Tesla slashes lease pricing on Model 3/Y, expects to lose half tax credit on 3
Hot on the heels of a price drop that makes the Model 3 the cheapest Tesla yet, Tesla has also cut the base lease pricing for Model 3 and Y by $90/month and $100/month respectively.
But the company also now says that it “expects” to lose access to half of the US $7,500 federal tax credit at year’s end, reducing that credit down to $3,750.
Tesla has continued to cut its prices throughout this year, with Model 3 getting another $1,250-$2,250 cut just last week and Model Y LR and Performance trims getting a $2K price cut.
But those price cuts throughout the year didn’t really manifest in lease pricing. Tesla has never really focused on leasing, and lease prices have always been a bit higher on a Tesla than on similarly priced EVs. Last quarter, for example, only about 5% of Tesla’s sales were leased, which is far below the industry average.
But that might be changing with a significant price cut today for Tesla’s leased vehicles.
Last week, Tesla quoted a monthly payment of $419/month for the Model 3 and $499/month for the Model Y on each base model. But today we’re seeing payments of $329/month and $399/month respectively, with the same down payment ($4,500), term (36 months), and mileage (10k/yr) as the previous prices were quoted.
Other trims have seen similar reductions of $70-$90/month off.
Tesla has now placed leasing front-and-center on the Model 3 and Model Y order pages, with the right side of the screen featuring purchase price (or Tesla’s misleading “probable savings” price), and the bottom portion quoting lease pricing, where it used to simply show the purchase price again. It is also easier to access a calculator for leasing/financing options by clicking on that bottom portion.
While Tesla’s website doesn’t state this openly, this price drop could have something to do with the way the EV tax credit works, which allows almost all of its restrictions to be bypassed by leasing vehicles. Most companies have taken advantage of this and are now passing along these lease savings to customers, but Tesla never did.
Again, we don’t know if it’s starting to do this now and passing the savings along, or if it’s still keeping those credits for itself and this lease price reduction is just reflective of the falling prices of Tesla vehicles anyway.
Tesla ‘expects’ to lose half of US tax credit on Model 3
But now it also looks like Tesla expects prices to increase at the end of the year – well, effective prices anyway, given that it now “expects” that half of the tax credit is going away for the Model 3.
The reason for this is that the Inflation Reduction Act tax credits are limited to cars with battery components and raw materials that come from the US or from a free trade partner. The restriction gets stricter each year, and it looks like Tesla thinks it won’t qualify for half of the credit with next year’s tightening of restrictions.
Tesla’s Shanghai factory has been producing Model 3s and components for Model 3s for quite some time now, having produced its 2 millionth EV last month. Some of those components include LFP batteries that make their way into Tesla’s base model vehicles and are made in China, which could be the reason for the reduction.
Before today, Tesla’s website stated on the Model 3’s order page that “reductions are likely after Dec 31.” Other models had seen the same warning at times, but currently the Model Y does not have that warning, rather saying, “Take delivery by Dec 31 for full $7,500 tax credit.”
But today Tesla has changed that warning to say: “$7,500 tax credit expected to reduce to $3,750 on Dec 31 pending federal guidance. Take delivery to guarantee full incentive.”
That said, Tesla has had a confusing history with this portion of the tax credit in the past. At first, the base Model 3 did not qualify for the full $7,500 tax credit upon the IRS’s release of battery guidance, though only a month and a half afterward, Tesla surprised by gaining access to the full credit on the base Model 3. Soon after that, it added the “reductions likely” language to its website, which it has now upgraded to “expected” for the Model 3.
Other models no longer say “reductions likely” – Model Y states, “Take delivery by Dec 31 for full $7,500 tax credit,” but doesn’t include similar language about reductions being likely or expected.
All this talk about tax credits is complicated and may not apply to every buyer, since every buyer can’t necessarily take advantage of the full credit due to the current credit being nonrefundable. But that too is changing on January 1, 2024, when the tax credit will be available upfront at the point of sale, and will then allow lower-income buyers to gain the full credit even if they don’t have enough tax liability to do so, as the IRS confirmed last week.
This might otherwise be a boon for some trying to take advantage of Tesla’s new lower prices, but with this “expected” halving of the tax credit on Tesla’s cheapest model, that news is somewhat bittersweet.
Electrek’s Take
That said, there’s always the chance that this language is just a play by Tesla to sell more cars. There are two potential reasons one might think this: First, Tesla just had a disappointing quarter and may be looking to boost sales. It seemed to know ahead of time that that quarter might be disappointing, too, given its craven limited-time FSD transfer scheme, which seemed targeted solely at boosting sales, rather than doing what’s right for customers who purchased a system several years ago that still doesn’t do what Tesla said it would do.
Second, Tesla just released the highly anticipated Model 3 Highland refresh in Europe, but that isn’t expected to come to the US until early next year. This could mean some buyers want to delay and purchase the new Model 3 with all the new features, but may be lured into buying early with Tesla dangling price drops and potential loss of tax credits in front of them.
Just like when Tesla originally added the “reductions likely” language, which we called “self-serving,” the vagueness of exactly why these credits were gained in the first place, and why they might be lost, makes it difficult to understand what the reason for the credit reduction is, and whether Tesla might just be yanking our chain. A little clarity on this would be nice from Tesla’s, uh… PR department…
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The State of California is moving to ban the sale of Tesla cars amid claims that the company and its CEO, Elon Musk, have misled buyers about the self-driving capabilities of their cars. We’ve also got market-leading news out of Vietnam and a pricey, pricey lesson for one VW ID.Buzz buyer on today’s lesson-learning episode of Quick Charge!
We also ask what this might mean for the recent Uber/Lucid autonomous taxi tie-up and go through a full rundown of the fastest depreciating EVs on the market (and yes, there are four Tesla models in the top 10 … because the Cybertruck was too new to qualify).
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If you’re considering going solar, it’s always a good idea to get quotes from a few installers. To make sure you find a trusted, reliable solar installer near you that offers competitive pricing, check out EnergySage, a free service that makes it easy for you to go solar. It has hundreds of pre-vetted solar installers competing for your business, ensuring you get high-quality solutions and save 20-30% compared to going it alone. Plus, it’s free to use, and you won’t get sales calls until you select an installer and share your phone number with them.
Your personalized solar quotes are easy to compare online and you’ll get access to unbiased Energy Advisors to help you every step of the way. Get started here.
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Sunrun is putting tens of thousands of home batteries to work in Puerto Rico as the island’s electric grid faces a summer of high temperatures and energy shortfalls.
The company says it’s now dispatching energy from over 37,000 residential batteries to help grid operator LUMA keep the lights on. That stored power is being used to prevent rolling blackouts when demand spikes and centralized power plants can’t keep up.
Sunrun’s emergency power contribution has grown more than tenfold since last summer. LUMA expects more than 75 energy shortfall events between now and October, with each dispatch sending electricity to the grid for four consecutive hours. During several recent evenings, Sunrun and other virtual power plant (VPP) operators provided enough energy to offset a 50-megawatt generation gap, LUMA said.
Sunrun CEO Mary Powell said Puerto Rico’s aging infrastructure and intense weather patterns make home battery support increasingly critical:
It’s going to be a very difficult summer, which is why Sunrun has ramped up our dispatch capabilities, using tens of thousands of home batteries to support the grid and people of Puerto Rico.
She added that distributed power plants like Sunrun’s serve the same role as natural gas peaker plants – offering fast, reliable power during high-demand moments – but with clean energy.
Sunrun customers enrolled in the VPP will get paid too. Each participating battery earns about $200 minimum for the season, and customers who allow more of their stored energy to go to the grid earn even more. Sunrun also earns revenue for operating the VPP.
Read more: The US’s largest virtual power plant now runs on 75,000 home batteries
The 30% federal solar tax credit is ending this year. If you’ve ever considered going solar, now’s the time to act. To make sure you find a trusted, reliable solar installer near you that offers competitive pricing, check out EnergySage, a free service that makes it easy for you to go solar. It has hundreds of pre-vetted solar installers competing for your business, ensuring you get high-quality solutions and save 20-30% compared to going it alone. Plus, it’s free to use, and you won’t get sales calls until you select an installer and share your phone number with them.
Your personalized solar quotes are easy to compare online and you’ll get access to unbiased Energy Advisors to help you every step of the way. Get started here.
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Volkswagen is advertising ID.4 leases starting at just $99 a month. It’s hard to find any car lease these days for under $100 a month, but for $45,000 electric SUV, it’s almost unheard of.
Volkswagen offers ID.4 leases as low as $99 a month
The Volkswagen ID.4 was the third top-selling EV in the US in January after the 2025 model year went back on sale.
Volkswagen’s electric SUV starts at $45,095 with an EPA-estimated driving range of 291 miles. It’s available in five different trims: Pro, AWD Pro, Pro S, AWD Pro S, and AWD Pro S Plus.
The base 2025 VW ID.4 Pro RWD is equipped with 282 hp from a single rear electric motor. Inside, it features a 12.9″ infotainment system with Android Auto and Apple CarPlay support, heated front seats, dual-zone climate control, and Volkswagen’s new ID.Cockpit digital instrument display.
Upgrading to the AWD version will gain a tow hitch and an additional 53 hp, for a combined maximum of 335 hp. The added power comes at the cost of some range, with an EPA-estimated range of 263 miles.
Volkswagen was already offering 2025 ID.4 leases as low as $129 a month, but some dealers are listing it for even less this month.
A California dealership, Volkswagen of Garden Grove, has the 2025 ID.4 Pro RWD listed for lease at just $99 per month. The offer is for 24 months with $2,995 down. According to the dealer, the offer includes a $5,000 cash back bonus, good on a new ID.4 purchase or lease.
We thought the 2025 Hyundai IONIQ 5 was a good deal with leases starting at just $179 per month, but for $99, now that’s a steal.
Looking for deals on the Volkswagen ID.4 near you? You can use our link to find and view offers on the 2025 Volkswagen ID.4 in your area (via a trusted affiliate link)
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