Tesla Slashes its Prices by $2,000 in Lieu of Max EV Tax Credit

Tesla sold its 200,000th vehicle last year, which meant that the federal government started to phase out its EV tax credits. To soften the blow on their customers, Tesla decided to drop prices on its vehicles by $2,000.

Now that Tesla has cut down prices, the Model 3 starts at $44,000 for the mid-range battery before adding incentives. The Model S begins at $76,000, while the Model X can be gotten for $82,000 before incentives. The price cut doesn't fully compensate for the reduced federal tax credits on offers and by January 1, the EV tax credit for the company dropped from $7,500 to $3,750.

The actual month Tesla reached the 200,000-vehicle threshold was July. It was the first company to begin the tax credit phase-out, which only happens when two calendar quarters after an automaker hits the 200,000 mark. The $3,750 reduced tax credit will stay in effect until July 1, then it will decrease again to $1,875 and in 2020, customers who take delivery of a Tesla wouldn't get a federal tax credit.

In addition to the given price cuts, Tesla also announced its fourth-quarter vehicle production and deliveries which made 86,555 vehicles in the quarter, it includes 61,394 copies of the Model 3. Tesla says this number is actually in line with its projections, and increased 15% from Q3.

Tesla also declared that it will bring the Model 3 to Europe and China in February and later in the year, the car will roll out into additional markets, including right-hand drive variants. Tesla once again mentioned how the lower-priced variants will help expand Model 3 sales, but so far we are yet to see the elusive $35,000 model Musk promised when the Model 3 debuted.