After several price cuts this year, the Tesla Model Y now costs less than the average of a new car in the US – EV or not. That’s the conclusion of a recent interview Bloomberg The article compares the Tesla Model Y rebate to the average new car price in 2023.
The base price of the Model Y has fallen 24% since January, the steepest price drop of any Tesla model, Bloomberg noted, adding that the Model Y and Model 3 are related yet. ever priced below the worldwide average of a new car. WE
The current base price is $49,990, $2,241 more than the average price of a new car in the US, but the Model Y is also expected to qualify for the federal tax credit. full 7,500 dollars. That reduces the actual price to $42,490, about $5,300 less than the average price paid for a new car in the US in March, according to the report citing Edmunds data.
Tesla has started a price war between batteries and internal combustion engine cars, and it’s only just begun pic.twitter.com/enFzoeuDtV
– Tom Randall (@tsrandall) April 14, 2023
Bloomberg views these price drops as transformative. Tom Randall, the author of the paper, wrote that the closest analogy to the Model y price drop might be Ford’s drop in the Model T price in the 1920s, and tweeted that Tesla has begun a price war with internal combustion automakers.
However, other factors may be at play. This could be a signal that the pending Model 3 and Model Y refresh is near. Tesla discloses product information only as part of financial updates and tweets from its CEO; but if Bloomberg analysis is any predictor, it might be soon.
In the end, though, Tesla’s latest sales figures indicates that even with the price cuts, the company is still lagging behind in deliveries compared to production—a sign that the company may need to cut prices even more. That said, Tesla has made a lot of profit where EVs grow strongly—like California—and it is the only electric vehicle manufacturer that has really stepped up to meet demand.
2023 Tesla Model Y – Courtesy of Tesla, Inc.
Tesla has struggled to meet strong EV demand in the past. In 2016, after Tesla announced the Model 3, demand for the model startled even CEO Elon Musk. In 2021, after Tesla started raising prices, the company pointed to a “deep awakening of desire for electric vehicles” that has catch it off guard.
The established automakers are also weighing electric vehicle costs and potential demand, but with a different calculation than Tesla. Stellantis’ operator for Ram calls electric car price pressure the “elephant in the room”, and the idea of an electric car price war is what Ford CEO Jim Farley has been prepared for.
Unlike Tesla, however, automakers like Stellantis and Ford have gasoline-powered car sales as a backup revenue source. A recent report from S&P Global Mobility emphasized that especially due to increased competition, full-line automakers need the profits from large gasoline-powered pickup trucks to support electric vehicle investment and expansion.
