The EV model's price climbed by $500 despite previous price cuts of up to $13,000.
Tesla's brand-new Model Y has gone up two weeks after drastically lowering its pricing.
Model Y Price Update
The price updates went live on Tesla's website on Tuesday night, Jan. 24. According to Electrek, they seem to apply exclusively to the Model Y. The said model is Tesla's best-selling car.
And although it had seen significant price reductions of up to $13,000, the Model Y's price has increased by just $500.
The new starting price is $53,490, up from $52,990 before the increase. Meanwhile, the costs for the Model 3, X, and S have not changed in response to the discount.
EV Demand
Tesla has been sending signs for weeks that demand may not be keeping up with supply. Moreover, the company has been giving discounts and incentives in different places as inventory has begun to build up, leading to the current price drops.
Tesla drastically increased prices in 2021 and 2022 as demand for electric vehicles (EVs) exceeded supply, and the automaker had a little issue selling out of cars by the end of last year.
Electrek previously pointed out that a price war for EVs may emerge from these massive discounts and that Tesla would likely do well in such a market. Tesla's strong margins will take a hit, but those margins are still larger than those of its competitors, giving the company room to lower prices when supply catches up to demand.
In the weeks after the price cut, Tesla reported "unprecedented demand" for these EV models.
See Also: Tesla Model Y Delivery Wait Time in Europe Extends - Is it Due to the Price Cut?
The Tesla logo is displayed on a Tesla car on April 26, 2021 in Corte Madera, California. Tesla will report first quarter earnings today after the closing bell.
EV Tax Credit Eligibility
Aside from the $13,000 price cut, many buyers will see a further $20,000 in savings if they take possession of the Model Y before March when it is predicted that US EV tax credits will be adjusted again.
Notably, this recent price increase affects EV tax credit eligibility again.
According to Electrek, the 5-seat Model Y previously had a starting MSRP of $52,990, meaning that up to $2,000 in extras could be added before the vehicle exceeded the government's $55,000 MSRP cap for tax credits. That allowed customers to choose whatever paint color they wanted for an additional $2,000 or to go for the $2,000 20-inch wheels and narrowly avoid the price hike.
Model Ys with the most costly red multi-coat paint color or the 20-inch wheel option will now have a base price that exceeds $55,000 and will thus not be eligible for the program. Customers can only earn tax credits on a 5-seat Model Y if it is painted silver, blue, or black and includes a tow hitch, although they may add the hitch later.
See Also: Tesla 2018 Funding Issue Update: Elon Musk Claims Was Supposed to Sell SpaceX to Secure Budget
