Tesla is cutting prices to $13,000 in the U.S. and Europe to counter slowing sales. The price reduction reduces the cost of the Model Y from $65,990 to $52,990 and helps it get an additional $7,500 in tax benefits.
Exactly a week after Tesla lowered the prices of electric cars in China, which led to mass protests across the country, the automaker did the same trick in Europe and North America. The cuts affect the Model 3 and Model Y lines and mean that some cars now cost about 20% less than at the beginning of this week. For example, the entry-level Model Y, which previously cost $65,990 in the US, is now on sale for $52,990.
Notably, this puts the Model Y under a $55,000 tax credit cap for electric vehicles. At the same time, the IRS stated that the five-seat Model Y is not a crossover, and therefore the $80,000 limit on the SUV does not apply.
“It’s a similar story for Europe. Last year, the UK government scrapped its grants for electric cars, but the entry-level Model Y now costs £44,900 compared to £51,990.”
Buyers can also save significantly on the Model 3, which now sells for £42,990. In other countries, such as France, where subsidies for electric cars still exist, the Model 3 now falls below the threshold of 47,000 euros. This move will help support falling demand in the face of an impending recession, high-interest rates, and strong competition.
The price reduction is likely to please as many people as it will infuriate. This is great news if someone was planning to buy a Tesla in the near future. A Tesla distribution center and several dealerships across China faced protests from angry owners demanding compensation when Tesla announced similar cuts last week.