 at the end of 2022, but Musk didn’t keep his promise and Tesla has been slashing the price to now $8,000.

Electrek’s Take

You can see it as a discount on paint and 7-seat option, but you can also basically see it as a discounted Full Self-Driving package.

Because you need to want FSD already for this to work. I don’t think there are a lot of people who aren’t willing to pay $8,000 for it, but they are OK to pay $6,000, which is basically what happens here if you want another paint color.