Tesla quietly reverses its price cuts after the IRS Revises Electric Vehicle Tax

The Tesla Model Y has been $1,500 more expensive over the past three weeks. Shen Chunchen/VCG via Getty ImagesTesla is slowly raising prices on Model Y in a quiet reversal from its dramatic price cuts last week that boosted sales of electric cars.

According to the company’s website, Elon Musk-run on February 3 raised the Model Y Long Range price by $1,500 to $54,990, and the Performance version by $1,000, to $57,990. Prices include shipping and order fees.

These price increases were made possible by the Treasury Department’s vehicle classification rules. This allows Tesla Model Y to be eligible for federal tax rebates under Inflation Reduction Act (IRA), at a higher retail price. For buyers who are eligible for the credit, the rule change could make the vehicle $7,000.

All five-seat Model Y models were considered small passenger cars before February 3, and are subject to the $55,000 price limit for vehicles that qualify for federal tax rebates. Trucks, vans and sports utility vehicles (SUVs) are allowed to retail at a higher price of $80,000. The SUV category was reserved for the Model Y, which has seven seats.

The Model Y, regardless of how many seats it has, is still considered an SUV by federal agencies like the Environmental Protection Agency or the National Highway Traffic Safety Administration. Tesla enthusiasts started petitions to have the IRS change its classification. According to the Associated Press, Musk met with top aides of President Joe Biden last Wednesday to discuss the EV market.

According to the Treasury Department, Feb. 3 was the result of changing its standard for a consumer-facing EPA Fuel Economy Labeling System from a more complex industry system.

Tesla slashed prices on various Model Y models by up to 20% in January so they could be eligible for the federal tax credit. The prices for Model 3 were also reduced, but only by a smaller amount. A Model Y entry-level was instantly 30% cheaper after the tax credit.

Tesla’s U.S. inventory of new cars dropped more than half due to the drastic price reductions. In late January, Tesla quietly increased the Model Y’s cost by $500. Musk stated that the price hike was due to strong demand during Tesla’s earnings conference last week. Musk stated that the price reductions in January resulted in the company receiving its highest ever number of orders.

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Title: Tesla Quietly Reverses its Price Cuts After the IRS Revises EV Tax …
Sourced From: observer.com/2023/02/tesla-model-y-price-increase-ev-credit/