Tesla Price Cut Means Increases Smart Cars’ Availability

On January 13, without any announcement Tesla’s prices dropped. And that’s how Elon Musk car brand decided to start his new year. Now, why did it happen? Stick around to find out. 

Although we must say that these sales did not happen in all places where Tesla has a presence, but in countries such as Germany, United Kingdom, France and the United States. With the aim of stoking demand and boosting its market. After several quarters in which deliveries of its units have been disappointing, the company reduced the cost of the Model Y by 20%. In addition, the price of its most expensive cars was cut to US$21,000. 

Although this action could also be interpreted as a way of benefiting, since exist an IRS procedural change that, allows for the receipt of the entire $7,500 tax credit for a Tesla. It is worth mentioning that this is for a brief period.  

Despite this, Tesla reduced the cost of other models in its lineup, even though they might not be eligible for tax incentives. 

Wait a minute… How works that government tax credit? 

The method for purchasing an electric vehicle with a government awards credits were changed by the Inflation Reduction Act. Since, the initial government tax credit had no price or revenue limits but was restricted to 200,000 automobiles per automaker prior to the law. And now, the new bill eliminates the 200,000 caps but imposes extra conditions on automakers to be eligible for the full $7,500. 

Here are some reasons for Tesla price drop 

We star with the postponed until March 31 of this year about the final judgment of IRS on some issues due to disagreements over how the statute should be interpreted. Because, the income level restriction that is in effect, but more significantly, the car price cap is also in place.  

It should also be clarified that the company has been losing market, since other manufacturers provide identical vehicles such as Ford, Kia, Volvo, Polestar. And on the other hand, Tesla’s market share of electric vehicles in the United States has decreased from 79 percent in 2020 to 65 percent in the third quarter of the previous year. 

Since the general interpretation of the law states that the automobiles must be delivered by March 31, this means, you cannot simply order one and claim it later your taxes. And that could be the reason, that Tesla’s website states that delivery is anticipated to occur between January and March 2023. 

Models that had a Tesla discount 

• Model Y Long Range 

It was reduced from $65,990 to $52,990. Thereby this car should also be acceptable. 

• Model Y Performance

   This also dropped dramatically, by a 23%, to $56,990, even with this prevents it from qualifying for a federal tax credit. 

• Model 3 Performance 

Until January 13 was not eligible because it cost $63,900. It now has a $53,990 price tag, so it might be eligible. Theoretically, you could pay $46,490 to purchase a Model 3 Performance if you meet the other conditions. 

• Model 3 

The base Model 3 was reduced to $43,990, which means you could purchase a Model 3 for $36,490. 

The models that are affected by the Tesla price cut: 

• Model S: $94,990 with 9.5% drop. 
• Model S Plaid: $114,990 – 15.4% drop. 
• Model X: $109,990 – 9.1% drop. 
• Model X Plaid: $119,990 with 13.7% drop.