Tesla has recently decreased prices significantly for their electric vehicles (EVs) in the US and Europe in an effort to increase sales. The Model 3 RWD, the least expensive EV, has gone from $46,990 to $43,990, and the Model Y Long Range has dropped 20% from $65,990 to $52,990.
This decrease in price also makes the Model Y Long Range eligible for the $7,500 US Federal Tax credit, resulting in a final price drop of over 30%, or $20,500.
Tesla has also reduced prices on other models including the Model S, Model X (both regular and plaid versions), and the performance versions of the Model 3 and Model Y. However, the 7-seat option on the Model Y has seen a $1,000 to $4,000 increase in price, putting it over $55,000. Despite this increase, it remains eligible for the Tax Credit as it is classified as an SUV. The prices of the Model 3 and Y have also been reduced by 1-17% in Germany, as well as Austria, Switzerland, and France.
Customers must place their orders before mid-March to receive the full $7,500 rebate, as it is expected to be reduced to half that amount after that date. The tax rebates are available for SUVs priced below $80,000 and cars under $55,000.
The Model Y falls into both categories, depending on the number of seats, which caused some models to be ineligible. CEO Elon Musk called this “messed up.” With the recent price cuts, all Model Y EVs except the Performance version now appear to qualify for the rebate.
Last year, reports emerged that Tesla’s inventory was piling up, primarily in China and the US. Tesla then lowered the prices of its vehicles in China, however, it did not offer compensation to customers who had already bought the vehicles at a higher price. The Model 3 now starts at 229,900 yuan ($33,425) in China.
Neither Tesla nor its CEO, Elon Musk, have commented on the recent price cuts. However, it is likely that potential buyers will be pleased with the lowered prices, while recent purchasers may be disappointed. The Model 3 was originally intended to be sold at $35,000 but the prices have been steadily increasing since then, reaching $46,990 in March 2022. Last month, Musk said that “radical interest rate changes” had affected vehicle affordability and that Tesla could potentially lower prices.