Tesla price cut becomes a price increase for Model Y


After slashing the price of its popular Model Y crossover by $13,000 this month, Tesla Inc. increased the starting sticker by $500 without explanation.

The cheapest version of the EV, the Model Y Long Range, starts at $53,490, even after a $1,390 shipping fee and a $250 ordering fee. That means they are eligible for the new $7,500 tax incentive that is part of the Inflation Reduction Act signed last year.

The $500 price change appeared on Tesla’s US shopping site on Tuesday.

The standard 2-row Model Y is classified as an automobile by the IRS, so it faces a $55,000 price cap for tax benefits. Shipping and other charges are excluded from the price limit.

A less popular version of the crossover, the three-row Model Y, costs an extra $4,000, is classified as an SUV, and has an $80,000 price cap under interim IRS guidance.

The Treasury Department is still working out regulations on EV credits, with a March deadline to submit final guidelines.

Tesla CEO Elon Musk took to Twitter to complain about classifying the two-row Model Y as a car, prompting Tesla fans to file complaints directly with the IRS. Musk is expected to attend Wednesday’s earnings call after the stock market closes.

Industry analysts saw the $13,000 price cut this month as Tesla’s response to softening demand due to a slowing economy and relatively high prices since automakers raised their stickers significantly over the past two years. His three other Tesla models also got price cuts earlier this month.

But the $500 price drop on the Model Y alone, and not the other models, sparked speculation by fans of the brand on social media on Tuesday. Tesla no longer has a press office and did not respond to emails seeking comment on the price increase.


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