Tesla slashed prices on its most popular Model 3 and Model Y electric cars Tuesday, the sixth price cut this year and the second this month as the automaker adjusts for new EV incentives and rapid growth among competitors.
The Tesla Model 3 Rear-Wheel Drive now costs $39,990, according to the manufacturer's website, which is a reduction of $2,000. The Model 3 RWD only qualifies for $3,750 in federal incentives, down from $7,500, due to its battery materials. The Model 3 Performance model qualifies for a full $7,500 credit, but its starting price is steady at $52,990 before applicable breaks and rebates.
The news is better for the Tesla Model Y, which not only qualifies for the whole $7,500 back from the feds but also had its price cut by $3,000 this week. The Model Y Long Range now costs $49,990 before federal or state incentives are counted, and the Model Y Performance rings the bell at $53,990 before breaks.
The most recent price cuts now mean that Tesla has lowered the price of its Model 3 sedan by 20% since the beginning of the year and cut the price of the Model Y by 11%. That’s partly due to changing electric car incentives based on new federal regulations and an influx of new competitors. Volkswagen, Ford, General Motors, Hyundai, Kia, and virtually every other major automaker on the planet have announced new EVs coming to market soon. Tesla cutting its prices could be a play to gain volume and retain its large market share.
There have been some complaints by current Tesla owners that by cutting prices of new cars by too much, too fast, their resale values would sink. That’s largely happened, too. Analyst iSeeCars.com reported last month that average used prices for Tesla Model 3s dropped 21.5% between September 2022 and March 2023.
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