Tesla recently cut prices of its entire lineup, changing the EV game and sending a clear message of dominance to GM and Ford.
The most popular Tesla models experience reduced prices in the most popular markets. Prices of the Model 3 and Model Y have been reduced in the United States, Europe, and China, which are three of the largest auto markets in the world. These price cuts bring Tesla models closer in cost to some of the smallest models from the legacy automakers of Ford and GM.
How much are Tesla vehicles being discounted?
The Tesla Model 3 and Model Y are the two most popular electric vehicles from this brand. They are also the smallest and most affordable, which means they should probably be discounted the least. Strangely enough, these small EVs have been discounted the most with new discounts ranging from 6% to 20% depending on the trim level. In addition to some price cuts for the small, volume-level versions, Tesla also reduced prices of the Model S and Model X. These two high-level luxury EVs now see discounted rates of 9% and 10%, respectively.
Is the change in price in response to slowed demand?
Is it even possible for Tesla to build more vehicles than it sells? For years, we’ve seen Tesla push back production dates, underdeliver the number of models required, and enjoy being cash-flush because there were many more reservations than vehicles available. While we still await the new Tesla Cybertruck and, eventually the Tesla Roaster, some analysts worry there might be more small Tesla Model 3 and Model Y vehicles ready for delivery than the company can sell. Could this have been the catalyst behind offering discounted rates for these EVs?
Did the automotive inflation bubble finally burst?
Like most EV automakers, Tesla spent most of 2022 increasing the prices of its fleet. Most automakers lean on low inventory levels and high demand as a reason to raise these prices. Tesla is supposed to be different. This electric car company doesn’t utilize physical dealership locations to sell vehicles, but that doesn’t prevent them from being flush with inventory. Is it possible that consumers have finally had enough of the increased prices from automakers, including Tesla? Has demand slowed enough to require this company to drop its prices to a more affordable level?
Tesla isn’t the only company that raised prices in 2022?
If you’re looking at Tesla and shaking a naughty finger at them, just remember most automakers increased the prices of their high-demand electric vehicles during 2022. Many stories surfaced of Ford dealers hiking prices of the F-150 Lightning to ridiculous levels. Although these dealers were eventually warned by Ford not to do this, the base price of the new electric Ford truck rose by nearly $16,000 during the year. This increase was entirely based on the supply of trucks being much lower than demand, and not caused by anything new or special being added to this truck.
Didn’t Tesla run out of Federal EV Tax Credits?
Tesla and GM were the first two automakers to rack up enough EV sales to hit the limits of the original Federal EV Tax Credit. Thanks to recent legislation in the new Inflation Reduction Act, Tesla is back in the game of offering these credits to customers. Of course, GM can also do the same with the new credits. While other automakers scramble to build their EVs in the United States and meet all requirements of this new legislation, Tesla and GM have already met all of the requirements to take full advantage of these credits.
Is Tesla pushing EV prices down?
With most electric vehicles being offered at much higher prices than originally quoted, will we see Tesla become the force that drives prices back where they belong? That seems like a complete shift in the EV market, but it could happen. Now that Tesla not only offers discounted prices but also has the benefit of the Federal EV Tax Credit to offer customers, what’s stopping more consumers from looking to Tesla for their vehicles. It won’t take much of a price break for some to forget that Tesla spent 2022 increasing prices, especially if Ford and GM don’t bring their prices in line with Tesla.
Is this a direct shot across the bow?
Yes, it certainly is. Tesla has its sights set on continuing to be the top brand for electric vehicles, and it now has the production process to compete with the two American legacy automakers. With lowered prices, Tesla can easily entice new customers that might want to buy the Chevy Bolt EV or Bolt EUV but can see the Tesla Model Y has a lot more to offer at a price that’s not much more.
Are these discounts being offered out of fear?
The electric vehicle market is expanding rapidly, and we’ll see several new models hit the market in 2023. Had Tesla begun to offer discounts to pad its numbers in the first quarter for fear o what might happen in the other three? As more EVs enter the market, the competition grows, which could cause many consumers to trust a brand name they know, like Honda, Nissan, Chevy, Ford, Subaru, Lexus, BMW, or Mercedes-Benz, before they would think about Tesla. Will Tesla need to go a step further and build a much larger fleet of EVs?
Is the pressure on Tesla and the EV market?
With Tesla offering discounted prices for its four electric vehicles, will we see two significant changes in this vehicle category? The first of these changes could be a return to quoted prices, and a leveling of the cost consumers have to pay for an EV. The Second change would be pressure on Tesla to actually deliver vehicles on time and as promised because when they don’t, consumers will have several other options and won’t need to wait for Tesla and their long history of broken promises.
It will certainly be interesting to see how these reduced Tesla prices are received and what impact they have on the rest of the electric vehicle market.
This post may contain affiliate links. Meaning a commission is given should you decide to make a purchase through these links, at no cost to you. All products shown are researched and tested to give an accurate review for you.
