Tesla Cuts Electric Car Prices Overnight

In an unannounced late-night price cut, Tesla has reduced the pricing of all of its vehicles by as much as 23% for a Tesla Model Y Performance and by 6.4% for a Tesla Model 3 RWD.

Last year's Inflation Reduction Act made significant changes to the method in which taxpayer incentives were offered to encourage the purchase of EVs. The government's original tax credit was restricted to 200,000 automobiles per carmaker and had no restrictions on price or income. The new legislation does away with the 200,000 cap, but it does include some restrictions (such as where battery components must be sourced from) for automakers before they can claim the entire $7,500. If you want to know more, we have an article detailing the process.

The IRS has put off providing a final judgement on certain areas until March 31 due to ongoing dispute about the interpretation of the legislation. Both the price cap on cars and the income threshold ($150,000 for singles or $300,000 for couples) are set in stone. The price of a car cannot exceed $55,000 for a standard passenger car or $80,000 for a "SUV."

Before tonight, the Model 3 Performance cost $63,900, making it ineligible. Price reduced to $53,990, which may now be within eligibility range. The Model 3 Performance could be yours for $46,490 if you match the other criteria. Also, the starting price of a Model 3 was reduced to $43,990, making it possible to purchase one for as little as $36,490.

Similarly, the Model Y Long Range went from $65,990 to $52,990. That car ought to be eligible, too. Even though the Model Y’s significant cut (by 23%, the largest), it still likely doesn't qualify for the federal tax credit because it now costs $56,990.

So, if you buy a Model Y now, you can save more than $20,000 compared to if you had placed your order yesterday. In addition to the current discount of 20%, buyers of the basic Model Y can receive a tax credit of $7,500.