LOS ANGELES, California: After adjusting its battery supply chain to qualify for federal credits and other tax breaks, Tesla's Model 3 could now be cheaper than a Toyota Camry in California.

This week, the Biden administration said that after two of the three Tesla models were only eligible for half tax credits, all Tesla Model 3 vehicles now qualify for the full $7,500 electric vehicle (EV) consumer tax credits.

In April, the government implemented new battery rules that lowered the credit of the Model 3 Standard Range Rear Wheel Drive and Long Range All-Wheel Drive to $3,750.

But last week, Tesla said on its website that all versions of the Model 3 again qualify for the full credit.

A cost of a Model 3 begins at $40,240, but its price may fall to $25,240 when the $7,500 federal tax credit and another $7,500 from the California tax rebate kick in, depending on income and other requirements. In contrast, a Toyota Camry is listed from $26,320.

Benchmark Mineral Intelligence (BMI) analyst Caspar Rawles said that to meet both battery mineral and battery component requirements for federal subsidies, Tesla may have also adjusted its battery supply chain by dropping CATL in favor of Panasonic or LG Energy Solution for US-made Model 3 Rear Wheel Drive vehicles, the least expensive version.

The subsidy value would far outpace the savings of using cheaper, iron-based cells used by CATL, he added, stating, "It is highly likely it is Panasonic, but there may be some concerns around cell availability if they need to supply enough for all US Model 3s," he said, as quoted by Reuters.

In response, CATL said in a statement, "The strategic partnership between the company and customers has not changed and will continue to deepen and improve."

To free up some capacity for US-made models, Tesla began delivering Chinese-made Model 3s and Model Ys to Canada.