Tesla Offers Up to $3750 Discount on Deliveries of Model 3 and Model Y in December
In a move that has surprised many in the automotive industry, Tesla is offering a $3,750 credit to buyers of its Model 3 and Model Y vehicles in the United States. The offer, which was revealed through messages from Tesla dealers to customers, comes as the company prepares for the new year.
Why is Tesla Offering this Discount?
The reason behind this generosity remains unclear, but there are several theories. One possibility is that Tesla wants its customers to take delivery of their vehicles before the end of 2022, thereby boosting its fourth-quarter sales numbers. This theory gains credence in light of the fact that many buyers have been pushing back their delivery dates to next year in order to be eligible for the electric vehicle tax credit.
The Electric Vehicle Tax Credit: A Game-Changer
With President Biden’s Inflation Reduction Act (IRA) set to go into effect on January 1, zero-emissions vehicles will once again become eligible for up to $7,500 in tax credits. However, there are some conditions that must be met in order for buyers to qualify.
- The battery components of the vehicle must have been made or assembled in North America.
- A certain percentage of battery critical materials must have been extracted or processed in countries with which the U.S. has a free trade agreement.
If an automaker can only show that half of these conditions are met, then they will only receive half of the rebate, which is expected to be the case for the next few years given the current sourcing practices of most critical materials from China.
Tesla’s Discount: A One-Time Offer
The $3,750 discount offered by Tesla does not discriminate based on income or vehicle manufacturer suggested retail price (MSRP). However, under the IRA’s tax incentive, single tax filers are eligible if their income is below $150,000; heads of households if income is below $225,000; and joint filers’ if income is below $300,000.
Additionally, new electric cars and SUVs that cost more than $55,000 and $80,000, respectively, do not qualify for the tax credit. The Model 3, a compact car, starts at around $47,000 but can easily go over $66,000 depending on model, trim, and year. The 2022 Tesla Model Y starts at $65,990, but a fully loaded performance model can go for more than $80,000.
A Rare Move by Tesla
It is not common for Tesla to provide discounts, as the company tends to increase its prices instead. However, this move may be part of a larger strategy to boost sales and maintain market share in the face of increasing competition from other automakers.
Tesla’s Market Dominance: Waning?
A recent report from S&P Global Mobility found that Tesla’s market dominance in the U.S. is waning. While the company still holds 65% of the electric vehicle (EV) market, this share has decreased from 79% in 2020 and may drop below 20% by 2025 as other automakers roll out more affordable EVs.
Conclusion
The $3,750 discount offered by Tesla to Model 3 and Y buyers is a one-time offer that allows customers to reap the benefits of the upcoming tax credit before it goes into effect. While the reason behind this generosity remains unclear, it may be part of a larger strategy to boost sales and maintain market share in the face of increasing competition from other automakers.
Related Topics
- Electric vehicles
- Tesla Model 3
- Tesla Model Y
- Electric vehicle tax credit
- Inflation Reduction Act (IRA)
- Battery components
- Critical materials
- Sourcing practices
- Market share
- Competition
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