Tesla cut the prices of their cars in the USA and Europe by up to 23%. This ensures that all by the Model Y performance will get the $7500 tax credit in the US. This price cut and the tax credit means the Model Y is selling for $22,000 less and the Model 3s are about $12000 less than December 2022.
The Tesla Model Y was costing $67000 to $75000 in December but now is $45000 to 56000 in most situations. This is very near the average price of a US car at $45.5k instead of being $20000 more than the average cost. It was 40-50% over the average price of a new car in the USA and is now 5-20% over the average price. Instead of being double the price of the Honda CRV the Tesla Model Y is only 40% more. The $2000-3000 per year fuel saving with the Model Y makes up the price difference within 4 years of ownership. This aggressive pricing and ten year tax subsidies will hit the Toyota RAV4, Honda CRV, and other compact SUVs hard in the US and Europe. Tesla also had earlier aggressive price cuts in China.
The least expensive Tesla Model Y is $43000 after the tax credit.
The Tesla Model 3 was costing $48000 to $60000 in December but now is $37000 to 45000 in most situations. This is up to 20% below the average price of a US car at $45.5k instead of being $20000 more than the average cost. The $2000-3000 per year fuel saving with the Model 3 makes up the price difference aginst any $29000 ICE car within 3 years of ownership.
The US does not buy many Model 3 like regular four-door cars. The most comparable is a Toyota Camry, Corolla and Honda Accord on the US top seller lists. The Model 3 was already outselling the Honda Accord. The Model 3 is 30% cheaper than it was before and should take huge sales from the Corolla, Camry and the Accord.
The average price paid in the US for a new non-luxury vehicle in December, 2022 was $45,578 which is the highest ever. This includes Ford F-Series which had an average transaction price of $66,451.
I believe that Tesla has the production capacity in 2023 to make 2.5 to 3 million cars. This aggressive pricing means they can produce and sell at capacity. The margins will take a hit but not as bad as most people think. I think it will be a dip to around 15% margin in Q1 and then recovering throughout the year to 20%.
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
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14 thoughts on “Tesla Price Cut and Tax Credit Reduces Model Y from $67000 to $45000”
Most people buy cars using credit. Because of this, Teslas cost less to own. You get sports car performance for a sedan price.
What’s the inevitable cost cutting going to do for their already sub par quality control?
This was expected.
Tesla used the high demand and low manufacturing capabilities to rise the price up to a level where they had inventory pileup at the end of 2022.
Now they have cut the price (in many countries at higher rates then in the USA), so they will probably be able to sell most of the cars they can make (although I predict they will have one or more additional price cuts this year).
This is good new for future costumers and for the shift to EVs, and a very bad news for Tesla profits that will be lower in 2023 relative to thus of 2022.
Fortunately they have enough cash due to the high 2022 prices to allow future manufacturing expansions and additional R&D efforts. But if they will not find away to increase the profit by the end of 2023, they will have to slow down the spending on new factories and R&D.
Tesla may have under-mined its future market-share dominance/ competitiveness by insisting on batteries-only propulsion. Good strategy to move the car battery universe forward from 2000 (and temporarily satiate the ‘reduce carbon at all cost’ activists), but the reality of the customers, grid, and existing repair/re-sale/dealers infrastructure in north america will likely lead to a PHEV dominated world well into the second half of this century. Musk may want to consider pivoting to creating packs that can work simultaneously with either FCEV or some kind of ICE-hybrid – whether old school CxHx or H2 fuels, especially for larger vehicles.
Tesla’s practice is unfair, technically fraud.
I took my Model Y delivery on 11/28/22, fully loaded, paid much more than what they offering just month after.
I should get credit for any money they overcharged me.
If I don’t see any actions from Tesla soon regarding this matter, we will boycott Tesla.
This will be our last Tesla, we will make sure Friends and families also stay away from Tesla.
What a fraudulent way to do business.
I am very sick of Tesla now.
we need to file a suit against to Tesla to het our over pay money back . this is unfair trade practice.
If they’d raised prices 30%, would you be sending them more money, just to be fair to them?
Tesla cheated by pushing hard on selling 2023 in December and force depreciating the price up to 25% just in one month by 3 discounts back to back. So much disrespect and insult to the existing customers. They just believe in machines’s character but not in people’s emotions. Cheated thousands of customers like me.
The funny thing is that the used car prices haven’t adjusted yet. Tesla will sell you a two year old 3/Y for the same price as a new one. And the used ones don’t get the same tax credit.
If you want a used Tesla, maybe give it a few months.
If you want FSD, used is the way to go. FSD costs $15k on a new car. It looks like it adds about $3k to the cost of a used car.
Such BS I purchased my Y in September 22 and even with my 15k down payment I owe more for the car then it’s currently worth. I checked on trade in value with Tesla just to see. What a joke, 40k max offer, which is less then I owe with 7800 miles on the car.
I think he is ruining the business model of Tesla and is certainly leaving a very foul taste in customer s mouths that bought car in 3rd and 4th quarter of 22.
I don’t think I can ever buy another Tesla I even ordered the truck early which not sure one will ever be parked in my garage after this total sham.
This sucks, but it is true of every car bought during 2021 and 2022. Prices for all brands were at all time highs due to pandemic supply chains, people stuck at home with extra cash, and low interest rates.
New and used car prices are crashing.
Gone are the days of huge profit margins for Tesla, another milestone in Tesla’s road of becoming like any other car company, withconventional growth rates. Given Tesla’s inability todevelp new modelsquickly,there is potntial for problems ahead.
Don’t know what are the margins now because of the IRA and the cheaper cost to make Tesla cars due to them scaling up and improving manufacturing. If they reduce margin by 50% but sales increase by 400% then they would 200% their profits.
Eventually the cost of ICE cars will rise to match so I will be unable to afford ICE or EV. I can accept that. Let the rich monopolize private transportation. As long as no one throws me in a cryogenics vat by accident it won’t be my problem after a couple of decades.
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