Tesla has cut prices across most of its popular models in the US for the second time in a fortnight as it continues to battle for market share and puts pressure on rival car makers.
In the latest price cuts, announced just hours before the company’s Q1 earnings call, the Model 3 RWD received a $US2,000 price decrease, bringing the price down to $US39,990.
There was no change to the dual-motor Model 3 Performance, which remained at $US52,990.
The more popular Tesla Model Y saw price cuts across all three dual-motor variants on offer in the US:
- Standard Range AWD variant is now $US46,990 (down from $US49,990)
- Long Range AWD variant is now $US49,990 (down from $US52,990)
- Performance variant is now $US53,990 (down from $US56,990)
In the first week of this month, both the Long Range AWD and Performance models were $US5,000 more than it is today, roughly translating to a 10% price drop.
The price cuts make Tesla’s EVs more affordable to many more people.
Many more incentives are available to EV buyers under the Inflation Reduction Act (IRA) which qualifies most of Tesla’s models with a $7,500 tax credit on top of the new prices as long as the buyers meet income requirements.
The only change to that is for Model 3 RWD vehicles where it’s eligible for only half the $7,500 tax credit due to the batteries being sourced from China instead of being made in the US which is one of the key requirements.
With the latest round of cuts, the Tesla Model Y Long Range model is the same price as what it was nearly two years ago in February 2021.
The Model Y Performance prices on the other hands are much lower than at that time. This variant was $60,990 which is $7,000 more than it is today.
On top of that, the $7,500 tax credit would bring this car down under $46,000 which is a very attractive price for a Performance orientated electric SUV.
Tesla has made it clear to investors and customers that they are in the game to accelerate the transition to a sustainable future and making EVs more accessible to more people.
The latest round of price cuts does just that and with Model Y prices getting closer to the Tesla Model 3 prices for the Performance variants along with Model 3 once again coming under $40,000, the company seems to be pushing forward with its plans.
At Tesla’s last price cuts earlier this month, I mentioned the pressure the traditional car manufacturers are under at that time to make any profit on their EVs.
Now, Tesla’s lead far extends that and it’s very hard to see many of Tesla’s competitors catch up while shifting their ICE manufacturing businesses towards EVs.
That’s at the same time as the ramp-up of production at Texas and Berlin Gigafactories to bring unit cost of Model Y down.
The latest round of price cuts will allow many more ICE vehicle drivers to make the switch to compelling EVs vehicles saving more money than they ever have during their ownership. It’s a win-win situation and paves the path for cleaner cars on the roads.
Riz is the founder of carloop based in Melbourne, specialising in Australian EV data, insight reports and trends. He is a mechanical engineer who spent the first 7 years of his career building transport infrastructure before starting carloop. He has a passion for cars, particularly EVs and wants to help reduce transport emissions in Australia. He currently drives a red Tesla Model 3.