Tesla Inc. has unveiled a strategic move in the American market with a temporary price cut on its Model Y, a decision aimed at bolstering sales and navigating evolving market conditions.
In a departure from recent pricing stability, Tesla announced reductions on the Model Y RWD and Long Range AWD variants, effective for deliveries through February 29. Prices are slated to rise by $1,000 or more starting March 1, as indicated on the company’s website.
The Model Y RWD now enters the market with a base price of $43,000, while the Dual Motor Long Range variant, renowned for its popularity, starts at $48,000. Moreover, Tesla has introduced competitive leasing options, with monthly rates starting at $379 and a reduced down payment of $2,500, positioning the Model Y as an accessible option for prospective buyers.
Notably, industry analysts such as Sawyer Merritt (@SawyerMerritt / X) have observed this move as a strategic effort to bolster sales within the quarter. The decision comes amid Tesla’s adjusted growth forecast for 2024, signaling a need to adapt to changing market dynamics.
To the best of my knowledge, this is the first time Tesla has ever announced temporary price cuts in the middle of a quarter. Interesting strategy to try and encourage people to take delivery sooner.
— Sawyer Merritt (@SawyerMerritt) February 10, 2024
In 2023, the surge in electric vehicle (EV) sales, including Tesla’s, was propelled by substantial price cuts and the introduction of a revised $7,500 federal tax credit in the U.S. However, recent analysis by Tesla-focused expert Troy Teslike (@TroyTeslike / X) suggests that Tesla may be experiencing an excess of supply over demand, with relatively short delivery times and ample production capacity in its plants, excluding the eagerly anticipated Cybertruck.
Furthermore, anticipation surrounds the forthcoming refresh of the Tesla Model Y, akin to the Model 3 “Highland” edition, which could potentially prompt adjustments in pricing strategy.
The Model Y production line at Giga Texas was designed to produce 500,000 units/year, with 4 crews working 40 hours/week each. It currently operates at 35% of its capacity because:
1. Demand is limited, and
2. US-made batteries are limited (needed for the $7,500 tax credit).— Troy Teslike (@TroyTeslike) February 8, 2024
Model Y Long Range used to be $65,990 in Dec 2022 and there was no tax credit. It dropped to $48,990 in Dec 2023 and there was a $7500 tax credit throughout 2023. So, $41,490. That's a 37% drop. US sales should have increased by 2x =74%. Instead, it increased by only 10% in 2023.
— Troy Teslike (@TroyTeslike) February 8, 2024
