TESLA will begin the Federal EV tax Credit phase-out on July 1

July is the TESLA moment that potential Owners, Investors, and Short Sellers have long waited for.

• On July 1, Tesla will begin the first 2 consecutive quarters of the EV Federal Tax credit phase-out term, where buyers can still receive a full $7500 tax refund.
• Tesla is approaching the famous highly anticipated 5000 per week Tesla Model 3 production rate at the end of the second quarter of 2018.
• Tesla recently announced that the first Model 3 All-wheel drive cars and performance models will be delivered to customers and arrive at stores as Test drive cars and display models in July.
• Tesla CEO Elon Musk has repeatedly stated recently that "Tesla will be profitable & cash flow positive in Q3 & Q4 of 2018". Believers and doubters are eager to prove or dispute this statement in the next few months beginning next week.
• Tesla stock (TSLA) has shown strength in the last few weeks with a quick run from around $280 up to $370 and now is at a small pull back as most of the stock market is since the "US-China Trade War" concerns.

Tesla Plug-In Electric Drive Vehicle Credit (IRC 30D) is entering the phase-out term.

Tesla has recently reached 194,000 cars sold in the US. That puts Tesla at the verge of beginning the Phase out period of the EV Federal Tax Credit Program for Tesla.

As soon as a Car manufacture of qualified EVs, sells the 200000th car in the US, they begin the Phase out period. That period contains 6 quarters as described here in detail:

• The same quarter that the 200000th car was sold, qualifies for up to full Federal Tax credit up to $7500. In Tesla's case it will be the full 3rd quarter of 2018.
• The following quarter – the 4th quarter of 2018 – qualifies for up to full Federal Tax credit as well.
• The next 2 quarters – 1st and 2nd quarters of 2019 – qualifies for up to 50% of the Federal Tax credit, $3750.
• The next 2 quarters – 3rd and 4th quarters of 2019 – qualifies for up to 25% of the Federal Tax credit, $1875.
• Any car delivered after December 1, 2019 - The EV Federal Tax credit is no longer available for a Tesla car sold in the US unless the program is extended.

Of course, existing state and local programs are still available around the US and there is always a chance that a new EV Federal Tax credit program will begin or the current program will be extended, although it does not seem likely with the current Federal administration.

Tesla could have easily sold the 200000th car this quarter, however there is no doubt they will go through hoops to delay that critical sales mark to July 1, 2018. This could hurt the financial results of the 2nd quarter unless Tesla managed to divert enough Tesla Model 3 to Canada this quarter which they have done heavily in the last few months.

The meaning of this is significant in several aspects:

• Customers now know exactly when they need to receive their car to receive the maximum rebate. They will have to make a decision in the next few months whether to order a Tesla Model 3 long range premium for $14000 more in order to earn an extra $3750 in refund! Or wait till 2019 for the $35000 base Tesla Model 3 with only $3750 refund.
• Tesla has the ultimate motive to produce the maximum possible Model 3 in the next 6 months to allow their customers to maximize their refund. Based on Elon Musk estimates, Tesla will produce at least 125000 Model 3 cars in the second half of 2018, but probably more since the ramp up should be growing up to around 10000 Tesla Model 3 per week!

It does look as if Tesla will nearly triple its production in units in 2018 and will keep its price point pretty high due to the higher sale price of AWD and Performance Model 3.

Will Tesla reach the 5000 Model 3 per week production goal next week?

There is no doubt that this is probably the biggest focus of short sellers and investors. The big question is:  will Elon Musk reach his goal of 5000 Tesla Model 3 production per week by next week?
No one really knows for sure. Bloomberg Tesla Model 3 Tracker is not very optimistic, although it is stated by website creator that the info might be somewhat lagging.

Elon Musk stated last week that Tesla is already producing 3500 Model 3s per week and will indeed meet the 5000 goal on time. Also this week Tesla reached production of 5000 Model 3 battery packs per week at the Giga factory.

Tesla will begin deliveries of AWD and Performance Model 3 to stores and customers in July.

Tesla recently announced a new constructed Hanger in the Fremont parking lot to host the already operational third assembly line for the Tesla Model 3 and especially for the AWD and Performance models.
Customers should be receiving these models as early as next week and the hype will reach new highs with reviews and reports from media sources and buyers.
Also announced in recent shareholder meeting was that these higher end models will be shipped to stores in July to be used as Test drive cars. This development alone is significant because until now traditional car buyers who insisted upon seeing and driving thier car before buying had no access to the car.

Elon Musk strongly believes that Tesla will be profitable the next 2 quarters!

Elon musk surprisingly stated that "Profitability will be reached as early as 3rd quarter of 2018 and no funding will be necessary before 2019". This was surely unexpected and came to many analysts as an impossible goal. Needless to say that many of Elon musk statements and goals are met with skepticism such as 500 miles range Semi for $180000, Roadster 2 with 600 miles range and 0-60 Mph in 1.9 seconds for $200000!

Elon musk is known for his overreaching statements that usually come to fruition … but with delays like … Model S, Model X and Model 3 production targets, Autopilot 2.0 rollout, Solar roof delays and Power wall deliveries.

TESLA stock (TSLA) is showing strength and confidence since last Shareholder meeting

TESLA stock (TSLA) has recovered quickly from its heavy dip down to mid-$200 in April. However in the recent weeks it was rallying following confidence shown in the recent Shareholder meeting. Due to concerns about the “US-China Trade War” threats between US and China mostly, the stock has pulled back a bit.
These coming few weeks could set the path on TESLA stock (TSLA) in a big way.

ORILIS LED Lighting Solutions is a small company in the Alternative Energy sector. We specialize in commercial LED lighting products. Naturally we are enthusiastic about solar, wind, battery storage and the EV industry.   

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