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…
FTC: We use income earning auto affiliate links. More.
Tesla has started to release its (Supervised) Full Self-Driving (FSD) v14 update, its first significant update in a year, to customers.
Here are the full release notes:
In late 2024, Tesla began rolling out FSD v13 to owners with the latest HW4 computers installed in their vehicles.
It has been the last significant update to Tesla’s “Full Self-Driving” program despite CEO Elon Musk again claiming that the automaker was on the verge of solving “unsupervised self-driving.”
Tesla’s excuse for not releasing any significant update for almost a year was that the team was instead working on its “Robotaxi” service in Austin, Texas.
FSD v14 has been described as Tesla using what it learned from the Robotaxi program and rolling it into software for its consumer vehicles.
Musk has been hyping the update for the last few months. He first said it would come in September, but he revealed that Tesla found a “bug”, which delayed the release to late Monday night.
Tesla HW4 owners are now starting to download the update.
Here are the full release notes for FSD v14:
Tesla FSD v14 release notes
- Added Arrival Options for you to select where FSD should park: in a Parking Lot, on the Street, in a Driveway, in a Parking Garage, or at the Curbside.
- Added handling to pull over or yield for emergency vehicles (e.g. police cars, fire trucks, ambulances).
- Added navigation and routing into the vision-based neural network for real-time handling of blocked roads and detours.
- Added additional Speed Profile to further customize driving style preference.
- Improved handling for static and dynamic gates.
- Improved offsetting for road debris (e.g. tires, tree branches, boxes).
- Improve handling of several scenarios, including unprotected turns, lane changes, vehicle cut-ins, and school buses.
- Improved FSD’s ability to manage system faults and recover smoothly from degraded operation for enhanced reliability.
- Added automatic narrow field washing to provide rapid and efficient front camera self-cleaning, and optimize aerodynamic wash at higher vehicle speeds.
- Added alerting for residue build-up on the interior windshield that may impact front camera visibility. If affected, visit Service for cleaning!
Upcoming Improvements:
- Overall smoothness and sentience
- Parking spot selection and parking quality
Full Self-Driving (Supervised)
Under your supervision, Full Self-Driving (Supervised) can drive your Tesla almost anywhere. It will start from a parked position, make lane changes, select forks to follow your navigation route, navigate around other vehicles and objects, make left and right turns and park at your destination. You and anyone you authorize must use additional caution and remain attentive. It does not make your vehicle autonomous. Do not become complacent.
Full Self-Driving (Supervised) is enabled on your vehicle. To use the feature, press the Start Self-Driving button on the UI, or press the right scroll wheel button once. You can disable Full Self-Driving (Supervised) in Autopilot Settings.
UI Improvements
- Start Self-Driving with a tap of the touchscreen from Park, or any time during your drive.
- Adjust settings like the Speed Profile and Arrival Options directly from the Autopilot visualization on the center display.
Speed Profiles
FSD (Supervised) will now determine the appropriate speed based on a mix of driver profile, speed limit, and surrounding traffic.
- Introduced new Speed Profile SLOTH, which comes with lower speeds & more conservative lane selection than CHILL.
- Driver profile now has a stronger impact on behavior. The more assertive the profile, the higher the max speed.
- Right scroll-wheel up/down now adjusts Speed Profile setting rather than your precise max speed offset selection in mph/kph.
Arrival Options
- You can now select an arrival option such as Parking Lot, Street, Driveway, Parking Garage and Curbside for Robotaxi-style drop offs.
- Your preferences for arrival options and preferred parking positions are persisted for each destination.
- Our reasoning model will assess the suitable options for your destination and pick an intuitive default.
Brake Confirm
Brake Confirm for the Start Self-Driving button is now defaulted off. When disabled, Start Self-Driving will not require you to press and release the brake to confirm engagement.
You can enable Brake Confirm in Autopilot > Brake Confirm.
Electrek’s Take
This is exactly what we expected. Tesla is adding some of the features of Robotaxi, such as improved parking capabilities at your destination, and much-needed performance upgrades after a year of regression based on crowdsourced data.
As I previously stated, I expect at best a 2 to 3x improvement in miles between critical disengagement, which sounds great until you realize that that brings Tesla to a max 1,200 miles between critical disengagement and the automaker needs to be closer to 10,000 miles for a limited unsupervised ride-hailing service, and then 700,000 miles to be level 5 safer than humans as promised.
We will have to wait a few days, and ideally a few weeks, to gather enough data to gauge the significance of those improvements.
As usual, I like to point out that FSD would be truly impressive and likely a praised product if it were sold and marketed for what it is: a level 2 driver assistance system.
However, we have to compare it against what Tesla is selling and claims it will become: a level 4 fully autonomous driving system – something it is not.
FSD still requires driver attention at all times and can make very dumb and dangerous mistakes.
Furthermore, Tesla is clearly starting to reach the limits of HW4, even though it will likely need to ~10x performance from FSD v14. It means that, as Tesla already admitted with HW3, the automaker has sold “Full Self-Driving” on cars that don’t have the hardware to make it a reality.
FTC: We use income earning auto affiliate links. More.
Zero Motorcycles, one of the world’s leading Western electric motorcycle manufacturers, announced that it is relocating its global headquarters from California to the Netherlands. The move marks a major strategic shift for the company as it doubles down on Europe, which has long been its largest market for electric two-wheelers, despite the American company’s US base of operations.
According to Zero, the transition will bring key global functions together in a new European hub while maintaining its California location as the company’s long-term “Innovation Center” for R&D and engineering. The move allows the company to keep a toehold in the states while transferring its main operations to Europe.
The electric motorcycle maker says its US location will still support a team working on Zero’s powertrains and next-generation models, maintaining the company’s technological roots in the US as leadership and global operations move overseas.
“Zero has led the electric motorcycle category for nearly two decades,” said CEO Sam Paschel. “With Europe setting the pace for EV adoption, moving key headquarters functions into the Netherlands allows us to respond faster to customer needs and strengthen our global operations. This is about focus, discipline, and ensuring we lead the transformation of the powersports industry.”
The decision follows a period of what Zero says is rapid expansion for the company in Europe, where the electric motorcycle maker has reported strong growth in both retail and fleet segments. With the Netherlands serving as a central hub, Zero aims to increase agility, streamline operations, and enhance collaboration with suppliers and distributors across the continent.
The move follows a pattern for Zero, which has seen an increasing reliance on overseas operations, from production to marketing and sales. While Zero originally touted its US-based manufacturing, its components and production have increasingly relied on Asian manufacturing, and recent partnerships have seen its most affordable models being produced nearly entirely by its Asian partners for marketing and sale by Zero.
But despite the global shift, Paschel emphasized that Zero remains committed to the US market. The company plans to continue working closely with its American dealers and investing in local sales and service infrastructure.
To support the transition, Zero’s primary shareholder has committed $50 million in new funding, which the company says will accelerate its transformation and reinforce its leadership in the electric motorcycle sector.
“Our brand, our technology, and our global reach give us unmatched credibility and capabilities,” Paschel added. “Tightly coordinating our global headquarters functions in Europe ensures we remain the clear leader in electric motorcycles and sets the stage for the most exciting chapter in the company’s history.”
FTC: We use income earning auto affiliate links. More.
Environment
Trilogy Metals shares soar nearly 200% in premarket after U.S. takes stake in minerals explorer
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports2 years agoStory injured on diving stop, exits Red Sox game
-
Sports2 years agoGame 1 of WS least-watched in recorded history
-
Sports3 years agoButton battles heat exhaustion in NASCAR debut
-
Sports3 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment1 year agoHere are the best electric bikes you can buy at every price level in October 2024