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Tesla’s Cheapest Car Might See a Price Hike Soon

There’s trouble afoot for electric car maker Tesla (NASDAQ:TSLA), and this time, it impacts Tesla buyers through the tax code. While this isn’t good news by any stretch, investors seem relatively unfazed, sending Tesla shares up slightly in Thursday afternoon trading.

The problem with the tax code for Tesla is connected to its cheapest car, the Model 3. Thanks to various tax incentives, in the United States, customers can get a $7,500 tax credit to buy the car since it’s electric. However, that’s likely about to change thanks to one major issue: the Model 3’s batteries are made in China. The Model Y, Tesla’s second-least expensive car, is also likely to see its price incentives cut as a result.

However, some Model Y and Model 3 Teslas won’t be impacted by this, reports note, as their battery cells are built in one of three locations in the U.S.: Nevada, Texas, and California. So the impact of this move might be less than expected. However, it likely will put a crimp on some U.S. electric vehicle sales and thus limit Tesla’s ability to generate profit overall.

This move might hurt the company somewhat, but analyst consensus still considers Tesla stock a Moderate Buy. Better yet, by virtue of its average price target of $212.89 per share, TSLA comes with 10.8% upside potential as well.


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