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Tesla just announced another enormous price cut on its EV models: 'The desire for people to own a Tesla is extremely high'

However, Tesla is not the only EV company lowering its prices.

Tesla Model S

Photo Credit: iStock

Tesla is known for being a luxury electric vehicle (EV) brand, but it doesn't seem to want to be known for its high prices.

For the fifth time since the beginning of the year, Tesla has announced another drop in its cars' prices. The price cuts ranged between 2% and 6%, with the company lowering the cost of its Model X and Model S by $5,000.

Tesla CEO Elon Musk has directed the EV brand to repeatedly slash prices, hoping that the lower costs would drive more people to buy Teslas. The Model Y has experienced the biggest reduction in price — almost 20% — while the Model 3 now costs about 11% less. 

According to Reuters, during a Tesla investor day event, Musk told the room that "the desire for people to own a Tesla is extremely high. The limiting factor is their ability to pay for a Tesla."

But the drops in price may actually be more significant than they appear. The Clean Vehicle Credit, established as part of The Inflation Reduction Act, is helping Americans make the swap to EVs by giving them up to a $7,500 tax credit if they make the switch.

However, not all EVs qualify. If models are too expensive, buyers won't get the credits. So, lowering the price of these EVs might allow more people to take off an additional $7,500, making Teslas a way more attractive option.  

Musk has also claimed that the reduction in Tesla's profits may be worth it to ensure that the company remains the dominant player in the American EV market space. 

However, Tesla is not the only EV company lowering its prices. Across the board, EVs cost, on average, nearly $8,000 less this February than they did just one year before.

So while EVs may still be unaffordable for many, the price of electric cars is undoubtedly trending cheaper. The New York Times reported that if you consider the tax credits, the cost of EVs could actually match that of gas-powered cars by the end of 2023.

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