Tesla Slashing Prices Of Its Electric Vehicles
Tesla is lowering the prices of its Model 3 and Model Y sedans by up to 20%, making these models now eligible for the electric vehicle tax credit.
Tesla has slashed the prices of its car models by a considerable amount of money. The price cuts follow the automaker’s stock value taking a steep drop. However, the lower prices also offer a potential opportunity for consumers looking to take advantage of the newly-revised electric vehicle tax credit.
Prices have been reduced by between 14 and 20 percent for numerous Tesla models, according to information from the Wall Street Journal. The Tesla Model 3’s base price is now $53,990, and the Model Y will now cost $52,990. The cap to receive a $7,500 electric vehicle tax credit for an electric vehicle purchase on a sedan is $55,000.
Purchases of either a Tesla Model 3 or Y would now make buyers eligible to receive that tax credit, due to the price reductions. Additionally, the EV maker also reduced the prices of its SUV models. That is good news for consumers; however, those reductions were not enough to make those vehicles tax-credit eligible.
Tesla has not been forthcoming about its reasoning behind the price reductions. Speculatively, however, it might have been motivated by the significant stock value drop that the auto giant recently experienced. Over the course of the past year, Tesla stock has tumbled by a tremendous 65%.
The cause for the stock to drop so steeply is multi-faceted. A large part has to do with the auto industry having a very rough 2022, which was perpetuated by things like inflation and supply constraints. Although, Tesla CEO Elon Musk might also have himself to blame.
Specifically, Musk’s antics over at Twitter have tainted many Tesla supporters’ perceptions of him. This may be causing some supporters to disassociate themselves from the brand. If that’s true, Tesla may have dropped prices to lure back some of the crucial business it has lost.
While the latter is pure conjecture, it is a fact that Tesla has lost a lot of money. Dropping prices inherently allows the automaker to diversify its market appeal. It doesn’t exclude people who are shopping for electric vehicles based on whether or not they qualify for that $7,500 tax credit.
Chris McNally, who is an auto analyst at Evercore ISI, echoed the above logic. McNally stated his belief that the price cut strategy is an advantageous move for Tesla. And it’s one that will likely serve the automaker well in both the short and long term.
In the short term, the drop in prices will certainly result in more buyers. However, Tesla now finds itself contending with something it’s never really had to prior – competition. For the first time, really since the inception of the company, Tesla actually has some viable competition.
Thus, by lowering prices and innately widening its appeal and potential buyer pool, it can be better equipped to compete against other impressive players in the space. All the major auto industry players are about to make or have already made huge forays into the electric vehicle marketplace. Ultimately, this is all great news for consumers, because more competition effectively drives prices downward, and of course gives individuals more great options to choose from, too.