Tesla Slashes Prices by Up To 20 Percent on Most Popular Models

Tesla responds to recession fears, new federal tax credit laws by slashing prices. What ripple effect will this have on the industry?

If you recently purchased a Tesla Model 3 or Model Y shut off your computer or smartphone right now and find something else to do. For your own sake do not read any further. Normally we would never encourage folks to stop reading any of the great content we have on Electric Vehicle Fourms. But this is for your own good. Tesla has just slashed prices globally and the cuts are deep. A Tesla Model Y Long Range is 20 percent cheaper today than it was last week. The old price was $65,990 and it is now $52,990. Your brand-new Tesla just depreciated by $13,000. Ouch. And that is not all. Model 3 prices also were reduced. A Model 3 Performance is now 14 percent less expensive. And those are just the U.S. cuts. Prices were reduced globally, albeit by different percentages. What happened and what does it mean?

There has not been any formal announcement as of the time of publication from Tesla regarding price changes. They simply updated their website with the new amounts. However, as reported by Reuters there are likely several factors that played into this drastic price cut strategy. The prospect of a recession and higher interest rates is suppressing demand. New U.S. federal tax credit law puts a strict price cap on the vehicles that qualify for the credit. And Tesla is now being faced with more competition than ever before. Put this all together and price reductions seem reasonable. However, most were still caught off guard. When was the last time you saw the price of car reduced by 20 percent? When was the last time you saw the price of ANYTHING reduced by 20 percent? Have you tried to buy eggs recently?

Now Watt?

OK, so Tesla slashes prices. Those that recently purchased are mad, but prospective buyers may be happy. But let’s look beyond Tesla for a moment. Everyone is rushing to make EVs now. Ford is number two in the U.S. in EV sales behind Tesla. Recently they have been taking the opposite pricing approach. They have been hiking up the price of the F-150 Lightning significantly and consistently since it was first revealed. With Tesla dropping prices so drastically how (or will) Ford respond? Will they look at their own pricing strategy for the Lightning and Mach-E? Can they continue to raise EV prices when the biggest EV player in town is cutting theirs?

Tesla Trouble

Can Tesla survive this? This might be the right strategy short term to keep sales churning at Tesla. But they are no longer the only EV player out there. Competition is ramping up and fast. Hyundai and Kia are making some solid EVs now. GM, Stellantis and everyone is getting into the EV pool. Tesla has great software, but their cars look a little stale. Can you spot the difference between a 2013 Tesla Model S and a 2023 model? A lot of people would be hard pressed to tell a Model 3 and Model Y apart. Tesla raced out to a huge lead in the EV space, but the world is catching up. To survive long term, they will likely need to do more than slash prices.

The Affordable EV

The knock on EVs has long been that they are expensive. But we have been hearing for years now that once they become more mainstream that prices will come down. On the contrary, prices of EVs have been increasing at an alarming rate. Is this price reversal by Tesla a harbinger of things to come? Will EV prices finally start to come back down? Will the average American finally be able to afford a new EV as a family car, truck, or SUV? That remains to be seen. But what we know right now is that it just became a lot less expensive to get behind the wheel of a Tesla.

Images: Tesla

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