Tesla’s relentless price cutting is turning the EV market into a race to the bottom with consumers looking on.
Prices for the most popular car in the world, the Tesla Model Y, have tumbled more than 21% in the past year (see chart below), falling from nearly $63,000 in January 2023 to less than $50,000 last month, Cox Automotive said in a statement on Tuesday And leases on Model Ys are in some cases below $400 a month, assuming a $7,500 federal incentive spread across the term of the lease and upfront costs.
This is forcing rivals to respond aggressively, said Mark Strand, senior director of Business Intelligence at Cox Automotive in a statement. “Higher inventory and slowing sales have pushed automakers and dealers to layer on the discounts in an effort to spur sales,” the market intelligence firm said.
Leasing a Model Y can fall below $400 a month in some cases.
Discounts and incentives are coming fast and furious. On many models, EV incentives have jumped more than three-fold in the past year, Cox said. “For example, in January 2023, the VW ID.4, a popular EV model, carried an average incentive package equal to approximately 6% of ATP; last month incentives jumped to nearly 17% of ATP,” according to Cox. ATP is shorthand for the Average Transaction Price. And incentives for the Hyundai Ioniq5, another popular EV, climbed from less than 3% in January 2023 to more than 18% last month, Cox said.
Discounting — along with the point-of-sale $7,500 on new EVs — is causing prices in the used EV market to collapse. The average listing price of a used Tesla Model 3 has fallen below $30,000 for 2017 to 2019 vehicles, putting roughly 300,000 used EVs within reach of a federal used EV rebate, said Recurrent. The price of a used Chevy Bolt, the third most popular EV in the U.S., is typically below $18,000. Used EV sales volume in 2024 will increase by roughly 100% over 2022 and 40% over 2023, Recurrent said.
Tesla price cuts have tumbled forcing rivals to respond.
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