Tesla raises Model Y prices after Treasury says it counts as an SUV
Enlarge / Tesla Model Y electric vehicles in a lot at the Tesla Inc. Gigafactory in Gruenheide, Germany, on Saturday, Jan. 21, 2023. (credit: Liesa Johannssen/Bloomberg via Getty Images)
Barely three weeks after slashing its prices to qualify for federal tax incentives for clean vehicles, Tesla has increased the prices of some of its best-selling electric vehicles. At the beginning of January, a five-seat Tesla Model Y long-range crossover cost $65,990; on January 12 Tesla dropped this to $52,990. Now, that has gone up by $2,000 to $54,990. And the Model Y Performance saw its price drop from $69,990 to $56,990; today that same EV will cost $57,990.
The original price drops in January allowed the Model Y to qualify for new clean vehicle tax credits introduced in the Inflation Reduction Act of 2022. Among other changes, the new tax credit regulations imposed a price cap on new EVs in order to qualify, with a larger $80,000 price cap for SUVs, trucks, and vans compared to sedans, which are capped at $55,000 for eligibility.
Originally, the Treasury said it would use the US Environmental Protection Agency's Corporate Average Fuel Efficiency classification to determine what was a car and what was a light truck-a category that includes SUVs and vans but excluded crossovers like the Ford Mustang Mach-E, the Cadillac Lyriq, the Volkswagen ID.4, and yes, the Tesla Model Y. (The seven-seater Model Y was classified as an SUV, however.)