Tesla has hiked prices on its Model Y in the US, apparently due to increased demand and changes in US government regulations to make more versions of the small SUV eligible for tax credits.
The Austin, Texas, electric vehicle company raised the price of the Model Y Long Range Edition by about 2% to US$54,990 and the Performance Edition by about 2.7% to US$57,990, according to its website. Prices do not include shipping and ordering charges.
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The moves on Friday come three weeks after Tesla cut prices by nearly 20% on some versions of the Model Y, the company’s best-selling vehicle. The price cut was done to boost declining demand, and also to make more versions of the Model Y eligible for the US$7,500 electric-vehicle tax credit in the Inflation Reduction Act. The full tax credit will be available through at least March.
On Friday, the Treasury Department revised vehicle classification definitions to make more EVs – including SUVs made by Tesla, Ford and General Motors – eligible for the full US$7,500.
The change came after lobbying by automakers, which pressured the Biden administration to change the definition of a vehicle to allow higher-priced vehicles to qualify for the maximum credit. Tesla CEO Elon Musk met with the president’s top aides Joe Biden Last week to discuss the broader goals of the EV industry and electrification.
Under the sweeping legislation approved last summer, pickup trucks, SUVs and vans with a sticker price of up to $80,000 qualify for the EV tax credit, while new electric cars, sedans and wagons can only cost up to $55,000. The rule disqualified some high-priced SUVs, such as GM’s Cadillac Lyric and some versions of the Model Y, prompting complaints from Tesla and other automakers.
The January price cut apparently worked. On Tesla’s earnings conference call last week, the CEO Elon Musk Said that the company has received the highest number of orders in the history of the company so far in January. He also said that the company had raised the price of the Model Y “in response to that a little bit”.
After Tesla cut prices, Ford responded by lowering the price of its Mustang Mach-E to qualify for tax credits and boost buyer interest. But crosstown rival General Motors said it has no plans to cut EV prices.
The EV tax credits are among the changes implemented in the Inflation Reduction Act, which Congress approved in August with only Democratic votes. The law is designed to encourage EV sales as part of a broader effort to reduce planet-warming greenhouse gas emissions.
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But a complex web of requirements, including vehicles and batteries that must be manufactured to qualify, has cast doubt on whether buyers can receive the full US$7,500 credit.
The Treasury Department said Friday that it hopes to make it easier for consumers to know which vehicles qualify for the credit. Treasury said that under the revised rule, vehicle classification would be determined by a consumer-facing fuel economy labeling standard, rather than a more complex formula set by the Environmental Protection Agency.
A message was left on Saturday seeking comment from Tesla on the price hike. The increase was reported Friday night by Bloomberg News.
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