Key Takeaways
1. Tesla may increase the price of the Model Y due to low inventory and high demand, though this is not guaranteed.
2. The end of the $7,500 federal tax credit has revived interest in the Model Y, with new rules allowing extended eligibility for the credit.
3. A surge in orders for the Model Y has led to significant inventory shortages, especially in areas like Austin.
4. Tesla has removed various promotions for the Model Y, such as 2.99% APR financing, in response to changing demand dynamics.
5. The company has not confirmed if it will raise prices on the Model 3, but it may be influenced by the situation with the Model Y.
Tesla is getting ready to increase the price of the Model Y since their inventory is getting low. They also want to boost factory production to match the demand, which is leading to urgent orders for parts that are turning out to be more expensive.
Uncertain Price Increase
The potential price hike for the Model Y isn’t guaranteed. Tesla’s Vehicle Service leader mentioned they are “trying hard” to avoid this situation. However, based on past trends, Tesla usually raises prices during high demand periods, so we could see a price increase by the end of August.
Demand Shift Due to Tax Credit Changes
After experiencing several quarters of weak sales where demand for Tesla vehicles dropped due to Elon Musk’s political actions and a sluggish EV market, the announcement that the federal government will be ending the $7,500 tax credit has revived interest in the Model Y.
Those looking to purchase a Model Y with the tax credit initially needed to take delivery by September 30. However, the IRS has adjusted its rules to allow a sort of extension on the tax credit deadline. Now, anyone who makes even a small down payment or starts a trade before the third quarter ends will qualify for the government subsidy, even if they receive their vehicle after September 30.
Inventory Shortages and Ordering Chaos
The rush to purchase the Model Y before the federal tax credit runs out has led to a significant ordering frenzy, resulting in places like Austin having no inventory vehicles within a 200-mile area. It seems Tesla was not prepared for such strong demand in this last quarter when the tax credit is still valid, and they are now scrambling to increase production, which might influence the Model Y’s pricing.
Tesla has already removed most of the Model Y promotions that were offered at the start of the quarter, when they were uncertain about the impact of the EV tax credit’s expiration on demand. For example, the Model Y’s 2.99% APR financing deal is no longer available, nor is the complimentary options upgrade for inventory vehicles.
Tesla is also discontinuing the zero APR financing offer for the Model 3 on September 1. However, they haven’t confirmed whether they will be raising prices on their popular sedan as well, which could be related to what’s happening with the Model Y.
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