WASHINGTON/SAN FRANCISCO - Tesla Inc's rapid adjustment of its battery supply chain is allowing it to offer a Model 3 sedan that, with federal and California tax breaks, can sell for less than a Toyota Camry.

The Biden administration on Tuesday confirmed that all Tesla Model 3 vehicles now qualify for $7,500 electric vehicle consumer tax credits after two versions saw credits fall in half.

In April, new battery sourcing rules went into effect that lowered the credit of the Model 3 Standard Range Rear Wheel Drive and Long Range All-Wheel Drive to $3,750. Tesla said last week on its website that all versions of the Model 3 again qualify for the full credit. The government confirmed the change on its fueleconomy.gov website.

A Model 3 starts at $40,240 and the 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. Toyota's Camry is listed at $26,320 and more.

(Reporting by David Shepardson and Hyunjoo Jin; Editing by Mark Porter)