On Thursday night, Tesla implemented another price cut for its Model 3 and Model Y, as depicted on its consumer website, bringing the price of these new electric vehicles to the lowest level in their history.
The move, which reduces up to $2,250 in discounts on these models, depending on the version, directly follows earlier this week’s news that Tesla’s global deliveries in the third quarter fell short of expectations. Considered as a single quarter, they might not be on track to meet the company’s guidance of 1.8 million vehicles for 2023.
Tesla also recently introduced a basic version of the Model Y with rear-wheel drive, so, in total, the entry cost of the Model Y is much lower than a couple of weeks ago. It now starts at $45,380, including destination. If you can claim the $7,500 electric vehicle tax credit, its effective price is only $37,880. And before the credit, the Long Range model is now below $50,000.
The price cut is the latest in a series of many and a trend that essentially began late last year. The most notable of these was a January 2023 move that cut Tesla prices by up to 20%. The automaker also reintroduced standard range versions of the Model S and Model X in 2023, and cut the prices of those premium models by tens of thousands this year. Another recent price cut for the Model X makes it eligible for the renewed electric vehicle tax credit and its $80,000 limit for SUVs.
The United States has not yet seen the launch of an updated Tesla Model 3, called Highland, which is currently rolling out to Europe, China, and some other markets. While part of the delay in Tesla’s global deliveries may be due to that ramp-up, lower prices in the United States are a likely indication that it’s not the only reason.
Taking into account last year’s delivery totals, sales in the United States accounted for over 40% of Tesla’s global sales. In 2022, it sold around 536,000 vehicles in the U.S., while delivering 1.31 million vehicles worldwide.
Considering that and other price cuts in the early months of the year, by April, the Model 3 and Model Y were cheaper than the average new vehicle, EV or not.
Do Tesla’s ongoing price cuts signal a price war for electric vehicles? So far, the closest comparison is Ford cutting nearly $10,000 off the price of the F-150 Lightning. Other automakers have not committed yet and have opted to offer a range of incentives rather than lowering the sticker price. But once a single company, besides Tesla, significantly cuts it this way, things could get very interesting.
