Tesla lowers Model 3 & Y prices in Europe and the USA

After the latest significant price reduction in China, Tesla is now following suit in Europe and the USA. Depending on the variant, the two models have been reduced in price by up to 9,100 euros – especially the prices for the basic models with LFP battery and rear-wheel drive have been lowered.

The Model 3 without name suffix (formerly SR+) without optional extras is now priced at €43,990 in the Tesla configurator. As is well known, the manufacturer’s share of the environmental bonus has already been deducted from the prices listed there and the processing fee still has to be added. The biggest price reduction of €9,100 was for the basic Model Y, which now costs €44,890 in the Tesla Configurator. Adding the processing fee and deducting the federal share of the environmental bonus results in €41,370 for a Model Y with rear-wheel drive and a 60 kWh battery.

Especially for the Model Y, the difference between the base model and the Long Range is now significantly greater, previously it was only €3,000. After the current price adjustment, it is 10,100 euros. For the Model 3, the difference is an even €10,000. On the other hand, in the current price structure for the LFP models and the Long Range variants, the Model Y only costs just under 1,000 euros more than the Model 3, while the Performance costs €4,000 more.

Falling demand or passing on optimised costs?

The reasoning behind this new price structure is not known in detail, and there are different views on this. In forums, for example, it was reported that Tesla Model Y customers who had already waited a long time for their Long Range were instead offered an immediately available base model – which was interpreted as low demand for the Model Y with LFP battery. A significant price reduction would now boost demand.

Tesla wrote in a statement that it had “continued to successfully lay the groundwork for our future growth by regionalising production and supply chains”. “Our focus on continuous product improvement through original design and manufacturing processes has further optimised our ability to produce the best product at industry-leading costs,” Tesla writes. However, nothing is currently known about design changes to the base models – at least none that would make production and logistics €9,000 cheaper. Tesla goes on to say that the optimised costs have made it possible to “achieve a normalisation of part of the cost inflation”. This was passed on to the company’s own customers to ease the burden.

There was also a significant price reduction in the USA: there, the Model Y and Model Y Performance have become a whopping $13,000 cheaper (now $52,990 and $56,990, respectively). The basic Model 3 has become $3,000 cheaper ($43,990), the Model 3 Performance by $9,000 dollars to now $53,990. The Model Y is thus 20 per cent cheaper than the day before.

In the USA, however, the prices for the luxury class series have also been adjusted: The Model S now starts in the five-digit range again at $94,900, the Model S Plaid has been reduced by a whopping $21,000 and is now listed in the configurator at $114,990. For the Model X, the price adjustment looks similar at $109,990 and $119,990 respectively, but here the difference between the base model and the Plaid is smaller than for the Model S.

At least for the Model Y, the price reduction in the USA is likely to have a political background: Since the authorities classified the model as a passenger car rather than an SUV, the upper price limit of $55,000 for the EV tax credit applies to the Model Y, thus making the Model Y as a five-seater qualifies for this subsidy again.

Whether Tesla will make concessions in Europe and the USA for those customers who recently ordered at the old price but have not yet received their vehicle is an open question. In China, the most recent downward price adjustment caused protests from customers.