When Tesla cut the prices on two of its vehicles in the U.S. so they could potentially qualify for the new federal EV tax credits, the company’s shareholders didn’t receive the news warmly — but potential buyers did.
About a week ago, the company slashed the price of its base Model Y crossover to $52,990, a nearly 20% price cut. The move certainly should help maintain sales volume, as it enables customers to qualify for federal tax incentives, which apply to electric vehicles costing less than $55,000.
Tesla also slashed the price 14% of the high-performance variant of its Model 3 sedan to $53,990, also allowing its buyers to benefit from the tax incentive. The shares dropped 4% that day, but, according to Edmunds.com, the number of “considerations” of Tesla vehicle pages jumped to 4% of all brands researched by the site’s users — more than double than the week prior to the cuts.
The Tesla Model Y became the second most researched vehicle on Edmunds (behind the Honda CR-V), up from 70th place the week prior. The Tesla Model 3 moved up 36 spots to become the 11th most researched vehicle on Edmunds.
Cuts against trend
“Consumers have grown accustomed to price hikes and the expectation to pay over MSRP for quite some time, so a discount this generous or easy to comprehend was understandably welcomed by car shoppers,” said Jessica Caldwell, Edmunds’ executive director of insights.
“These price cuts, as well as inventory on the ground, will win Tesla market share and help consumers overlook the brand’s aging lineup. Lower prices and immediate availability undeniably resonate with the American consumer.”
The average transaction price for a new car is now up to $48,681, according to KBB.com, which was up $422 from October and more than $2,200 from the same time in 2021. The average buyer has paid more than the manufacturer’s suggested retail price (MSRP) every month since July 2021.
The opportunity to pay less for something that appears to be on the leading edge is tough to ignore — especially if you’re in the market for a used Tesla, which saw prices dip substantially. According to Edmunds, since Jan. 1, prices of 2020 model year or newer used Teslas dropped 24.5% since their peak in June 2022. In June 2022, Teslas listed for an average price of $76,626 compared to $58,657 this month.
What does it mean?
If you’re in the market for a Tesla, now is the time to get one. If you were thinking of selling your Tesla, you may want to hang on to it a bit longer, until some stability returns to the market — whenever that may be.
“For shoppers currently in — or now considering entering — the Tesla market, now is the time to research vehicle inventory, secure financing, and determine how current and upcoming EV tax credits will impact your purchase. Price cuts of 20% or more, with incentives, nationwide don’t come around often, so acting now is in your best interest before any corrections in the opposite direction,” said Ivan Drury, Edmunds’ director of insights.
Since the price cuts in the U.S. — as well as in China and Europe — have been announced and the stock price dipped, getting into the $101 range. However, they’ve been on the rebound since then. The stock climbed into the mid $136 range Wednesday before sliding down a closing price $128.78. The stock opened Thursday at $127.26 and it’s pretty much stayed in the $127 range for the day.