Tesla Hikes Model Y Price After Government Makes More Versions of Their Cars Eligible for Tax Credits

Tesla American carmaker has increased the price of its Model Y in the United States due to increasing demand and changes in U.S. government regulations that allow more models of the small SUV to be eligible for tax credits.

According to its website, Austin’s electric vehicle company raised the Model Y Long Range version’s price by about 2% to $54,990 while the Performance version increased by around 2.7%, to $57,990. Shipping and an order fee are not included in the prices.

These moves were made Friday three weeks after Tesla reduced prices by almost 20% on certain versions of its top-selling Model Y. To boost demand and to allow more Model Y versions to be eligible for the $7500 tax credit for electric-vehicle purchases under the Inflation Reduction Act, the price reductions were made. The full tax credits will not be available until March.

On Friday, The Treasury Department revised vehicle classification definitions to make more EVs — including SUVs made by Tesla, Ford General Motors — eligible for the full $7,500.

After lobbying by automakers who had asked the Biden administration for vehicle definition changes to allow higher-priced vehicles to receive maximum credit, the change was made. Elon Musk, Tesla CEO met with top aides to the President Joe Biden Last week we met to discuss the EV market and the wider goals of electrification.

The law, which was passed last summer, allows pickup trucks, SUVs, and vans to qualify for EV credit credits. However, new electric cars, sedans, and wagons cannot be priced above $55,000 under the law. Tesla and other carmakers complained that some SUVs of higher price, such as the Cadillac Lyriq and Model Y from GM, were exempted by this rule.

The price reductions in January worked, it seems. Elon Musk, Tesla CEO, stated that January had been the best month for orders in its history. He also mentioned that Tesla had increased the Model Y prices. “a little bit in response to that.”

Ford responded to Tesla’s price cuts by cutting the price for its Mustang Mach-E. This was partly to qualify to receive the tax credit but also to encourage buyer interest. General Motors, however, stated that it would not reduce EV price.

The Inflation Reduction Act approved the EV tax credits in August. It was approved by Congress with just Democratic votes. This law was created to encourage EV sales in a larger effort to reduce the planet’s warming greenhouse gas emissions.

A complex set of requirements, including the manufacturing of vehicles and batteries, makes it difficult to know if buyers will be able to receive the full $7,000.500 credit.

The Treasury Department announced Friday that it wants to make it easier for customers to determine which vehicles qualify for the credit. Treasury announced that the revised rule will make vehicle classifications easier for consumers by using a standard fuel economy labeling method that is accessible to the public, as opposed to the more complicated formula used by the Environmental Protection Agency.

Sat., a message was left asking for comment from Tesla about the price hikes. Bloomberg News reported the price increases on Friday night.