1/So let's assume that the $7.5k USD Federal tax credit is reinstated by the Biden administration.

I have read some ppl thinking that Tesla will start offering $30k Model 3 SR+ and Model 3 LR for under $40k.

I really, REALLY, don't see this happening folks. Here's why:
2/ Tesla is already selling every car they make out of Fremont. Unless they figure out a way to massively increase production (like, MASSIVELY) - they would be leaving money on the table by dropping price.

We know that Tesla won't build another Model 3 line until after...
3/...Model Y and CT (and possibly even Semi) are rolling out of Austin. Elon has mentioned an Austin Model 3 line for East coast. Surely unlikely before 2023.

Fremont will free up some capacity when Giga Berlin starts building the Model 3 Compact...also probably in 2023.
4/ Tesla has already grabbed a 22.5% share of the small/medium luxury segment with its current price. It's only a question of time and increased capacity before the Model Y achieves the same. So why drop price?

I think Tesla would probably absorb the majority of the credit...
5/...by RAISING price on Model 3 and Model Y, resulting in a net decrease in price by $1-2k/car. The potential impact of this is significant. Tesla would absorb ~$5k/car in revenues. On the 200k or so Models 3 and Y sold in the US in 2020, that's an incremental $1B in sales.
6/ Another reason not to drop price: Tesla is a luxury brand. Dropping price too far, too fast, would hurt the brand.

I could see Tesla dropping price on certain models. Model X is priced higher than most of its peers. Model S Performance is $23k more expensive than LR.
7/ Overall, I think the renewed tax credit is unnecessary for Tesla at this point, but it would help them financially. If the government wants to help Tesla, they could instead do something about the stupid direct sales restrictions and limitations in the U.S.

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