Tesla Cannot Decide on Its Car Prices

Tesla is changing the prices on two of its most popular models, but they both still qualify for the $7,500 tax credit.

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Tesla cars are seen on a lot at a Tesla dealership on January 03, 2023 in Austin, Texas.
Photo: Brandon Bell (Getty Images)

Tesla is once again changing the price on a handful of its Model 3 and Model Y electric vehicles. According to Reuters, this is the fourth price adjustment done by the Texas-based automaker since the start of 2022. It is increasing the price of the Model Y Performance by $1,000 – bringing the new MSRP to $58,990. On the other hand, Tesla is dropping the price of the rear-wheel drive Model 3 – its cheapest offering – by $500. It’ll now start at $42,990.

Both vehicles are still going to be eligible for the $7,500 federal EV tax credit. The electric vehicle maker first made drastic cuts to prices across its lineup in January, but since then it has almost constantly been adjusting prices by hundreds or thousands of dollars in either direction.

Despite the $1,000 price hike, the Model Y Performance is still about 16 percent cheaper than it was in early January for customers in the U.S., according to Reuters. And, with the new $500 cut, the rear-wheel drive Model 3 is about 9 percent cheaper than it was at the beginning of 2023.


As of right now – and who knows how long this will be true – the price of the other two versions of the Model 3 and Model Y are unchanged.

Reuters reports that Tesla raised the price of the Model Y Long Range earlier this month following the government’s decision to raise the ceiling on the price of crossover EVs eligible for the $7,500 credit. CEO Elon Musk said that strong demand is the reason behind the Model Y price increase. He added that the company would focus on price to drive demand since he thinks the economy is headed toward a recession.


These pricing decisions have also led to some pretty pissed-off customers who were not able to take advantage of better deals.