Tesla raises Model Y prices after expanding electric vehicle tax credit

Tesla raises Model Y prices after expanding electric vehicle tax credit

  • Post category:Economy

Tesla (TSLA) takes the opportunity to impose price increases thanks to Uncle Sam.

On Friday, the IRS issued new guidance that changes the definition it uses to classify vehicles as SUVs, using the wording used by the EPA for electric vehicle tax credits. This then allowed many vehicles, such as certain versions of the Tesla Model Y, Volkswagen ID.4, and Cadillac LYRIQ, to use the higher MSRP price cap of $80,000 to exclude vehicle tax credits. electrical.

Like clockwork, Tesla has hiked the price of the long-range Model Y, currently the cheapest Model Y available, from $1,500 to $54,990. The Model Y Performance model also increased by $1,000 to $57,990.

Of course, these new prices are still significantly lower than what the vehicles cost before the massive price cuts Tesla initiated in early January, which the company used to stimulate demand (and also to address loopholes in eligibility for the electric vehicle tax credit to fix the 5 -model Y passenger vehicle versions).

Tesla Model Y price as of February 6, 2023

Also somewhat surprisingly, Tesla has dropped the price of the Model 3 sedan, with the RWD version of the Model 3 dropping from $500 to $43,490.

With higher price caps coming into play with new IRS rules, and CEO Elon Musk saying demand was outstripping supply on Tesla’s conference call last month, Tesla seems to have a lot more leeway. to set prices in this way since the $7,500 fee. credit is still at stake.

“[As] Tesla lifted the Model Y [prices] around $1,500 with the $55,000 cap no longer applicable and ultimately based on robust demand (2x production levels), we could see modest price increases in the coming months, giving Tesla more flexibility with the tax credit now in place,” Wedbush analyst Dan Ives said in a note today.

While some expect an EV price war given Tesla’s steep price cuts earlier, that scenario has not materialized. Ford was the only manufacturer to significantly lower the prices of its Mustang Mach-E SUV, a direct competitor to the Model Y. GM and Volkswagen refused to lower the prices of their electric vehicles.

The bottom line for consumers considering electric vehicles, and a Tesla Model Y in particular, would be to place an order now before prices are hiked again.

Tesla shares are higher, up more than 3% in early trading today and 60% year-to-date as demand appears to be improving here and around the world.

Pras Subramanian is a reporter for Yahoo Finance. you can follow him Twitter and further instagram.

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