Tesla is slashing the prices of its vehicles for the sixth time this year, according to Reuters.
In late April, the company cut $3,000 off the starting price of all three versions of the Model Y, Tesla's top seller, reported TechCrunch. This represented about 6% off the lowest-priced version, the standard all-wheel drive.
The newest Model Y was released earlier this year to tremendous demand. Tesla's Model Y is a versatile mid-size SUV, having the ability to carry seven passengers with its high storage capacity.
At the start of this year, Tesla's cheapest Model Y was selling for $65,990 in the U.S. Then, the company dropped its prices, sparking other electric vehicle (EV) manufacturers to follow suit. The Model Y base price has since nudged up slightly and was $47,240 as of early May. According to Kelley Blue Book, the average price paid for new EVs in February 2023 dropped by 1.8%, or $1,050, from January compared to February.
"Tesla had a very, very strong year," Vince Palomarez of S&P Global Mobility said in an interview with NPR. "They have produced a product that is attractive to a consumer."
According to the Kelley Blue Book website, in February 2023, "incentive spend rose to 3.0%, averaging $1,474, a level not seen since March 2022." With the price cuts, Tesla gained higher sales volumes. Kelley Blue Book estimates that Tesla's sales in February 2023 increased "by more than 44%" compared with its numbers in February 2022.
Tesla's falling costs are also due to some help from the government. Thanks to the price cuts, many of the company's vehicles can now qualify for a federal EV tax credit of up to $7,500. Brand loyalty might play a part in Tesla's sales, but it seems likely that its newly competitive pricing will now contribute to more purchases.
"There is plenty of demand for our products, but if the price is more money than people have, that demand is irrelevant," Elon Musk, Tesla's CEO, said on Twitter.
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