Tesla slashes prices on an entire product line by up to 20%！
Electric carmaker Tesla has quietly slashed prices across the board for all the cars it sells in the U.S., a bizarre move that has left many analysts scratching their heads at the company's motivations.
Before we talk about the why, here’s the what. Current pricing for a new Tesla is as follows:
- Model 3: $43,990 (down from $46,990)
- Model 3 Performance: $53,990 (from $62,990)
- Model Y Long Range: $52,990 (from $65,990)
- Model Y Performance: $56,990 (from $69,990)
- Model S Dual Motor: $94,990 (from $104,990)
- Model S Plaid: $114,990 (from $135,990)
- Model X Dual Motor: $109,990 (from $120,990)
- Model X Plaid: $119,990 (from $138,990)
Why So Cheap?
One reason is that Tesla did not hit its sales targets for 2022, according to Reuters, which hit the company’s stock prices in December. It also faces a shrinking market share thanks to more competitors chipping away at the company’s sales, which is switching Tesla from a situation of customers waiting weeks or months between ordering and delivery to a situation where the company actually has inventory building up and customers can get vehicles just about immediately.
But the biggest reason for the price cuts may have to do with the new IRS rules on which electric vehicles qualify for government tax rebates under revised incentives recently created by the Biden administration and the Inflation Reduction Act. The change in how the program operates means that some Teslas once again qualify for the $7,500 tax rebate for 2023 — but several of them were too expensive under the new rules. Slashing the base price of the Model Y five-seat version in particular brings it under the $55,000 price cap for cars since destination and delivery fees are not considered in the price for purposes of the tax rebate, according to the IRS website. (The government considers the five-seat version a car, while the seven-seat model is considered an SUV and already qualified due to the $80,000 price cap for SUVs.)
This means that in addition to the $13,000 price drop for the Model Y, it now also qualifies for the $7,500 tax rebate (provided the buyer also meets the qualifying criteria) — and that buying a Model Y today could be more than $20,000 cheaper than buying one just a few days ago. If we compare an identically optioned 2023 Model Y to the 2021 Model Y Long Range that was purchased in July of 2021, the new Model Y would be only $265 more than our test vehicle cost us then (though with documentation and order fees, that drops to just $190). This new price would also significantly impact the Model Y’s performance in several of our head-to-head competitions, such as when we pitted it against the Kia EV6 and it narrowly lost based in no small part on its unfavorable value proposition.
In all, it is undoubtedly great news for many buyers who want to buy new energy vehicles. Consumers can have more choices. First, they can enjoy second-hand cars with more reasonable prices, and second, a pure electric vehicle with good mechanical quality. The price of a new car is not high. Now you can buy a Model 3 for only $43,990. According to the current trend, it is uncertain whether the price will be lower in the future.
