After huge cuts, Tesla raises Model Y price… but not by much
Tesla has increased prices on new Model Ys, in a slight reversal after drastic cuts just two weeks ago.
The changes went live on Tesla’s website tonight, and only seem to affect the Model Y, Tesla’s most popular vehicle. However, in contrast to the massive price cuts of up to $13K, the Model Y has been bumped in price by just $500.
This brings it to a base price of $53,490, as opposed to $52,990 prior to this bump. The Model 3, X, and S all maintain the same post-cut prices as before.
The recent price cuts came after weeks of signals from Tesla that demand might not have been keeping up supply, with Tesla offering discounts and incentives in various regions as inventory started to pile up. Tesla had hiked prices significantly over the course of 2021-2022 as EV demand far outstripped supply, and had little trouble selling out of vehicles until the end of the year.
We here at Electrek noted that the result of these massive cuts could lead to an EV price war, which Tesla seems poised to do well in. Though this will cut into Tesla’s high margins, its margins are higher than other companies in the space, which gives it leeway to cut prices when supply gets to the point that it can keep up with demand.
And in the weeks since that price drop, Tesla has seen “unprecedented demand” on these vehicles. Not only was the Model Y price dropped by $13K, but this also put it into range to qualify for the US EV tax credit, meaning a $20K price drop for many customers, as long as they take delivery before March when tax credits are expected to change once again.
Notably, today’s price bump does again make a difference for EV tax credit eligibility. At the previous base MSRP of $52,990, up to $2,000 in options could be added before the 5-seat Model Y reached the government’s $55,000 MSRP limit to be eligible for tax credits. This meant that buyers could choose any paint color (which cost up to $2,000) or could choose the $2,000 20-inch wheels and just skate in under the limit.
Now, adding the most-expensive red multi-coat paint color or the 20-inch wheel option take the MSRP above $55,000, which means Model Ys with those options will not qualify. At this point, the only options a 5-seat Model Y can choose to still qualify for tax credits are silver, blue, or black paint or a tow hitch (though the hitch can be added after purchase, which we’d recommend if you’re getting any other options).
Tesla also made another change tonight – it now quotes the actual MSRP of the vehicle upfront, instead of including “potential savings” from gas and incentives:
Tesla has gone back and forth on this over the years. The previous method has been criticized for being potentially misleading, quoting a price far lower than a customer would pay. But Tesla, somewhat correctly, argues that it’s a more realistic comparison in terms of lifecycle vehicle costs. Tesla does offer a calculator so you can figure out your own gas savings based on annual vehicle miles, electricity rate, and gasoline costs, but would previously include average estimates of those upfront, while now they’re behind a “learn more” link:
Electrek’s Take
We’ve received a lot of angry emails recently from Model Y buyers about the price cut, feeling aggrieved that they purchased a vehicle that they could have gotten for cheaper had they just waited a little longer.
But, such is the case with purchases – sometimes the price changes, and sometimes you don’t get the best price. C’est la vie.
That said, this price change was sudden and massive, so the complaints are more reasonable this time around. Usually pricing doesn’t change so much so quickly, and usually those price changes aren’t done by a company that has repeatedly stated that “the price is the price” and that it wants to buck the dealership model and stick with transparent, predictable pricing.
Price bumps like these are a little more reasonable, as a 1% difference in price of a vehicle isn’t going to break most people’s bank. But it still violates Tesla’s “we don’t want to jerk prices around like a dealership” model, given that this happened just under two weeks after a huge price cut. There was one point long ago where it was easy to keep up with Tesla pricing, but that hasn’t been the case for a while now.
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As demand for the Cybertruck can’t reach more than about 10% of Tesla’s planned production capacity, Elon Musk used his privately owned company to try to boost demand.
We now learn that SpaceX has bought tens of millions of dollars’ worth of Cybertrucks – potentially over a hundred million.
Elon Musk said that he expects Tesla to sell as many as 500,000 Cybertrucks per year.
Tesla actually planned to produce up to 250,000 Cybertrucks annually at the Gigafactory Texas. It never came even close to that.
The automaker is extremely opaque about its sales data, bundling Model S, Model X, and Cybertruck sales together.
However, based on registration data and historical split of Model S/X sales, we can estimate that Tesla is having issues selling even 20,000 Cybertrucks per year – less than 10% of its planned capacity.
By definition, the Cybertruck is a commercial flop.
Tesla boasted over 1 million reservations for the vehicle ahead of production, but it is estimated to have converted only about 60,000 of those reservations into orders since production began more than 2 years ago.
There are many reasons for this, but it is primarily because the Cybertruck costs much more than initially announced at the unveiling in 2019 and has less range and fewer cool features than the prototype.
SpaceX to the rescue
Earlier this year, we reported that Tesla started delivering truckloads of Cybertrucks to SpaceX and xAI, Elon Musk’s privately owned companies.
Now, a source familiar with the matter told Electrek that SpaceX bought over 1,000 Cybertrucks from Tesla and that it could ramp up to about 2,000 over time.
Hundreds of Cybertrucks can currently be seen parked in SpaceX’s lots in Southern Texas:
With a base price of $80,000, it would represent between $80 million and $160 million in sales.
It would be a significant help to Tesla’s performance in the fourth quarter, as the automaker is suffering from EV incentives ending in the US at the end of the third quarter, which remains Tesla’s most important market.
Electrek’s Take
SpaceX has been helping out Elon’s other companies quite a bit lately. It has reportedly committed to invest $2 billion into xAI, which is burning cash at an insane rate. Now, they are buying tens of millions to over a hundred million worth of Cybertruck, which are sitting in Tesla’s inventory, making its 4th quarter look even worse than it already is.
Can’t blame him here. This is legal. Although SpaceX investors might have concerns about how smart a purchase this is and what the utilization rate of those trucks looks like.
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Volkswagen’s upcoming family of smaller, more affordable EVs will not be offered with a gas-powered engine. Volkswagen brand boss Thomas Schäfer said small gas cars make no sense, urging “the future in this segment is electric.”
Volkswagen shifts from small gas cars to EVs
During an interview with Auto Motor und Sport (via Ecomento), Schäfer explained that “Offering new gasoline-powered models in the Polo class and below makes no sense in light of future emissions regulations.”
The comments come as the German auto giant prepares to launch its new family of mass-market electric cars, starting with the ID.Polo in Spring 2026.
“The future in this segment is electric,” Schäfer urged, adding that new gas cars would be “too expensive,” and wouldn’t make any sense.
With the Polo-sized electric car due out next year, the report suggests Volkswagen’s upcoming entry-level EVs will not get any sister models with a gas engine. Although the VW brand CEO didn’t say exactly how long it plans to continue selling ICE versions of the Polo and T-Cross, local reports suggest it could still be until 2030.
As for hydrogen-powered cars, Schäfer called them “a sham discussion” for the volume segment. “There simply isn’t enough green hydrogen, the fuel cell is far too expensive, and the technology isn’t efficient either,” he said.
“The only way to quickly decarbonize mass-market cars is through electric drive,” according to Schäfer. The ID.Polo is kicking off a new generation of Volkswagen as its first EV to bear an established brand name.
Volkswagen is set to launch the Polo EV in Europe next Spring, starting at around €25,000 ($30,000). The electric version of the T-Cross, the ID.Cross will follow it in mid-2026. Volkswagen has yet to reveal prices, but the ID.Cross is slated to sit below the ID.4, which starts at around €35,000 ($41,000).
Both will be based on VW’s new MEB+ platform, set to underpin Volkswagen’s upcoming entry-level EV series. An even smaller, lower-priced ID.1 is due out in 2027, which will serve as a replacement for the e-UP!.
Electrek’s Take
Finally, a global OEM has the right idea. Volkswagen appears to be finally on the right path with its new entry-level EV lineup.
Schäfer is correct. Small gas-powered cars don’t have a future, but it’s not just because of stricter emissions rules. Buyers are looking for smaller, more efficient electric vehicles.
Through the first 10 months of the year, electric vehicles accounted for 16.4% of vehicle registrations in Europe, up from 13.2% in October 2024.
According to data from the European Automobile Manufacturers’ Association, the market share of gas and diesel-powered cars fell to 36.6% from 46.3% during the same period.
Chinese and Korean brands, such as BYD, Kia, and Hyundai, are seeing early success in Europe with mass-market EVs like the Dolphin Surf, EV3, and Hyundai Inster EV. Volkswagen looks to grab its share with the ID.Polo and ID.Cross arriving in 2026.
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Environment
Rivian rolls out software update 2025.46, including Universal Hands-Free driving and digital key for Apple and Android users
Rivian has just shared details of its latest over-the-air software update 2025.46, which includes some of the new features announced during its recent AI and Autonomy event last week. The update features a new digital key function for Gen 2 R1 owners, “flavorful” drive styles, kick turns, tuning, and, of course, Rivian’s new Universal Hands-Free driving capabilities.
There’s a lot to unfold with the 2025.46 software update, so we’ll provide a quick recap of our visit to Rivian’s Palo Alto facilities last week for its inaugural AI and Autonomy Day. During the exclusive event, Rivian executives, like founder and CEO RJ Scaringe, unveiled the company’s new in-house designed silicon chip, which will help power its new dedicated autonomy platform.
In addition to adding LiDAR to the upcoming R2 models, Rivian shared plans to expand its Enhanced Highway Assist ADAS to support Universal Hands-Free driving. That includes expanded availability of the feature from 135,000 miles to over 3.5 million miles of roads across the US and Canada.
According to Rivian, this availability is expected to start rolling out in early 2026. However, it appears the process is now underway with its latest software update, which includes a slew of other noteworthy upgrades.
2025.46 includes Rivian’s Universal Hands-Free driving
According to a blog post from Rivian this morning, a key rollout in its end-of-the-year software update is Universal Hands-Free driving, which significantly expands the number of roads on which R1 owners can engage the driving assist feature.
With update 2025.46, Gen 2 drivers can engage Universal Hands-Free on virtually any road where lane lines are clearly marked. Note that this is not a full autonomy feature (yet), so Hand-Free cannot slow or stop at lights or stop signs.
Speaking of autonomy, Rivian is introducing three new Drive Styles for its assisted driving features, including Universal Hands-Free, Highway Assist, Adaptive Cruise Control, and Lane Change on Command. After the update, R1 owners will be able to choose their “spice level” of autonomous functions:
- Mild: A relaxed style with more gap distance and more gradual lane changes.
- Medium: A balanced style to manage cut-ins and accelerate with traffic flow.
- Spicy: A more dynamic style with a tighter gap distance and quicker steering during lane changes.
Another significant bonus, in addition to Universal Hands-Free, is Rivian’s new Digital Key feature for Gen 2 R1 owners. Following the 2025.46 update, owners will now be able to add their R1S or R1T key to their digital wallet on iPhone, Apple Watch, Google Pixel, or Samsung devices. Digital Key provides an additional means of easy access to your EV, as well as the ability to share keys with family and friends.
Other features in software update 2025.46 include a new way to view the Driver Display for both Gen 1 and Gen 2 R1 owners. Per Rivian:
Gen 2 drivers can now switch between the Autonomy view, which shows surrounding lanes and vehicles, and the Maps and Navigation view on the driver display. Gen 1 drivers can switch between the Driver Assistance view, which shows vehicles and objects up ahead, and the Maps and Navigation view on the driver display. Press the right thumbwheel on the steering wheel to swap.
Here’s an example:
Last but not least, Rivian is introducing some exciting new features for R1 Quad owners. Software update 2025.46 includes a new tuner screen from the Rivian Adventure Department (RAD) – “a team of engineers, software developers, and designers who create and test features that push the boundaries of our vehicles.”
The RAD Tuner (seen below) was initially used by teams at Rebelle Rally and Pikes Peak, but is now available to Gen 2 Quad owners. Those drivers will be able to tune beyond Rivian’s factory presets and customize the vehicle’s behavior to their preferences and/or the terrain. Touch sliders control custom, savable drive modes that include factors such as acceleration, torque balance, and stability.
In addition to RAD Tuning, Rivian’s latest software update also includes the ability for Gen 2 Quad drivers to perform Kick Turns. Per the blog post:
Turn makes it easier to steer in tight off-road conditions while moving at speeds under 15 mph (24 km/h). It works by controlling the power and tire grip, letting the vehicle spin about its center, even when it’s moving. You can now make tighter turns with just a simple button press. When you engage Kick Turn, your R1 Quad smartly adjusts the power to the inside wheels, slowing them down or even reversing them. This precise control over wheel slip ensures your vehicle turns exactly as quickly and smoothly as you intend.
Electrek‘s Seth Weintraub tested it out in Lake Tahoe earlier this year, and it’s absolutely incredible. Check it out:
I have a Gen 2 R1S, so I’m looking forward to Universal Hands-Free rolling out so I can test it and report back. Stay tuned. If you haven’t test-driven a Rivian yet, I highly recommend doing so. You can schedule a demo drive at your nearest Rivian Space here.
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