Tesla has once again lowered its prices. Starting from Thursday, the online configurator for the automaker shows price cuts for every model in its lineup.
The Model Y received the most significant cut, around 20% across the lineup. Including the new higher destination fee of $1,390, the base Model Y Long Range now starts at $54,380, while the Model Y Performance now starts at $58,380.
There might be a good reason for the deeper cut on the Model Y. The five-passenger versions of the Model Y qualify for the new clean vehicle tax credit as passenger cars, meaning buyers can claim $7,500 (likely until March) if the vehicle’s MSRP is not more than $55,000. With buyers again able to claim that credit, the effective price for many U.S. drivers of the Model Y will now be under $47,000 after the tax credit is applied.
With the initial price of the Model Y at $68,390 until yesterday, that’s effectively more than a $20,000 price reduction.
The Model 3 now starts at $45,380, while the base price of the Model 3 Performance is now listed at $55,380. These are changes of 6% and 14% for the standard and performance specifications, respectively, before destination charges.
This comes after Tesla issued discounts on the Model 3 and Model Y in December. The automaker initially offered a $3,750 discount, then doubled it to $7,500 for cars delivered from December 21 to 31. This came after a series of price hikes by Tesla, including one in June that raised the starting price of the Model Y to over $67,000.
Tesla also reduced the base price of the Model S by about 10% to $96,380. The Model S Plaid Performance variant now starts at $116,380, 15% less than before, excluding the destination. Model X prices were cut by a similar amount, with the base Model X now starting from $109,990 and the Model X Plaid now starting from $119,990.
These price cuts help reverse years of price increases at Tesla and come as the used Tesla vehicle market weakens. Used Teslas have generally held their value better than other electric cars, but a recent report found that prices were dropping rapidly. The average price of a used Tesla peaked in July 2022 at $67,297 but fell 17% in November 2022, compared to a 4% decline for the overall used car market, according to the report.
The cuts come after a record year for Tesla. According to an estimate from the Automotive News Data Center, the brand sold 491,000 cars in the U.S. in 2022, making it the best-selling luxury brand in the country. Tesla does not break down sales by country or region, but the estimate gave Tesla a lead of about 158,000 cars over BMW.
However, Tesla also faces increased competition in the electric car market, and many more brands are planning new electric vehicles in the future.
