Tesla issues another round of sweeping price cuts

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Earlier this year, Tesla raised eyebrows when it announced significant price cuts across its product line, but the automaker has slashed MSRPs another time since. Now we’re learning of the third Tesla price drop in 2023, this time bringing a new Model Y variant with it.

Automotive News reported that Tesla cut prices across the board this week after news that the Model 3 would only be eligible for half the $7,500 tax credit due to new raw materials sourcing requirements that go into effect soon. At the same time, the automaker offered a new, lower-cost Model Y variant with a shorter range than current models.

Price cuts come out to around $1,000 for the base Model 3 and Model 3 Performance. Though the standard car is losing half its tax credit, the higher-cost Performance will retain the full amount. Tesla cut Model Y prices by $2,000, Model S by $5,000, and a whopping $10,000 for the Model X. These cuts follow significant cuts in January of up to 20% and another round in March, moves that riled some owners and worried investors. Prices for Tesla vehicles to that point had been appreciating, in some cases, leading to an interesting flipper’s market.

Though the price cuts are good for buyers, they likely won’t be the only thing drawing them to the brand. After a while without them, buyers can now take advantage of federal tax credits when buying a Tesla. The automaker was previously ineligible for federal tax credits due to a cap on the number of units an automaker could sell. New tax credit rules from the Inflation Reduction Act removed the cap but introduced a host of new requirements, including around final assembly and raw materials sourcing locations. Tesla builds all but the battery cells for the base Model 3 in the U.S., so its transition to the new tax credit era will be smoother than most.

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