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Tesla Slashes Prices Up to 20 Percent to Juice Sales After Slump in 2022

Model Y Long Range SUVs now may qualify for federal tax breaks.

Tesla slashed prices overnight on most of its cars, including a 20% price drop on the Model Y Long Range before figuring in federal EV tax incentives. The price cuts in the United States mirror similar price drops in other markets, including China and Europe, where Tesla has slashed prices to spur sales after it missed targets in 2022. The move also ducks several models under the price threshold set by federal officials in the U.S. for tax credits. For instance, a Model 3 Performance sedan cost $63,900 earlier this week and now costs $53,990, which qualifies under the $55,000 price cap set by U.S. regulators for electric sedans. Other models, including the Model S sedan and Model X SUV, slashed prices by $10,000 or more. 

“At the end of a turbulent year with interruptions to the supply chain, we have achieved a partial normalization of cost inflation, which gives us the confidence to pass this relief onto our customers,” a spokesperson for Tesla Germany told Reuters in a statement.

Prices for a Tesla Model 3 Rear Wheel Drive dropped 6%, down to $42,880, including destination and a $2,500 incentive, but before federal tax breaks. The Tesla Model Y Long Range was the biggest dropper, down $13,000 to $51,880 after destination and incentives but before federal tax breaks. That’s a 20% drop in price from earlier this year. 

On Tesla’s website, the configurator specifies that delivery will be between January and March of this year when battery sourcing requirements are expected to take effect and could potentially halve the federal tax break available to Tesla buyers now. Tesla previously didn’t qualify for the nationwide EV tax credit because it surpassed the volume quota from a vehicle manufacturer. However, that tax credit has since been restored under the revised guidelines passed in the Inflation Reduction Act last year. 

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