Tesla’s latest price cut brings Model 3 pricing below $40,000

Tesla has slashed its electric vehicles’ prices for the sixth time this year, on the eve of its next earnings report. It has quietly lowered the price for the Model 3, so that the the rear-wheel drive variant now starts at $39,990 or $2,000 less than what buyers would pay for it as recently as earlier this month. If you’ll recall, the automaker already cut $1,000 off its price and started selling it for $41,990 the last time it implemented price cuts just a couple of weeks ago. And earlier this year, Tesla cut its prices quite drastically across its lineup, with some models getting a price drop of as much as 20 percent.

As Tesla notes on its website, though, the rear-wheel drive model now only qualifies for $3,750 in tax credits after the government’s change in guidelines took effect on April 18th. The new rules are related to the US cutting off China as an approved trading partner, which would lead to EVs using China-made batteries losing tax credits as a result. To note, Tesla’s other cars are still eligible for the full $7,500 tax credits, including the Model Y vehicles that also got a price cut. 

The base, the Long Range and the Performance Model Y vehicles now cost $3,000 less than before. The base Model Y will now set buyers back $46,990, while the Long Range and Performance vehicles now cost $49,990 and $53,990, respectively. When Tesla reported its earnings for 2022 in January this year, Elon Musk said the company was seeing orders “almost twice the rate of production.” According to Bloomberg, though, Tesla was unable to sustain that rate of demand and has made the lowest number of deliveries in the first quarter of this year since 2021. Since the company reportedly produced thousands of vehicles more than it handed over to customers, these price cuts were likely implemented to sell existing inventory and to drum up demand going forward.

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