According to the reports, Tesla has raised the price of its Model Y in the United States in response to strong demand and adjustments to legislative requirements that now make additional models of the small SUV eligible for tax benefits.
The EV manufacturing behemoth increased the price of the Model Y Long Range by around 2% to $54,990 and the Performance version by roughly 2.7% to $57,990, according to its website.
Tesla reduced prices on several variations of the Model Y, the company’s best-selling vehicle, by about 20% three weeks ago.
The price cuts were put in place to boost sluggish demand and increase the number of Model Y cars that are eligible for the $7,500 electric vehicle tax credit given by the Inflation Reduction Act.
The Treasury Department revised its rules for vehicle categorization on Friday, allowing more EVs—including SUVs made by Tesla, General Motors, Ford, and many others—to be eligible for the full $7,500 tax credit.
The alteration was brought about as a result of pressure from the auto industry to change the definitions of vehicles so that more expensive cars would qualify for the maximum credit.
In fact, Tesla CEO Elon Musk discussed the EV market with President Joe Biden’s top advisers.
According to the rules, pickup trucks, SUVs, and vans with a starting price of up to $80,000 are eligible for EV tax credits, while new electric cars, sedans, and wagons can only be sold for up to $55,000.
Tesla and other automakers had previously objected to the rules since it forbade some more expensive SUVs, including several Model Y variations and GM’s Cadillac Lyriq.
The price cuts from January seem to have been a success. On the company’s earnings conference call last week, Musk claimed that the year-to-date order volume was the highest ever.
In reaction to Tesla’s price reductions, Ford lowered the cost of the Mustang Mach-E in part to qualify for the tax credit.
The EV tax credits were one of many revisions to the Inflation Reduction Act that were approved. In an effort to reduce greenhouse gas emissions, the law hopes to boost EV sales.
However, it is uncertain whether customers will be able to utilise the whole $7,500 credit due to a number of conditions, such as the locations where vehicles and batteries must be made to a high standard, according to AP.
The Treasury Department claims that it wants to make it easier for customers to comprehend which vehicles qualify for the credit.
The amended rule will classify automobiles according to a consumer-facing fuel economy labelling standard rather than the EPA’s classification scheme.