If you ever felt like buying a Tesla was a bit too heavy on your wallet or that electric cars in general cost too much, then this news might make you happier. Because Tesla just shook the electric vehicle industry. Tesla is now significantly lowering the cost of its automobiles in the US and Europe after steadily raising costs over the past few years.
The company's blatant attempt to boost sales is evident. From $46,990 to $43,990, the cost of the least expensive EV Model 3 RWD decreased. The cost of the Y Long Range variant has been reduced by 20%. Tesla Model Y prices have recently decreased from $65,990 to $52,990. Federal tax credits of around $7,500 are applied to the Model Y Long Range, resulting in a final price reduction of $20,500, or more than 30%.
The pricing of the other versions, such as the Model S and Model X, is considerably less expensive than they used to be. Additionally, between 1 and 17 percent off was taken off the cost of the Model 3 and Model Y in Germany. Price drops were also seen in other parts of Europe.
Customers must order the cars before mid-March in order to receive the $7,500 discount. SUVs and cars priced under $55,000 are eligible for tax refunds. Depending on the number of seats, the Model Y fits within either category, hence some 5-seat vehicles weren't counted towards it.
Tesla Cars Are Significantly Cheaper Now
In the beginning, only 200,000 electric vehicles from one manufacturer were eligible for tax credit in the US. Later, this changed, and the cap was removed. The criteria that manufacturers must satisfy in order to be eligible for the incentive, however, have altered.
Since there is still debate about the precise application of the statute, we won't know the result in its entirety until March 31. The incentive is available as of the first of January, and Tesla lowered their pricing in response.
Customers must presently fulfill a lower income requirement in order to be eligible for the federal tax incentive. If they reside with a partner, their combined yearly income cannot be more than $300,000 or more than $150,000.
Their yearly income cannot be more than $150,000 or $300,000 if they share housing with a partner. The tax incentive also has an impact on the car's pricing. For regular cars, it cannot be more than $55,000, and for SUVs, it is also limited to $80,000.
The Model 3 Performance was priced at $63,900 on Tesla's website, making the bonus no longer applicable. The Model 3 Performance is now available for $53,990, which, provided all requirements are satisfied, translates to savings of up to $46,490.
Slashing Prices Is Tesla's Strategy For Better Sales
This is reportedly one of the strategies Tesla is using to boost total sales in a few key areas. Recent market share declines are mostly attributable to Ford, Kia, and Volvo brand rivalry. Tesla's market share decreased from 79% in 2020 to 65% in the third quarter of last year in the US alone. By 2025, the corporation projects that its market share (in the US) would fall to 20%. In China, where its sales have similarly fallen year over year, Tesla faces the same destiny.
Over the past year, the value of the corporation led by Elon Musk's shares has declined significantly. Early in today's trade, they dropped as much as 4.5 percent before later regaining some lost value. The stock market is a fairly accurate indicator of how news of this nature is perceived and had to be done when the news was made public.
Prices for most vehicles are now bound to drop. However, the element of surprise is still there because it is not at all surprising that Tesla plummeted on the stock market when the price crash was made public.
By doing this, Tesla is assisting in creating a brand-new benchmark for the entire auto industry. This means that other automakers will either sell fewer automobiles as a consequence of failing to match Tesla's pricing or they will sell fewer cars overall. Due to the fact that both components result in lost revenue, practically all the major automakers had negative stock exchange statistics on Friday.
Tesla's Price Cuts Will Affect The Used Car Market
The hurt will not just be felt by the rivals. Anyone who already owns an electric vehicle will almost certainly notice a significant decline in the value of their vehicle, whether it is a Tesla or not.
And it is especially unpleasant for individuals who only just managed to register a car before the New Year. No one who already has a car will come out on top now that the entire pricing cartel needs to be re-laid, and a strong competition picture needs to be reconstructed. Because of the significant influence that lower new car pricing will have on used car prices across the whole value chain of electric vehicles, not just for Tesla.
Will it work for Tesla? And how long is it going to last? Guess we'll just have to wait and see.