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Tesla expects reduced tax credit for Model 3 by March-end

Visitors check a Tesla Model 3 car at a showroom of the U.S. electric vehicle maker in Beijing, China

(Reuters) - Tesla Inc said on Wednesday a $7,500 tax credit in place since January will be reduced for its Model 3 rear-wheel drive by March 31, subject to guidance due this week from the U.S. Treasury Department on the sources of battery components.

The Treasury Department is due to issue guidance on sourcing of electric vehicle (EV) batteries by Friday that will impact the credit available for some EVs. The credit is in effect for deliveries taken before the updated guidance is issued.

A U.S. official told Reuters that the Treasury Department's guidance on the EV tax credit due March 31 would result in fewer vehicles getting full or partial credits.

Tesla added that only consumers buying the model for their own use in the U.S. could take advantage of the tax credit.

In early February, the Treasury said it would make more Tesla, Ford Motor, General Motors, and Volkswagen EVs eligible for up to $7,500 tax credits after it revised its vehicle classification definitions.

(This story has been refiled to add a missing letter in “rear-wheel” in paragraph 1)

(Reporting by Lavanya Ahire in Bengaluru; Editing by Sonali Paul)