Tesla drops Model 3 and Model Y prices in the US again

Tesla has implemented another round of price cuts in the US, less than 24 hours before the automaker announces its Q1 2023 financial results. The price drop has brought the entry-level Model 3 to below $40,000 USD, before incentives.

After cutting prices earlier this month across their entire lineup in the US, Tesla is now lowering the price on the Model 3 and Model Y by as much as $3,000. Unfortunately there have been no similar price drops in Canada.

Model 3 Price Changes

The entry-level Rear-Wheel Drive (RWD) variant of the Model 3 now starts at $39,990, down from $41,990. Add in the now reduced $3,750 US tax credit effective as of today and the Model 3 could be purchased for $36,240. There was no price change to the Performance variant, and the Long Range is still unavailable to order.

  • Rear-Wheel Drive: $41,990 to $39,990 (-$2,000)
  • Long Range: Unavailable
  • Performance: $53,990 (no change)

Model Y Price Changes

The Model Y price cuts apply to all variants, and they are all the same at $3,000. The newly added Model Y AWD with 4680 cells now starts at $46,990, while the Long Range and Performance variants now start at $49,990 and $53,990 respectively.

All of these prices are before incentives, and unlike the Model 3 RWD, all Model Y variants qualify for the full $7,500 tax credit. Add in state-level incentives, like those available in California and a brand new Model Y can now be purchased for as little as $37,490 in Tesla’s biggest market in the US.

  • All-Wheel Drive: $49,990 to $46,990 (-$3,000)
  • Long Range: $52,990 to $49,990 (-$3,000)
  • Performance: $56,990 to $53,990 (-$3,000)

This big question is how these successive price cuts have impacted Tesla’s industry-leading margins. During the Q4 2022 earnings call, and after the first round of massive price cuts in January, CFO Zachary Kirkhorn said Tesla’s margins were still above 20%. We will find out tomorrow at the Q1 2023 earnings call how much the price cuts since then have cut into their margins, but we won’t see the impact of tonight’s price cuts until the Q2 2023 report, and going by Tesla’s track record so far this year, who knows how many more price adjustments there will be by then.

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