Model Y offers a $5,000 discount compared to Model 3 with tax credit

Tesla recently announced price cuts on several of its models for the U.S. market, part of a global trend of price reductions. The base price of the Model Y rear-wheel drive has dropped by $2,000 to $44,630, while the Model Y Long Range AWD now costs $49,630. Both models are eligible for a $7,500 EV tax credit, bringing the effective price down to $37,130 and $42,130 for many households. The Model 3, on the other hand, did not receive a price cut and remains at $42,130 for the base RWD model and $49,380 for the Long Range AWD version, with no EV tax credit available.
For Americans who qualify for the federal EV tax credit based on their income, the Model Y Long Range AWD is now priced the same as the base Model 3 RWD. Additionally, the base Model Y RWD is now $5,000 cheaper than the base Model 3 for those eligible for the tax credit. This pricing adjustment may be influenced by Tesla’s production facilities and plans to increase production volume for the Model Y, which has become the top-selling EV and passenger vehicle globally. The Model Y is produced in Fremont, California, and Austin, Texas, while the Model 3 is only made in Fremont for the U.S. market.
In addition to the Model Y price cuts, Tesla also reduced the prices of the Model S and Model X by $2,000. The company also lowered the price of its Full Self-Driving package to $8,000, down from $12,000, eliminating the $6,000 Enhanced Autopilot option that was previously required for certain functionality. Tesla claims that vehicles equipped with Full Self-Driving can operate with minimal driver intervention almost anywhere. The timing of these price reductions is unusual, as Tesla typically lowers prices towards the end of a quarter. This move may be an attempt to boost interest and sales following a challenging first quarter in 2024.
Tesla’s quarterly call is scheduled for April 23rd, and the company’s management, including CEO Elon Musk, may be taking proactive steps to stimulate demand and increase sales. The $250 order fee charged by Tesla is now included in price calculations by Green Car Reports. The changes in pricing and incentives for Tesla’s models may make the Model Y a more attractive option for potential buyers, especially those who qualify for EV tax credits based on income. Ultimately, these price cuts and adjustments reflect Tesla’s ongoing efforts to make its electric vehicles more accessible and appealing to consumers in the competitive automotive market.