Tesla has yet again lowered prices of its vehicles across its model line in yet another unannounced late night move, with prices dropping on models from the Model 3 to the Model X, and everything in between. This move applies to both models that do qualify for the IRS tax credit and those that don’t, with a whopping $10,000 coming off of the top-of-the-line Model X and $2,000 off the more popular Model Y.
Why, you may ask, is this happening? There’s an argument from this Automotive News report that Elon Musk isn’t happy that Tesla sales, while good, “failed to meet CEO Elon Musk’s internal goal of 50 percent per year for the foreseeable future.” (Side note: we will also have 900% growth for the website this year or Thomas will be forced to work the 2:00 AM to 10:00 AM shift.)
Unlike most automakers, Tesla is well positioned to take advantage of the federal tax credits that will be reduced for most automakers later this month. TL;DR: In order to qualify for a full tax credit, a vehicle has to be made in North America and most of its battery components need to come from places that are not China, as well as staying below a certain dollar amount. Tesla says all Model Y models will qualify and most Model 3s will qualify for the full $7,500, but the RWD base Model 3 will not because it uses a lithium-iron-phosphate battery that contains cells from China.
It’ll be interesting to see how this impacts other automakers who, realistically, don’t have the scale to compete with these constant price cuts.
Let’s go through all of them.
Tesla Model 3 Now Starts At $41,900 ($43,600 Delivered)
The base Tesla Model 3 RWD is now $41,990 before delivery, which is $1,000 less than after the last price cut. The caveat here is that you better order fast because the IRS tax credit is dropping to $3,750 soon. Still, delivered, that’s under $40k for a good car (before local taxes) that is still quite competitive as we found out in our Tesla Model 3 vs. Hyundai Ioniq 6 test.
A Model 3 Performance is also $1,000 less, at $52,990 before delivery ($54,630 delivered), and does qualify for the full $7,500 price cut. As Tesla watcher/investor Sawyer Merritt noted, there’s apparently an even better deal in Oregon for a few more days:
With this price drop, until April 17th you can get a new Model 3 RWD in Oregon for as low as $25,490 including fed, state & local incentives.
When the Fed incentive drops & state incentive goes away later this month, the price will effectively be $36k on May 1st. Take delivery… https://t.co/qNrm9JUwRC
— Sawyer Merritt (@SawyerMerritt) April 7, 2023
Honestly, if I lived there and qualified I’d do this. That’s a ton of car for not that much money.
Tesla Model Y Now Starts At $49,990 ($51,630 Delivered)
Tesla’s Model Y is the most popular car in the lineup and it’s creeping below $50k, especially after the $7,500 tax credit. Both the Model Y Long Range and Model Y Performance have had $2,000 taken off the price, bringing the prices to $54,630 and $58,630, respectively, delivered. If you qualify for the tax credit, take $7,500 off each and, again, it’s a great deal.
There’s also a relatively new base model that reportedly uses a new Tesla battery cell and gets 279 miles on a charge, with a starting price of $49,990 ($51,630 Delivered). This also qualifies for the full $7,500 tax credit.
Tesla Model X And Model S Now Cheaper As Well
Both the Model S sedan and Model X crossover are too expensive to qualify for the tax credit (and its owners may also breach the income cap), but that didn’t stop Elon Musk’s company from lowering prices again. The Model S is now $5,000 cheaper, starting at $84,990 (or $86,649 shipped). The Model X is a whopping $10,000 cheaper, or $94,990 ($96,630 shipped).
It’s worth noting that these cars, shipped, were $106,440 and $122,440 less than six months ago.
What a time to be alive.
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The Musk Melon has graduated from Peeping Tom to full on slasher status. Typical progression for a sociopath.
The income limit on these incentives is $150k/single. Not to be a financial scold, but most people making under that amount should not be buying new $50k cars, incentives or not.
I realize the used car market is insane right now, but I can’t help but wonder how this impacts depreciation.
If I bought a Tesla right before one of these price drops I’d be pretty darn peeved – resale value has plummeted (who’s going to buy your car when an identical brand new model a few weeks younger is 20% less), but if you financed the deal your debt is now even more out of sync with the value of your asset.
Maybe it’s just my PTSD from the mortgage crisis (holy crap was that 15 years ago now?), but the whole economy feels like I’m watching a train wreck in slo-mo.
Friend of mine bought a Model 3 last year when then didn’t have the $7,500, and was after all of the “price adjustments” up from Tesla.
Now very VERY upside down in the car loan. Likes the car well enough, but finds it a bit boring. Saving quite a bit commuting, but it’s ugly for people who bought wrong and if you have a life event change where the payment is no longer achievable, that’s going to be an ugly situation. Hard to roll that much negative equity into anything and drop the payment.
You can’t trust anything Musk does.
Special Report: Tesla workers shared sensitive images recorded by customer cars | Reuters
I thought thirty pieces of silver was the going rate for selling your soul. Inflation, I guess.
Just want my fellow progressive Autopians to know that giving your $$$ to Elon = enriching a megalomaniac sociopath who espouses antidemocratic views. I’d rather drive a busticated hooptie like Saul’s yellow Suzuki Esteem than be seen in a Tesla.
Here’s a really good primer on Elon’s many, many awful deeds:
I thought this was a car website that stayed away from politics. Let’s get real here: the Tesla fanboys and haters have always been around but one particular party did a hard 180 on him when he bought Twitter. Let’s stick to cars, not commenting on agreement with the ideologies of automakers’ CEOs.
If you don’t like the political posts, simply don’t respond to them. There’s nothing wrong with political content as long as it’s done respectfully and without personal attacks.
Politics is part of absolutely everything, like it or not, including autos. You can direct your attention elsewhere during times when you don’t want to engage.
Those of us who are realists don’t want the important political aspects of things filtered out just because some find it a bit uncomfortable.
If you can’t see that industry and politics are bedfellows (◡︵◡)
As Musk has well inserted himself into the most malign politics imaginable and as every Tesla purchased helps him achieve his antidemocratic goals, it’s fair to comment on it.
Here’s a year old primer on why he’s appalling, assuming you lacked the patience for the above video.
So my wife (and kid, who’s not into cars) has been harassing me to sell my Si and get a Tesla. I just spent some time on their site, might be making a move this weekend.
I absolutely ignore those voices. Otherwise I’d live in Spain, only eat pizza, and would be saying “no, we are not there yet” over and over again.
Nothing wrong with Spain (never been) or pizza (what toppings?), but I definately ignore ‘are we there yet’. The thing is, I’ve been itching to make a move, but undecided which way to go. I like my Si, it’s fun, reliable, efficient, and fun! But maybe not sparking joy anymore. When I walk away after parking it, I don’t glance back. I feel I owe it to myself to at least look into this pricing opportunity.
Be aware that Tesla might be watching you and your family.
Special Report: Tesla workers shared sensitive images recorded by customer cars | Reuters
Be aware that Tesla
mightwill be watching you and your family.
Teslas were probably more overpriced than most other types of vehicles in the run up that we saw over the last couple years. You’re not seeing comparably large discounts from literally any other automaker, even though supply has stabilized quite a bit. There are a few reasons for this. The cars are long in the tooth and no longer something unique, new and exciting. The build quality isn’t great. There’s excellent competition out there now and more coming by the day. EV adoption is increasing but the infrastructure/consumer interest isn’t there to justify a 50% annual increase in sales. Doesn’t help that Elon Musk has poisoned his brand and alienated his customer base. I’m not naïve enough to think that’ll sink Tesla, but it absolutely will have an impact.
Tesla isn’t as strong in this “price war” as people think they are. Sure, they’re raking in money on their decade old platforms and selling energy credits to other automakers… for now. But other automakers can afford to lose money on their early EVs for long-term gain and scale up/down as necessary because they have their ICE cash cows. Tesla can’t. And as other automakers do this, Tesla is going to lose those sweet, sweet (and insanely profitable) ZEV credit sales that legacy auto will increasingly no longer need. As it faces actual, legitimate competition, it’ll no longer be able to skimp on R&D and new product development, which will further hurt their profitability.
Of course, they could be sensible and better align their production with actual consumer demand. But they won’t. Why? Because the only reason Tesla’s worth even a fraction of its current (not even all time high) valuation is that they make outlandish claims like indefinite 50% YoY sales growth and “full self driving just around the corner.” How else do you justify them being worth more than literally every other global automaker combined, when they have a tiny fraction of global sales? If they admit that that they’re just another car company and align production with demand, walk back FSD, etc. then the narrative falls apart. They know this, and Musk would rather sell cars at a steep loss than face the reality that 50% growth will be extremely difficult to achieve this year. Again, not saying they’ll go away. But I don’t see these moves as exercising strength as so many have proclaimed. I see it as a bunch of different weaknesses finally coming home to roost.
Yeah, the indefinite 50% YoY prediction is peak unsustainable growth. I know capitalism likes the idea of unfettered growth in markets, but even then there are limits. You can’t assume 50% YoY when you’ve saturated a good portion of your market, haven’t released a new product in some time, AND competitors are gaining market share.
But it’s very much in line with the speculative investment crap that is really Tesla’s game. Inflate your expectations to inflate your stock price. Everyone profits until the folks who are left holding the bag.
I would almost argue that you are wrong. Look at what Apple has done with the iPhone since its inception. At this point, it seems people will just blindly buy (drive) what everyone says they should, regardless of what they want. The numbers of stories I have heard of someone “switching away from Apple” over the years because they actually starting paying attention is huge.
But Apple projects and reaches much more manageable YoY growth. Looks like in recent years, they’ve averaged about 12% over the last decade or so. Which is a high average, indicative of massive success. On a product that a fairly large number of customers replace every couple years with the same brand (some even every year).
That should tell you how unrealistic Tesla’s 50% YoY indefinite growth expectation should sound to reasonable investors.
Or they had huge profit markups and now are focused on crushing the new entries and keeping up sales. Other companies are going through growing pains and cant afford to.
Tesla has done alot to improve in the past few years but people hate Elon and can’t get over it, its almost funny. I’ll let you in on a secret…. he doesn’t think about you at all.
Lol if you say so. Their market dominance will be fleeting.
P.S. He doesn’t think about you either.
I hold 0 stock or cars in tesla just fyi, I don’t really like them. I do think they’ve done a good job though getting some of their issues under control though from everything I have read. They have some other big issues like spying on their customers and I’m sure thats the tip of the iceberg.
Please don’t burst my bubble, I was hoping he was thinking that I was a great candidate to launch to mars. *fingers crossed*
But how much will this price cuts really help sales? And how many prospective buyers will say, “He already cut the prices twice, let’s wait and see how low he will go?”
This seems like pretty normal corporate behavior for an electronics company, to me. when your product is the only game in town, you can charge a premium for it. When competitors begin to enter the market at a substantial level, you lower prices. This keeps your aging product competitive against newer designs. Given a limited market, this not only maintains your sales but hurts the newcomers by reducing their sales.
How long before Tesla dilutes their brand to go from “luxury” to mainstream? That’s the way they’re going. Musk is starting to act like Roger Smith. And that’s not a good thing for shareholders.
Ultimately every ICE daily driver replaced by a Tesla is a net positive for the environment in my book. Good for making those cars more accessible.
I’d argue that the 3 and Y should have been considered mainstream from the start and the main reason they seemed like luxury vehicles was just that they were electric, which implied you could afford to be riding the early wave of EV adoption. With the number of similarly-priced and equally or better equipped options they compete with from mainstream brands, they really aren’t a luxury vehicle.
That said, for Tesla buyers, there is a certain sort of status conveyed by the brand, and that is hard to quantify. As long as there is a diehard contingent of Tesla fans, it might be hard to ignore the brand as a kind of status symbol.
I agree, I think it was more the price and exclusivity, and maybe add on the service experience where they’d come to you to service it and/or give you a loaner. How much that’s the case now, I can’t say, just purely speaking anecdotally.
That said, entry models from BMW, Mercedes, etc. didn’t really seem to dilute the overall brand like people said they would years ago. For Tesla it may just be how they react to getting squeezed on both ends of the market.
In terms of build quality and interior finish materials, they already started in the crater Cadillac took a decade or two to fall into
I think they were born into the crater, producing crap from the start, but have worked their way towards the edge of the pit.
Anyone here who can name a big car company not recalling half their vehicles regularly are welcome to let me know!
They never were “luxury”. They are just expensive (as they should be) and in order to make early adopters feel a little bit better about paying early adopter premiums they called them luxury.
Problem now is that early adopters got their fill and there are cars like the Chevy Bolt that you can get for $20k. EVs are nearly mainstream now, no longer a blue ocean so the competition gets real.
I think the intent from the start was to be a brand with a vehicle for every price point. They just started at the high end with the S and X. The 3 and Y are middle class vehicles and the rumored Model 2 may come in even cheaper.
Most car companies have different brands for their target market (Scion, Toyota, Lexus), but Tesla just has one brand.
That’s a good deal. But the money is still going to Elon so yeah, that’s gonna be a no from me, dawg.
Not only that, but driving a Tesla implies to others that you are a Tesla person. I don’t really want to seem like I’m part of the online Tesla brigade or some sort of Tesla evangelist.
Agree on all points. Plus, Teslas look old. And I don’t like the UI. And the lack of parts support and a local dealership to install those parts makes Tesla a hard pass for me.
To my eye they haven’t aged badly. There is still a futuristic look about them. Having everything done via touchscreen is still novel to a lot of new customers. Add the current brand cachet and they still have a ways to go before being in real trouble.
Yeah, I don’t like touchscreen menus for so many functions and I HATE having all the info on the center stack instead of a gauge cluster/driver info screen. And I see so many Teslas now that they all look so generic now.
Yeah if you live in an urban area with a lot of affluent people like I do pretty much every 5th or 6th car is a Model 3 or Y. I see several of them every day and I pay them about as much mind as I do a Camry.
these are the issues I have with the vehicle. I’d like to see some new designs from them soon, or even these cuts won’t keep them ahead.
Doesn’t Tesla have the highest margins on the cars compared to other OEMs? However, are other OEMs saddled with the same ever growing debt that the bird site is causing?
I’d also be curious to see how those margins change as they spend on development and retooling to produce the Cybertruck and the upcoming budget vehicle. Their current models are not only long in the tooth, but their development was subsidized by selling carbon credits, among other incentives. With that gone, margins may start to look a little different.
Y’know, if those things start to materialize. But continuing to make the same product for longer does wonders for your margins, as long as you can pull it off, so this might be a hell of a strategy.
How much would a Leaf or Bolt be with those Oregon incentives? They already start under 30k without the incentives…
There are a lot of “ifs”, but…
Cheapest MSRP is $27,495 including delivery. Bolt qualifies for $7500 federal and $2500 state in Oregon. On top of that, if you meet Oregon’s low and moderate income levels, there’s an additional program that offers $5000.
If you actually got MSRP and had moderate income (max $54,360 annual for an individual) that’s a $12,495 Bolt if you take delivery before May 1st. It’s insane.
Looking forward to the rational and constructive comments on this one….
And I’ll help with that by just not
I keep waiting to see them change their lease to include a buyout option, at least on the S and X. With leases counting as commercial use, they could give the tax credit to the buyer and perhaps capture a few more sales on the high end.
Of course, keeping the leasing credit for themselves (or whatever bank they run their financing through) might be worth more than the extra sales they might get, especially if they keep cutting prices.
Either way, I’m not buying one, so it doesn’t affect me. Just sort of watching the various moves that companies are making to capture market share.