Tesla’s Model Y Now Costs Less Than the Average New Car in the U.S.

Summary:

• Tesla’s latest price cuts reduce the Model Y’s starting price by 24%, making it a more affordable option for buyers.
• The base versions of the Model 3 and Y are now cheaper relative to the average new vehicle selling price.
• Tesla’s constantly fluctuating prices are putting pressure on other carmakers that are struggling to make money from manufacturing electric vehicles.

Tesla has long stated the Model Y would become the best selling vehicle globally, and we’re already seeing that happening. A new report from Bloomberg states the Model Y now costs less than the average new car in the U.S., thanks to price cuts this year.

Since January, the Model Y has dropped in price by 24%, more than any other Tesla vehicle. With the $7,500 federal tax rebate, the price of a Model Y all-wheel drive with 279 miles of range now costs 10% less than the average price of a new car sold in America, at $42,490 after tax credit. This price is roughly $5,300 less than the average price paid for a new car in the U.S. in March, based on Edmonds data.

The Model 3 after its $3,750 tax credit as of April 18 would take its starting price down to $38,240, less than a BMW 3-series starting at around $44,000.

Analysts are divided on whether Tesla’s price cuts are indicative of weakening demand or part of a long-term strategy to expand its addressable market while cutting costs. Other automakers will now face even more pressure to compete with these price cuts and still generate profits on already razor-thin margins.

Just yesterday, Tesla cut more prices on the Model 3 and Model Y for Europe and Asia.