Tesla Cut Model Y Prices By $1,000, But This Is Not A Typical Tesla Adjustment

Tesla Model Y

The manufacturer might be experimenting with a new pricing approach.

Tesla applied a special pricing update to the Model Y in the United States. It appears to be a new approach to price adjustments. Instead of simply changing the price like in the past, the manufacturer announced that the price change would only be temporary.

The new Tesla Model Y RWD and Long Range AWD are now $1,000 less expensive, while the Performance version of the car maintained its previous price. However, the change is time-limited and concerns only vehicles that will be delivered by the end of the month (February 29).

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Tesla Model Y is the best-selling car

In 2023, the Tesla Model Y became the best-selling car in the world overall, regardless of the powertrain. It was also the best-selling all-electric car in the U.S., Europe, and China.

This kind of promotion for the Model Y will end, and according to Tesla, prices will increase by “$1,000 or more” on March 1. In other words, the car might be even more expensive then.

The new Tesla Model Y prices:

• RWD: $42,990 (down $1,000 or 2.3% from $43,990)
• Long Range AWD: $47,490 (down $1,000 or 2.1% from $48,490)
• Performance: $52,490 (no change)

When including the destination fee and order fee, as well as the $7,500 federal tax credit, the new effective starting cost is $37,130. The entry-level Model Y RWD has an EPA range of 260 miles, according to Tesla.

* Tesla adds a Destination fee (DST) of $1,390 and an Order Fee of $250 to all its models ($1,640 total).

We don’t know what caused the adjustment or why it has a different form this time, but it might be a test.

Tesla analytic Sawyer Merritt (@SawyerMerritt / X) also noted that it seems to be a new thing to boost sales within the quarter.

There is more to the story. That’s because Tesla forecasts a notably lower growth rate in 2024 than in previous years. A price reduction might be a necessity.

In 2023, the relatively high level of growth of EV sales was achieved in large part thanks to big price cuts, accompanied by the updated $7,500 federal tax credit in the U.S.

According to Tesla-focused analytic Troy Teslike (@TroyTeslike / X), recently Tesla reached a point at which the supply of new cars exceeds demand. There are no long queues of orders and estimated delivery times are relatively short (excluding the all-new Cybertruck). Plants might have some spare production capacity.

Another important factor is the upcoming refresh of the Tesla Model Y (similar to the Tesla Model 3 “Highland”), which might be ready within a few months. The introduction of a new Model Y in the could also be a reason behind price adjustments.