Tesla Says Price Cuts Made Possible by ‘Normalizing’ Inflation

Tesla on Friday explained that its recent price cuts, which drove down the stickers on its electric vehicles (EVs) by up to a whopping $21,000 USD in the U.S., were made possible by the “normalization of cost inflation” — reports Reuters.

According to the company, the price drops are making its top-selling EVs more accessible to buyers.

“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,” a spokesperson for Tesla Germany said in a statement.

Tesla this week rolled out price reductions of up to 20% in the U.S., 19.5% in Canada, and comparable discounts in Europe. Check out Tesla’s U.S. price changes below:

Model 3

• RWD: $43,990 (was $46,990; $3,000 drop, -6.4%)
• Performance: $53,990 (was $62,990; $11,000 drop, -14%)

Model Y

• Long Range: $52,990 (was $65,990; $13,000 drop, -20%)
• Performance: $56,990 (was $69,990; $13,000 drop, -19%)
• Standard Range AWD 4680 Existing Inventory: $50,990 (was $63,990; $13,000 drop, -20%)

Model S

• Long Range: $94,990 (was $104,990; $10,000 drop, -9.5%)
• Plaid: $114,990 (was $135,990; $21,000 drop, -15.4%)

Model X

• Long Range: $109,990 (was $120,990; $11,000 drop, -9.1%)
• Plaid: $119,990 (was $138,990; $20,000 drop, -13.7%)

Days prior, the company had also lowered pricing in China, South Korea, Japan, Singapore, Australia, and New Zealand.

The news comes as a breath of fresh air following what was a year of frequent price increments caused by supply shortages and rising component prices. In the U.S., eligible buyers will also qualify for a $7,500 federal tax credit on certain Model 3 and Model Y trims until March 2023.

Tesla has also started adjusting existing Order Agreements with customers in the U.S., Canada, and Europe to reflect the new, lower pricing.