Tesla has recently announced that it will be increasing the price of its Model Y vehicle due to a change in the US tax credit rule. This change is expected to have an impact on the price of the vehicle and consumers will have to bear the cost of the adjustment.
Tesla Increases Price of Model Y
Tesla has announced an increase in the price of its Model Y vehicle. The company has cited a change in the United States’ tax credit rule as the reason for the increase. The Model Y, which was first released in 2020, is a full-size electric SUV and is one of Tesla’s most popular vehicles. It has a starting price of around $50,000 before any tax credits and incentives.
US Tax Credit Change Cited
The US tax credit rule change that Tesla has cited as the reason for the price increase is that the federal tax credit for electric vehicles has been set at $7,500 from $3,750. This change was announced by the US government under the Inflation Reduction Act and will stay in effect until at least March 2023. Tesla, as well as some other electric vehicle manufacturers, have been quick to adjust the prices of their vehicles to account for the change in the tax credit.
Price Increase Impacted by New Rule
The amount of the price increase that Tesla has announced for the Model Y is approximately 2% to roughly $54,990. The performance version will be increased by 2.7% to roughly $57,990. This increase is due to the fact that the Model Y needs to be eligible for credits from the Inflation Reduction Act. According to the comprehensive law passed last summer, new electric cars, sedans, and wagons can only be priced up to $55,000, while pickup trucks, SUVs, and vans with a sticker price up to $80,000 are eligible for EV tax credits.
Consumers to Bear Cost of Adjustment
The price increase of the Model Y will be borne by the consumers. Basically, whenever the US government offers tax credits, automakers move to take a percentage of those tax credits to consumers by raising their prices. It effectively allows the US government to subsidize the price of EV makers directly which usually raises complaints from other countries to the WTO. However, if all countries agree to offer some form of EV credits to consumers, then it’s seen as largely a wash.
Tesla $TSLA Stock Chart
Tesla $TSLA stock is trading in a bullish uptrend channelUptrend and downtrend channel patterns are technical analysis tools used to identify potential future price movements. They are formed by two parallel lines on a chart and can be u... and has recently retaken its 50 day moving average for the first time since September 2022. However, the stock is approaching 200 day moving average resistance. The stock is in a technical downtrend.
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