Tesla has rolled out another wave of price cuts to its Model 3 and Model Y vehicles. It’s the second time this month that its electric cars start at less than $40,000 before incentives.
After steadily and gradually raising the prices of its electric vehicles over the past two years, Tesla has begun to lower those prices in 2023 to keep up with demand.
It started with a big price drop in early January, and then some smaller price adjustments, with the latest in February for the Model 3 and Model Y, and last month for the Model S and Model X .
We thought Tesla would take a break from cutting prices, but the automaker once again slashed prices across its entire lineup earlier this month.
Now just a few weeks later, Tesla is once again adjusting the prices of the Model 3 and Model Y in the US, and not by a small amount.
Tesla Model 3 prices
The Model 3 Standard Range RWD, Tesla’s cheapest vehicle, went from $41,990 to $39,990.
It’s the first time in a long time that Tesla has had an electric vehicle starting under $40,000 to order new.
However, it is important to note that in this case, this is the only Tesla model that has seen its federal tax credit reduced from $7,500 to $3,750 following the battery source requirements.
It looks like Tesla is trying to counter the reduced incentive with an outright price cut.
Model 3 performance remains at the same price, and Tesla has yet to reopen long-range Model 3 orders in the US.
Tesla Model Y prices
In this new pricing update tonight, Tesla has greatly reduced Model Y prices across the entire lineup.
Each variant saw its price drop by $3,000 overnight:
- Model Y AWD: down from $49,990 to $46,990
- Model Y Long Range: down from $52,990 to $49,990
- Model Y Performance: Went from $56,990 to $53,990
Unlike the Model 3, all new Model Y vehicles qualify for the full $7,500 tax credit. In some markets with state incentives, the Model Y will start at around $35,000 for a new vehicle.
The Electrek dam
It’s hard to overstate how drastic Tesla’s price cuts have been over the past few months.
Just a few months ago, Tesla was selling the Model Y Long Range for $66,000 in the US, but after several waves of price cuts over several months, it’s below $50,000 for the first time, and that’s before a federal relatively new $7,500. tax credit
While some of Tesla’s fans or investors try to make us believe that it’s all part of Tesla’s mission to make electric vehicles more affordable, these price cuts are actually due to lower demand.
Tesla’s goal is to sell every vehicle it produces. If I could sell them for a higher price, I would and I have in the past. Yes, there may be some cost improvements as well, but not $16,000 worth or 24% in just a few months.
Demand is not matching Tesla’s increased production rate.
To be fair, it’s not all Tesla’s fault, as current interest rates are making all new car purchases difficult right now.
Either way, it’s something to keep an eye on.
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