Amid demand concerns, Tesla cuts prices by up to $13k in US
Tesla has massively cut prices across new models in the US, with the largest price drop occurring on the Model Y, which is now $13k and 20% cheaper than it was yesterday.
The changes just happened on Tesla’s website and seem to cover all models.
Over the course of the last year or so, Tesla has continually raised prices on all of its vehicles as demand for EVs has been extremely high. While Tesla’s sales and production have been growing rapidly, demand for EVs has also been growing, and supply of EVs has not been able to keep up.
Other automakers have been raising prices too, though some more modest than others.
But in recent weeks we’ve finally seen some signs that Tesla might need to shore up demand, or at least that the price hikes have gone a little too far. The first and most aggressive cuts so far have been in China, but several other markets are seeing discounts and incentives added to help move vehicles as inventory has grown.
These price drops even led to protests in China from recent buyers who felt like they overpaid, to whom Tesla declined to offer compensation.
Here are the new and old prices for Tesla’s various models:
| Model | Old price | New price | Difference |
| Model 3 | $46,990 | $43,990 | -$3k (-6%) |
| Model 3 Performance | $62,990 | $53,990 | -$9k (-14%) |
| Model Y | $65,990 | $52,990 | -$13k (-20%) |
| Model Y Performance | $69,990 | $56,990 | -$13k (-19%) |
| Model S | $104,990 | $94,990 | -$10k (-10%) |
| Model S Plaid | $135,990 | $114,990 | -$21k (-15%) |
| Model X | $120,990 | $109,990 | -$11k (-9%) |
| Model X Plaid | $138,990 | $119,990 | -$19k (-14%) |
Other configurations, including Performance models, have also received price cuts, with the largest being the $21k (15%) reduction on the “Plaid” Model S. However, there is one significant price hike – the 7-seat option on the Model Y is now $4,000, rather than the $3,000 it used to be.
Among other things, this means that the base 5-seat Model Y now qualifies for the $7,500 EV tax credit in the Inflation Reduction Act. The 5-seat Model Y configuration was previously left out of qualifying since it’s considered a “car” rather than an “SUV” by government rules, which take into account a number of factors. This means that it needs an MSRP of under $55k to qualify, which base models now do.
So in addition to the $13,000 price drop, the base Model Y is another $7,500 cheaper for those who qualify for the full tax credit, meaning a Model Y ordered today could be more than $20k cheaper than one ordered yesterday.
Recently, Tesla CEO Elon Musk called for the government to reconsider this longstanding definition of “SUV,” which has been in place since before the Model Y went into production. He asked his followers to comment on the matter, but the public comment link in question looks to pertain to an annual update to the tax credit form, not to the tax credit qualifications themselves (his company’s lawyers might have told him about this, or he might have read it himself, if he weren’t spending all of his time doomscrolling on twitter).
Previously, Musk had called for the government not to pass the bill extending tax credits, saying that Tesla did not need these credits to be successful.
Electrek’s Take
After a year of price hikes, it’s about time that we got a few price drops. Tesla may now be the top luxury brand in the US, but the original concept behind the Model 3 and Y were to be the “people’s vehicles,” closer to the low-end of the luxury segment than the mid or high end.
The original launch price of the Model 3 was supposed to be $35k, and the Model Y was supposed to be $40k.
Yesterday’s prices of $46,990 and $65,990 (!) didn’t look anything like those original numbers, so it’s great to now see some prices a lot closer – still not quite there, even after the federal tax credit, but closer.
And, while there definitely seem to be demand concerns across various markets, including North America, much of this must be attributable to the large price rises Teslas have seen in the last year. These cuts finally get us heading in the right direction in terms of price, and should spur significant additional demand. But in addition, CEO Musk has been doing his part to turn customers away with his social media antics, causing many people who would otherwise consider Teslas to look at other brands instead.
These price cuts will reverse the price portion of Tesla’s demand concerns, but it remains to be seen whether customers will remain turned off by the brand destruction to which its CEO seems committed.
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EV sales kept up their momentum in December 2024, with incentives playing a big role, according to the latest Cox Automotive’s Kelley Blue Book report.
December’s strong EV sales saw an average transaction price (ATP) of $55,544, which helped push the industry-wide ATP higher, according to Kelley Blue Book. The December ATP for an EV was higher year-over-year by 0.8%, slightly below the industry average, and higher month-over-month by 1.1%. Tesla ATPs were higher year-over-year by 10.5%.
Incentives for EVs remained elevated in December, although they were slightly lower month-over-month at 14.3% of ATP, down from 14.7% in November.
EV incentives were higher by an impressive 41% year-over-year and have been above 12% of ATP for six consecutive months. Strong sales incentives, which averaged more than $6,700 per sale in 2024, were one reason EV sales surpassed 1.3 million units last year, according to Cox Automotive, a new record for volume and share.
(My colleague Jameson Dow reported yesterday, “In 2024, the world sold 3.5 million more EVs than it did in the previous year … This increase is larger than the 3.2 million increase in EV sales from the previous year – meaning that EV sales aren’t just up, but that the rate of growth is itself increasing.”)
Kelley Blue Book estimated that in December, approximately 84,000 vehicles – or 5.6% of total sales – transacted at prices higher than $80,000 – the highest volume ever. KBB lumps gas cars and EVs together into this luxury vehicle category, so this is where Tesla Cybertruck is slotted.
However, Tesla bundles sales figures of Cybertruck with Model S, Model X, and Tesla Semi(!) into a category it calls “other models,” so we don’t know for sure exactly how many Cybertrucks Tesla sold in Q4, much less in December. However, Electrek‘s Fred Lambert estimates between 9,000 and 12,000 Cybertrucks were sold in Q4, and that’s not a stellar sales figure.
What will January bring when it comes to EV ATPs? What about tax credits? Check back in a month and I’ll fill you in.
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Tesla is now claiming that Cybertruck was the ‘best-selling electric pickup in US’ last year despite not even reporting the number of deliveries.
There’s a lot of context needed here.
As we often highlighted, Tesla is sadly one of, if not the most, opaque automakers regarding sales reports.
Tesla doesn’t break down sales per model or even region.
For comparison, here’s Ford’s Q4 2024 sales report compared to Tesla’s:
You could argue that Tesla has fewer models than Ford, and that’s true, but Tesla’s report literally has two lines despite having six different models.
There’s no reason not to offer a complete breakdown like all other automakers other than trying to make it hard to verify the health of each vehicle program.
This has been the case with the Cybertruck. Tesla is bundling its Cybertruck deliveries with Model S, Model X, and Tesla Semi deliveries.
Despite this lack of disclosure, Tesla has been able to claim that the Cybertruck has become “the best-selling electric pickup truck” in the US in 2024:
It very well might be true. Ford disclosed 33,510 F-150 Lightning truck deliveries in the US in 2024 while most estimates are putting Cybertruck deliveries at around 40,000 units.
Those are global deliveries, but Tesla only delivered the Cybertruck in the US, Canada, and Mexico in 2024, and most of the deliveries are believed to be in the US.
However, there’s essential context needed here, as we highlighted in our recent ‘Tesla Cybertruck sales are disastrous‘ article.
First off, Tesla had a backlog of over 1 million reservations for the Cybertruck that it has been building since 2019. This led many to believe Tesla already had years of demand baked in for the truck and that production would be the constraint.
However, based on estimates, again, because Tesla refuses to disclose the data, Cybertruck deliveries were either flat or down in Q4 versus Q3 despite Tesla introducing cheaper versions of the vehicle and ramping up production.
Again, that’s after just about 40,000 deliveries.
Furthermore, with almost 11,000 deliveries in Q4 in the US, Ford more likely than not outsold Cybertruck with the F-150 Lightning in Q4.
Electrek’s Take
Tesla is in damage control here. There’s no doubt that it is having issues selling the Cybertruck.
Inventory is full of Cybertrucks and Tesla is now discounting them and offering free lifetime Supercharging.
Tesla is great at ramping up production, and it’s clear the Cybertruck is not production-constrained anymore. It is demand-constrained despite having over 1 million reservations.
Again, those reservations were made before Tesla unveiled the production version, which happened to have less range and cost significantly more.
The upcoming cheaper single motor version should help with demand, but I have serious doubts Tesla can ramp this program up to more than 100,000 units in the US.
As a reminder, Tesla installed a production capacity of 250,000 units annually and Musk said he could see Tesla selling 500,000 Cybertrucks per year.
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