Tesla Model 3 now costs as little as $23K in California thanks to tax credits

The holy grail for electric vehicle adoption is said to arrive once mainstream EVs could be had for under $30,000. For some buyers in the U.S., this is now reality — thanks to government subsidies.

Earlier this week Tesla (TSLA) announced on its website that all versions of the Model 3 sedan now qualify for the full federal EV tax credit of $7,500; previously the cheaper Model 3 Rear-Wheel Drive (RWD) version qualified for half the amount. The federal government confirmed the announcement on its fueleconomy.gov website.

The federal government’s requirements for the EV tax credit mandate that 40% of the critical minerals be extracted in the U.S. or a country with a free trade agreement, and 50% of the value of the battery components must be manufactured or assembled in North America.

Though no reason was given for the change, it can be presumed Tesla updated where it was sourcing the materials for the Model 3 RWD batteries or where it has assembled the packs. Prior to the announcement, Tesla was reportedly using LFP (lithium ion phosphate) battery cells made by China’s CATL.

Nevertheless, inclusion of the full federal tax credit means the Tesla Model 3 RWD now costs $32,740 if buyers meet criteria including income restrictions and MSRP caps ($55,000 for cars; $80,000 for trucks and SUVs).