Tesla is raising the price of two Model Y versions after the Biden admin adjusted tax credit rules following lobbying by Elon Musk
Tesla has raised prices for its Model Y in the US, apparently due to rising demand and changes in US government regulations making more versions of the small SUV eligible for tax credits.
The Austin, Texas-based electric vehicle company increased the price of the long-range version of the Model Y by about 2% to $54,990 and the performance version by about 2.7% to $57,990, according to its website. Prices do not include shipping and order fees.
The moves made on Friday come three weeks after Tesla cut the prices of some versions of the Model Y, the company’s best-selling vehicle, by almost 20%. The price cuts were made to spur falling demand and to qualify more versions of the Model Y for the $7,500 EV tax credit under the Inflation Reduction Act. The full tax credits are available until at least March.
On Friday, the Treasury Department revised vehicle classification definitions to put more electric vehicles — including SUVs from Tesla, Ford and General Motors — under consideration for the full $7,500.
The change came after lobbying from automakers who had urged the Biden administration to change vehicle definitions to allow higher-priced vehicles to qualify for maximum credit. Tesla CEO Elon Musk met with senior advisers to President Joe Biden last week to discuss the electric vehicle industry and the broader goals of electrification.
Under the sweeping law passed last summer, pickup trucks, SUVs and vans with a sticker price of up to $80,000 qualify for EV tax credits, while new electric cars, sedans and wagons can cost as little as $55,000. The rule had disqualified some higher-priced SUVs like GM’s Cadillac Lyriq and some versions of the Model Y, prompting complaints from Tesla and other automakers.
The January price cuts seem to have worked. During last week’s Tesla earnings conference call, CEO Elon Musk said the company had the strongest number of orders in its history in January. He also said the company raised the price of the Model Y “a little bit in response.”
After Tesla’s price cuts, Ford responded by lowering the price of its Mustang Mach-E, in part to qualify for the tax credit and also to attract buyer interest. However, crosstown rival General Motors said it has no plans to cut EV prices.
The EV tax credits are among a series of changes enacted in the Inflation Reduction Act, which Congress passed by a Democratic vote in August. The law aims to boost sales of electric vehicles as part of broader efforts to reduce greenhouse gas emissions that are causing the planet to warm.
But a complex web of requirements, including where vehicles and batteries must be manufactured in order to qualify, has cast doubt on whether buyers can get the full $7,500 credit.
The Treasury Department said Friday it hopes to make it easier for consumers to know which vehicles are eligible for the loan. Under the revised rule, vehicle classifications will be determined by a consumer-focused fuel economy labeling standard rather than a more complicated formula established by the Environmental Protection Agency, the Treasury Department said.
A message was left on Saturday asking Tesla for comment on the price hikes. The increases were reported by Bloomberg News on Friday evening.
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