Tesla tries new pricing strategy in the US, announcing temporary Model Y price cut

Tesla appears to be trying out a new pricing strategy in the US, announcing a temporary price cut on the Model Y.

Tesla is known for its frequent price adjustments, increasing or decreasing prices on its vehicles throughout the year, sometimes substantially so. These price adjustments are a double-edged sword, good for the consumer that has been waiting on the sidelines when the prices drop, but not so much for those that have recently purchased their Tesla, only to see some of their equity disappear overnight, and conversely so when prices increase.

This price volatility has an even greater effect on fleet customers who purchase thousands or even tens of thousands of vehicles. With Tesla’s recent trend of cutting prices, fleet customers SAP has had to drop Tesla as one of their vehicles, citing difficulties in planning and the heightened financial risk posed by the automaker’s inconsistent pricing strategy, as the changes are always unannounced and can happen at any time.

Hertz has also seen the effect of the price drops, with the car rental giant announcing it is selling some of its fleet of Tesla vehicles due to the loss of equity, and using the money from those sales to purchase more gas-powered cars.

Now Tesla appears to be trying a different pricing strategy. On Saturday the company dropped the price of the Model Y Rear-Wheel Drive (RWD) and Long Range (LR) variants by US$1,000. While this isn’t out of the ordinary, the online configurator announced the price drop for the first time, with a message saying it was a temporary move for deliveries by February 29, 2024, and that prices “will increase by $1,000 or more on March 1, 2024.” (h/t: @SawyerMerritt)

With the $1,000 price drop, the Model Y RWD now starts at US$42,990, or US$35,490 after the federal tax credit, while the Model Y LR now starts at US$47,990, or US$40,490 after the tax credit.

The Model Y Performance has remained the same at US$52,490.

While there were no price changes for Canada today, Tesla has already been decreasing the price of the Model Y. Over the last week all variants of the electric SUV have dropped by $4,000 or more, meaning all three variants are now eligible for Canada’s $5,000 federal rebate.

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