For example, the price cuts bring the Tesla Model Y down from $65,990 to $52,990 and help it qualify for a further $7,500 in tax credits
Tesla has slashed European and North American prices, just a week after the Chinese prices were dropped, which lead up to large protests from Tesla customers across the country. And now, the American automaker did the same for European and North American customers. It marks a significant change in the prices for some of the most popular models in their lineup and poses a direct threat to all other car makers, heavily invested in the electric vehicle market and models.
“Tesla’s latest price cuts reflect a major shift in the EV market,” said Jessica Caldwell, the executive director of insights at the car-buying website Edmunds. “In 2023 a wave of new EV options will enter the market, but given that production will be limited for most manufacturers, Tesla is positioning itself to scoop up consumers unwilling to wait or who may be on the fence about EV technology by enticing them with one thing all buyers respond to — a deal.”
It raises a question of whether this is a move to target other companies on the market and their EV models, or simply, a price adjustment due to the slowing down of the inflation. Some have also stated that this move is significant in the way that it poses a clear-cut signal that Tesla sales may need a nudge. Whatever it might be, the customers are the ones that will benefit from all of this.
The reduction in prices affects both the Model 3 and Model Y model ranges, where some of the models now cost around 20 percent less than they dud earlier last week. For example, the entry-level Model Y, which was previously priced at $65,990 in the U.S., now costs $52,990. That’s one whopping drop! It also puts the Model Y under the $55,000 tax credit cap for electric cars, with the IRS having declared that the five-seater Y isn’t an SUV and so the $80,000 SUV cap doesn’t apply.
To make matters even more interesting, when you add the potential $7,500 federal tax credit, someone buying a Tesla today could walk away with the same car their neighbor purchased a month ago but for $20,500 less. No wonder some people that bought the car in the last few weeks are pissed, but that isn’t Tesla’s problem. What ever some may say.
Similar happened in Europe. For example, even though the UK government scrapped the EV subsidies last year,but an entry-level Model Y now costs £44,900, down from £51,990, and buyers can also make big savings on the Model 3, which now starts at £42,990. In other countries such as France, where EV subsidies still exist, the newly reduced Model 3 now falls below the €47,000 ($51,000) threshold.
It didn’t sit well for a lot of earlier buyers, but the markets are an organic, ever-changing thing, and Tesla, in our opinion, did the right move.