Tesla implemented across-the-board price cuts for its vehicles on Monday, making most versions of the Model S, Model X, and Model 3 more affordable. At the same time, Tesla eliminated the most affordable versions of the Model S and Model X, called Standard Range, from its product lineup.
The price of the Long Range Model S (now the cheapest Model S) dropped from $85,000 to $79,990. The Standard Range Model S cost $75,000 before it was discontinued.
The price of the high-end Model S Performance model actually increased from $96,000 to $99,990. However, that reflects the fact that “Ludicrous Mode” is now included as a standard feature for the Performance model. Previously, “Ludicrous Mode” was a $20,000 upgrade on top of the Performance model’s $96,000 base price.
Tesla’s Model 3 also saw across-the-board price cuts. The entry-level Standard Range Plus model fell from $39,500 to $38,990. The Long Range Model 3 fell from $49,500 to $47,990. The Performance Model 3 had its price slashed from $59,500 to $54,990.
The result is a more streamlined product lineup with more clear-cut differentiation between the affordable Model 3 and the premium Model S and Model X. Last week, a Performance Model 3 with all the bells and whistles could cost almost as much as an entry-level Model S. Now there’s a much larger gap between the most expensive Model 3—the Performance model starts at $54,990—and the cheapest Model S at $79,990.
The federal tax credit for Tesla vehicles is declining
One factor behind the US-based price cuts may have been the gradual expiration of the electric vehicle tax credit the federal government provides to Tesla customers. Until the start of 2019, every Tesla buyer got $7,500 back from Uncle Sam. That amount fell to $3,750 on January 1 and to $1,875 on July 1. It will go away altogether at the end of 2019.
For Tesla’s more expensive models, the price cuts more than offset the July 1 reduction. For the cheaper Model 3 versions, it will at least partially offset it.
Tesla’s price cutting isn’t limited to the United States. Tesla cut prices in Europe and China, too. Europeans enjoyed particularly large price cuts on the Model 3. The Model 3 Performance got a 14 percent price cut, from €65,580 to €56,370. Still, the new price is equivalent to $63,000. So even after the latest price cuts, the Model 3 is still significantly cheaper in the United States—largely a reflection of the value-added tax that’s included in the European sticker price.