U.S, Canada witnesses a 23% price drop for some Tesla models

Sahana Kiran
Source – Unsplash

The increased demand for EVs prompted Tesla to increase its prices throughout last year. However, in a new turn of events, the automaker has currently introduced major reductions in the price of certain models.

This decrease in price is limited to Model 3 and Model 7 Tesla vehicles in the United States. According to reports, Model 3 RWD is seeing a 6.4 percent drop from $46,990 to $43,990. The Model 3 Performance vehicle is currently priced at $53,990. This model was previously valued at $62,990, noting a 14.2 percent drop.

Shifting the focus to Model Y vehicles, the Model Y Long Range is now $52,990 following a 20 percent drop from $65,990. The Model Y Performance recorded the highest plunge in price from $69,990 to $56,990, i.e an 18.6 percent dip. It should be noted that Tesla slashed the price of its vehicles in China as well following rising demand.

Is Tesla trying to make EVs more affordable?

While this might be one of the reasons, the main motive behind the company’s latest move is associated with confusion around tax credits. It was recently brought to light that the U.S. inventories of Model Y were outpacing demand.

There are about 1,300 Model Y vehicles that are looking for buyers.

However, the latest price changes may solve this dilemma. The 5-seat Model Y Long Range is now eligible for the $7,500 EV tax credit provided by the Inflation Reduction Act. The 5-seat Model Y design was previously disqualified because according to government regulations, it is classified as a “car” rather than an “SUV.”

Accordingly, base models, which are currently eligible, must have a Manufacturer’s suggested retail price [MSRP] of less than $55,000.

Therefore, a Model Y purchased right now might be more than $20,000 less expensive than the one ordered yesterday. In addition to the 20 percent price reduction, the base model Y also qualifies for a $7,500 tax credit.