The Treasury Department has confirmed the Tesla Model 3 is eligible for the full $7,500 electric vehicle tax credit. In the state of California, that makes it less expensive than the gas-powered Toyota Camry, one of the most popular passenger cars in the country.

The Inflation Reduction Act of 2022 overhauled the lucrative tax break, requiring vehicles to have battery components and critical minerals made in the US. (Chinese companies currently manufacture more than half of all EV batteries.)

When the new regulations went into effect in April, only the $53,240 Model 3 Performance variant qualified for the full credit. The $40,240 standard rear-wheel drive version and the $47,240 long-range edition were eligible for only half credit. 

But Tesla appears to have rejiggered its supply chain so that vehicles with batteries produced in China are headed to foreign markets, Reuters reported. Those bound for the US are being outfitted with Panasonic or LG Energy Solution batteries that qualify buyers for the full credit.

FuelEconomy.gov, the Department of Energy website that lists all eligible vehicles, has been updated to show all versions of the Model 3 qualify.

The standard Model 3 is listed on the Tesla website as having a manufacturer’s suggested retail price of $32,740 after the EV tax credit is applied. 

Separately, California’s Clean Vehicle Rebate Project also offers between $1,000 and $7,500 in tax credits for the purchase of certain new EVs. The Model 3 is eligible for the full $7,500, bringing the total amount of federal and state tax credits to $15,000 — and the list price down to $25,240.

The Camry starts at $26,320. 

Read on: Tesla Raised the Price on All Its Vehicles Except the Model 3

Even before the change in EV tax credit eligibility, Automotive News reported in February that the Tesla Model 3 was the top-selling car in California in 2022, based on new vehicle registrations.
According to data from the California New Car Dealers Association, the Model 3 raced to the number one spot with 78,934 registrations in the state.

The Camry came in a distant second with 55,967 registrations, or 11% of the market.

Nationwide, it’s a different story: In 2022, the Camry was ranked the fifth best-selling car in the US, according to CNBC, with 295,201 cars sold.

The Model 3 ranked 13th in sales last year, with 211,641 rolling off the lot.

Read on: Every Electric Vehicle That Qualifies for the $7,500 EV Credit