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Tesla cuts prices in the US and Europe by up to 20 percent

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There are steep discounts on the Model Y, with five-seater versions now qualifying for the federal tax credit.

Tesla is cutting prices throughout Europe and in the US. Reuters reports that prices for a Model Y rear wheel drive have dropped by 17 percent in Germany, with cuts of 20 percent for the Model Y long range in the US. Tesla has also cut prices for its Model X and Model S in the US. The price cuts arrive less than a year after Tesla made multiple price hikes in 2022.

“At the end of a turbulent year with interruptions to the supply chain, we have achieved a partial normalization of cost inflation, which gives us the confidence to pass this relief onto our customers,” says a Tesla Germany spokesperson in a statement to Reuters.

Today’s changes put the prices of the Model 3 and Model Y below the listed price they were at before Tesla’s initial big price hikes almost a year ago. EV researcher Troy Teslike has compiled a list showing the price changes in the US, with the Model Y long range now $13,000 cheaper before the tax credit and $20,500 cheaper including the credit. That’s a 31 percent discount in total after the tax credit.

While some aspects of the EV tax credits will be delayed until March, the new rules mean EVs should be more affordable in the US depending on where cars are built, where batteries are assembled, and where materials for those batteries are sourced from.

The price cuts also mean that the five-seater version of the Model Y will now qualify for the $7,500 federal tax credit. Before the cut, the IRS released a list of vehicles that would qualify for the new incentive, and five-seater versions of Tesla’s popular Model Y weren’t eligible. Tesla CEO Elon Musk initially called the disqualification “messed up” in a tweet replying to a Tesla fan comparing a plug-in hybrid Jeep to the Model Y.

Tesla’s own discounts are clearly designed to push sales across Europe and in the US. Reuters reported earlier this month that Tesla’s quarterly deliveries fell short of market estimates, due to logistical issues and concerns around demand.

Update, January 13th 6:30AM ET: Article updated with statement from Tesla Germany.

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