DETROIT (AP) – Tesla has raised prices on its Model Y in the United States (US) apparently due to rising demand and changes in US government rules that make more versions of the small SUV eligible for tax credits.
The Austin, Texas, electric vehicle company bumped up the price of the Model Y Long Range version by about two per cent to USD54,990 and the Performance version by about 2.7 per cent to USD57,990, according to its website. The prices exclude shipping and an order fee.
The moves come three weeks after Tesla cut prices nearly 20 per cent on some versions of the Model Y, the company’s top-selling vehicle. The price cuts were made to boost sagging demand, and also to make more versions of the Model Y eligible for the USD7,500 electric-vehicle tax credit in the Inflation Reduction Act.
The full tax credits will be available at least into March.
On Friday, The Treasury Department revised vehicle classification definitions to make more EVs – including SUVs made by Tesla, Ford and General Motors – eligible the full USD7,500.
The change came after lobbying by automakers that had pressed the Biden administration to change vehicle definitions to allow higher priced vehicles to qualify for a maximum credit.
Tesla CEO Elon Musk met with top aides to President Joe Biden last week to discuss the EV industry and the broader goals of electrification.
Under the sweeping law approved last summer, pickup trucks, SUVs and vans with a sticker price up to USD80,000 qualify for EV tax credits, while new electric cars, sedans and wagons can only be priced up to USD55,000. The rule had disqualified some higher-priced SUVs, such as GM’s Cadillac Lyriq and some versions of the Model Y, prompting complaints from Tesla and other automakers.
The January price cuts apparently worked. On Tesla’s earnings conference call last week, CEO Elon Musk said that so far in January the company had seen the strongest number of orders year-to-date in company history. He also said the company had raised the Model Y price “a little bit in response to that.”
After Tesla’s price cuts, Ford responded by reducing the price of its Mustang Mach-E, in part to qualify for the tax credit and also to spur buyer interest. But crosstown rival General Motors said it had no plans to cut EV prices.
The EV tax credits are among a host of changes enacted in the Inflation Reduction Act, which Congress approved in August with only Democratic votes.