May 05, 2023

Tesla Model Y Now Cheaper Than Average U.S. Vehicle

Throughout the year, Tesla has set the bar for vehicle pricing in the auto industry, as many automakers work to scale their first few electric vehicles. Following Tesla’s sweeping price reductions since the beginning of the year, pricing on the company’s Model Y SUV has officially dipped below that of the average car in the U.S.

Above: A Tesla Model Y (Image: Casey Murphy / EVANNEX).

Tesla’s entry-level Model Y is currently cheaper than the average new vehicle sold in the U.S. in March, according to recent Kelley Blue Book data in a report from Business Insider. The data shows that the average new vehicle in the U.S. was sold for $48,008 in March, while the entry-level Model Y costs just $47,240 at the present time. Buyers of new EVs paid more during the month, averaging about $58,940 for their new cars.

The more-affordable Model Y was quietly added to Tesla’s repertoire early this year, before the company added the lower-range variant to its order configurator in April and reduced it to its current price. Within the past week, Tesla has started raising prices again in the U.S., China and other key markets on its Model 3 and Model Y.

At the beginning of the year, Tesla’s cheapest Model Y was selling for $65,990 in the U.S., before the automaker made multiple price cuts across its lineup. In addition to the Model Y, Tesla also dropped its entry-level Model 3 in recent weeks to $39,990, down from the previous price of $41,990, before increasing it again to the current price of $40,240 in the past few days. Tesla also quietly added the Model 3 Long Range back to its website this week.

The most recent price cut came just after new regulations on the $7,500 federal EV tax credit dropped eligibility for the Model 3 to a reduced $3,750 credit.

The reduced incentive was recently applied to a number of cars in the auto industry, as the new rules are meant to incentivize U.S. components and minerals or those working with North American countries or specific trade partners. The Tesla Model 3 currently uses a Chinese battery pack. Along with federal incentives, some states in the U.S. offer additional buyers’ incentives on qualifying EVs.

You can see current prices across Tesla’s entire lineup below, along with some information on federal tax credit eligibility.

Model 3 Prices

$40,240 - Model 3 Rear-Wheel Drive (federal EV tax credit eligibility: $3,750)
$47,240 - Model 3 Long Range (federal EV tax credit eligibility: $3,750)
$53,240 - Model 3 Performance (federal EV tax credit eligibility: $7,500)

Model Y Prices