Tesla has slashed prices up to 20% across its U.S. product line, making its electric vehicles affordable to more Americans and potentially boosting underperforming sales.
What You Need To Know
- Tesla has slashed prices up to 20% across its U.S. product line, making its electric vehicles affordable to more Americans and potentially boosting underperforming sales
- The reductions resulted in some vehicles now qualifying for a $7,500 federal tax credit
- The Austin, Texas-based carmaker is facing increased competition in the electric vehicle market, and Musk recently said that rising interest rates and the prospect of a recession could prompt the company to lower prices
- CEO Elon Musk said in July that Tesla’s prices were “at embarrassing levels”
The price of the long-range Model Y crossover fell 20% from $65,990 to $52,990. It now qualifies for the $7,500 U.S. federal tax credit, all together resulting in a savings of more than 30%. Tesla CEO Elon Musk said earlier this month he thought it was “messed up” that the vehicle did not qualify for the tax break.
Buyers of electric cars under $55,000 or SUVs under $80,000 are eligible for the credit.
The Model 3 rear-wheel drive, Tesla’s least expensive model, had its price cut by 6%, from $46,990 to $43,990. The price of a Model 3 Performance fell 14%, from $62,990 to $53,990, which also makes it eligible for the federal tax credit.
The Model Y and Model 3 are Tesla’s best-selling vehicles. Other models also saw price reductions.
Tesla could not be reached for comment Friday.
Shares of Tesla fell nearly 5% as early Friday morning. As of about noon Eastern time, they were down 2.8%.
The price reductions come after Tesla’s sales lagged behind expectations last year. In the fourth quarter of 2022, the company fell 15,000 cars short of meeting its Wall Street delivery estimates.
Tesla’s stock fell 65% last year as it dealt with production issues and investor frustration about Musk’s attention being diverted by his $44 billion purchase of Twitter.
The Austin, Texas-based carmaker is facing increased competition in the electric vehicle market, and Musk recently said that rising interest rates and the prospect of a recession could prompt the company to lower prices in order to boost demand.
Musk said in July that Tesla’s prices were “at embarrassing levels.”
“But we’ve also had a lot of supply chain and production shocks and we’ve got crazy inflation,” he said then.
There are now signs that inflation is slowing. The federal government said Thursday that year-over-year inflation in December was 6.5%, down from 7.1% in November. It was the sixth straight month of decline.
Tesla also reportedly cut prices in several European countries, including France, Germany and the United Kingdom. Last week, the company lowered prices in China.
Tesla Germany said in a statement to Reuters the price reductions are a result of achieving partial normalization after a turbulent year of supply chain interruptions.
The lower prices will be welcome by prospective buyers, but could frustrate recent ones. Last weekend, hundreds of angry Tesla owners in China went to showrooms and distribution centers demanding money back. Tesla China said it had no plan to compensate the buyers.
