It isn't a deduction but a credit.

But it's not a refundable credit. Which means you get whichever is the lowest of your tax liability or $7,500. Please note saying it's not refundable is term of art that does not mean what you might take it to mean. So let's walk through some examples.

Let's say your total tax liability for a year is $10,000. You paid in $11,000 via Payroll and other taxes. Without the credit you'd be due a refund of $1,000. If you are eligible for a $7,500 credit because you bought a Tesla you'd be due a $8,500 refund.

Let's say your tax liability for the year is $5,000. You've paid nothing in taxes for the year (probably because you knew you were buying the car and didn't need to). You bought a Tesla which makes you eligible for a $7,500 tax credit. You do not get anything refund from the IRS, but the $7,500 tax credit offsets your entire tax liability.

So just because it's a credit doesn't mean the credit is effective for low income people. You have to have enough income to have a high enough tax liability to even get the full $7,500.

Very few people with a tax liability of less than $7,500 would be buying a new Model 3.

This post is in response to someone saying "this is literally the cheapest car on the market", which is exactly what someone with that small of a liability would be looking for.