Tesla Reduces Prices: The Model Y, which is now $13K and 20% less expensive than it was yesterday, has seen the biggest price reduction among Tesla’s new models in the US (update: and Europe).
The updates, which recently took place on Tesla’s website, appear to apply to all models.
Due to the exceptionally high demand for EVs over the past year or two, Tesla has consistently increased the pricing of all of its vehicles. The demand for EVs has been increasing alongside Tesla’s sales and manufacturing, but the supply of EVs has not been able to keep up.
Other automakers have also raised prices, albeit in more subtle ways.
However, in recent weeks, there have been some indications that Tesla may need to boost demand or at the very least, that the price increases may have gone a bit too far. Since inventory has increased, several other markets are adding discounts and incentives to help move cars. The first and most drastic cutbacks to date have been made in China.
Recent purchasers in China who believed they had overpaid protested these price reductions, but Tesla refused to give them a refund.
The prices for Tesla’s various models in the US are listed below, both new and old. Similar price reductions also occurred in Europe, albeit you will need to search by nation to see those.
|Model||Old price||New price||Difference|
|Tesla Model 3||$46,990||$43,990||-$3K (-6%)|
|Tesla Model 3 Performance||$62,990||$53,990||-$9K (-14%)|
|Tesla Model Y||$65,990||$52,990||-$13K (-20%)|
|Tesla Model Y Performance||$69,990||$56,990||-$13K (-19%)|
|Tesla Model S||$104,990||$94,990||-$10K (-10%)|
|Tesla Model S Plaid||$135,990||$114,990||-$21K (-15%)|
|Tesla Model X||$120,990||$109,990||-$11K (-9%)|
|Tesla Model X Plaid||$138,990||$119,990||-$19K (-14%)|
Tesla overtakes other leading automakers in the USA
The highest price decrease, $21K (15%) off the “Plaid” Model S, was also applied to other combinations, including Performance variants. There has been one big price increase, though: the Model Y’s seven-seat version is now $4,000 rather than the $3,000 it was previously.
As a result, the base five-seat Model Y is now eligible for the $7,500 EV tax credit provided by the Inflation Reduction Act, among other things. Due to government regulations that take into account a number of criteria, the five-seat Model Y configuration was previously excluded from qualification. In order to qualify, it must have an MSRP of less than $55,000, which base models currently meet.
A Model Y ordered today could be more than $20K cheaper than one ordered yesterday, assuming delivery is taken before mid-March, when the tax credit is expected to be reduced to $3,750, in addition to the $13,000 price drop. This is because the base Model Y is another $7,500 cheaper for those who qualify for the full tax credit, making a total savings of $13,500.
The government’s long-standing definition of a “SUV,” in force since before the Model Y went into production, has recently come under fire from Tesla CEO Elon Musk. His company’s lawyers may have informed him of this or he may have read it himself, if he weren’t spending all of his time doomscrolling on Twitter, but the public comment link in question appears to relate to an annual change to the tax credit form, not to the tax credit criteria themselves.
Prior to this, Musk had urged lawmakers to reject a plan that would have extended tax incentives, arguing that Tesla did not require them to be profitable.
It’s about time we saw some price reductions after a year of price increases. The Model 3 and Y were designed with the intention of being “people’s automobiles,” falling more into the low-end than the mid- or high-end of the luxury market. Tesla may now be the leading luxury brand in the US.
The Model 3 and Model Y were initially scheduled to arrive at a $35K and $40K, respectively, price point, respectively.
It’s wonderful to see some pricing that are considerably closer – still not quite there, even after the federal tax credit, but closer – than yesterday’s prices of $46,990 and $65,990 (!).
And while there do appear to be demand worries in a number of areas, notably North America, a significant portion of this must be attributed to the significant price increases Teslas have experienced in the previous year. With these price reductions, we are finally moving in the right direction and should see a major increase in demand. But CEO Musk has also played a role in driving away customers with his antics on social media, which has led many people who would have otherwise considered Teslas to explore alternative manufacturers.
The price-related aspect of Tesla’s demand difficulties will be resolved by these price reductions, but it is uncertain whether consumers will still be put off by the CEO’s apparent commitment to destroying the company’s brand.