Tesla raised prices of its best-selling Model Y by $1,000 in the United States after the government raised the price ceiling for crossover electric vehicles eligible for tax breaks.
Tesla raised the price of the Model Y Long Range to $54,990 and the Model Y Performance to $57,990, an increase of $1,000 each, according to current and previous prices posted on its website.
This was the second price increase for the Y Long Range model in the past two weeks. The models remain 15% and 17% cheaper than they were before Tesla cut prices last month to spur demand, before factoring in the $7,500 tax credit buyers now qualify for.
The Treasury Department ruled Friday that crossovers like the Model Y will qualify for electric vehicle tax credits if they are priced below $80,000. The cap for cars, sedans and station wagons is lower at $55,000.
That represented a victory for Tesla, General Motors, Ford and other automakers, which forced the Biden administration to loosen vehicle definitions when implementing the incentive plan to allow more of their lineups to be used.
At the previous price, a Tesla Model Y buyer could only add about $1,000 in extra features, such as a tow bar, before pushing the price above the level where the tax incentive would apply. Tesla cut prices worldwide in January in response to signs of slowing demand. It cut prices in South Korea for the second time on Friday.
CEO Elon Musk said last month that vehicle orders were roughly double the company’s output in January after the first round of price cuts. He said strong demand prompted the company to raise the price of the Model Y for the first time.
