Far from the free-swinging heights of 2022, Tesla is seeing its sales numbers dropping. Whether it is due to its pricing or to legacy manufacturers stepping up their EV programs giving buyers more choices, Tesla had to do something. It can’t do much about the competition, but it can do something about the prices it is asking. So for its popular Models 3 and Y, it has cut prices, by as much as $13,000 in some cases.
Have the Tesla price reductions helped sales?
And it has had a positive effect on sales, spiking since the pricing adjustments were announced this week. Especially, the new prices for base Model 3 sedans hovering under $45,000, is a welcome sign for many EV adopters. But not so with business analysts and stockholders.
They fear the slashed prices will affect Tesla’s bottom line. Because of that, Tesla’s stock value has dropped, putting Tesla in a Catch-22 predicament of sorts. And it missing projected 2022 production figures haven’t helped. And everyone is aware of the depressed global auto market as we enter 2023.
What are the Model Y and Model 3 prices?
But Tesla makes far higher margins on its cars than other manufacturers. So it wouldn’t seem that this will put much of a dent in the profit picture. And it allows them to continue their rush for ever-higher production figures.
Back to the price slashing, Teslarati says a base Model 3 is priced at $43,990, coming down from $46,990. The Performance version of the Model 3 shows a $9,000 drop to $53,990, down from $62,990. The Long Range version of the Model Y and Performance models will see a $13,000 reduction. For the Model Y Long Range, pricing is now $52,990 while the Performance Model Y comes down from $69,990 to $56,990.
What about the federal tax credits?
Part of the case for these reductions is to qualify for the Inflation Reduction Act tax credit of $7,500. Before, the credit capped EVs at $55,000 MSRP. So with the tax credit, a Dual Motor Model Y comes down to $45,490, while the 4680 Standard Range Model Y AWD drops to $43,490.
Because the weight of the Model Y Performance is classified as an SUV, it already qualified for the $7,500 credit. Last year, the Model Y was Tesla’s best-selling crossover. So with this substantial reduction in price, it could match or even beat sales from 2022.
These price reductions could put a dent in legacy automakers’ EV ambitions. Tesla is considered the benchmark EV. The new crop of EVs is definitely affecting Tesla sales, but with its reputation as well as having amortized tooling years ago, lower prices for Tesla should bring a whole new group of buyers into the tent.