Tesla prices have been falling all year, and today we can report another price cut across most trim levels of the most popular Tesla models, making the Model 3 available at its lowest price ever.
Model Y – Long Range & Performance is $2,000 cheaper
The Model Y Long Range and Model Y Performance are now both listed for $2,000 cheaper than before, with the Model Y Long Range available for $48,490 and the Model Y Performance for $52,490 on Tesla’s website is.
Previously, the models cost $50,490 and $54,490, respectively.
The change comes days after Tesla unveiled the cheapest Model Y the U.S. has ever seen, the new rear-wheel-drive Model Y, which starts at $43,990. This model was unaffected by today’s $2,000 price drop and remains at the same price at which it was introduced earlier this week.
Model 3 is now the cheapest Tesla ever
The Model 3 also saw a price cut, with all three trim levels discounted compared to today. The Model 3 rear-wheel drive and Long Range versions each receive a $1,250 discount, and the Performance model is down $2,250 from its previous price.
These models now start at $38,990 for the RWD, $45,990 for the LR and $50,990 for the Performance model. They previously sold for $40,240, $47,240 and $53,240, respectively.
The new prices mean that even with modest state, local or regional tax credits in addition to the $7,500 federal credit, a new Model 3 could cost less than $30,000 for the right buyer. This is the cheapest new Tesla ever, aside from the questionably briefly available $35,000 Model 3 – although today’s Model 3 is an even better deal than it would have been then, given inflation and the reduced availability of tax credits back then.
The Model 3 recently received a major refresh with many changes in foreign markets, although the refreshed “Highland” Model 3 isn’t expected to be available in the US until next year. Therefore, Tesla probably feels the need to sweeten the price a little for buyers who would otherwise wait for the new version to be released.
This is the latest in a long series of Tesla price cuts that began in January but includes several more this year. Most recently, the company cut a large portion of the prices of Model S and X and also reduced the price of FSD by $3,000.
Additionally, most Teslas are now eligible for Inflation Reduction Act tax credits, which Tesla previously no longer had access to after the previous electric vehicle credit was exhausted. Therefore, many buyers may receive an additional $7,500 credit on their federal income taxes. While this may not last forever, because of the way the tax credit law works, Tesla’s cheapest models that use Chinese-made LFP batteries could lose access to half of the credit next year.
Electrek’s take
Teslas now cost tens of thousands of dollars less than they did at the end of 2022. Sure, 2022 came at the end of a year or two of significant price increases while the electric vehicle market was under severe pressure due to COVID-19. While there were supply disruptions, those declines were nonetheless drastic.
The price cuts even prompted protests from owners, as recent buyers were upset that their cars had lost thousands of dollars in residual value overnight. Imagine protesting for inflation.
The declines have also impacted the rest of the electric vehicle market, as Tesla has more room to prevail in the price war against other manufacturers due to its dominant position as a market and brand leader in electric vehicles and its previously industry-high margins, while still maintaining the brand’s perception as an electric vehicle the higher class.
This has created difficulties for other manufacturers trying to sell similar vehicles. We just saw this today when the quarterly figures for the VW ID.4 were published. While the ID.4 posted record sales, VW only sold 10,707 electric vehicles in the US in the third quarter. That’s less than a tenth of the number of electric vehicles Tesla delivered in the US during the same period.
The ID.4 is currently cheaper than the Model Y, with a base price of $37,495 (plus destination), but every price drop at Tesla erases that difference.
And that, I believe, is the source of the current industry complaints about “demand issues” for electric vehicles. Many manufacturers are complaining about difficulty increasing sales after having no trouble selling every electric vehicle they made in 2021 and 2022. But those manufacturers largely didn’t cut their prices this year, while Tesla did (well, VW did offer a cheaper ID.4 model). this year, just like Tesla did with the RWD).
To continue the example above, an ID.4 is an incredibly attractive proposition at around $38,000 versus a Model Y at $66,000, especially if you can get the tax credit on the ID.4 and not the Y. But if you effectively save about $25,000 off the Model Y’s price, that math will change. Maybe that’s why the Model Y is now the best-selling car in the world.
The same goes for comparisons with other vehicles, most of which are priced around the same as last year. But when the parts shortage is over, when component materials are much cheaper and your competition is squeezing you to sell, but you still manage to reduce prices by five-figure multiples, perhaps a little price competition is in order (and the same applies also for …). Incidentally, also in sectors other than the automotive industry…).
And despite my personal distaste for Elon Musk’s ridiculous shenanigans, at this point I’m hard-pressed to say there’s a better EV deal than the Model 3, or even cars as a whole. Except perhaps for the excellent Chevy Bolt, which is an absolute steal with a base MSRP of $26,500 in the final quarter of production.
FTC: We use income generating auto affiliate links. More.