Tesla also cut the prices of its flagship sedan, the Model S, by $10,000, for a starting price of $96,630 with shipping and order fee. The Model X midsize crossover received an $11,000 price cut for a starting price of $111,630. Neither of these midsize Teslas qualifies for the tax credit, which tops out at $80,000 for SUVs and trucks, according to Inflation Reduction Act guidance.
Tesla already had the lion’s share of the EV market before the price cuts, according to new-vehicle registration data from Experian covering the January to November 2022 period.
While Tesla’s U.S. EV share fell to 64 percent in the 11-month period from 70 percent a year earlier, its overall new-vehicle registrations increased to 431,740, up from 303,129 as the EV market rapidly expanded last year, Experian said.
Tesla does not disclose its U.S. sales results, so experts must estimate the company’s deliveries by using registration numbers and other data.
The price cuts also spurred search results on Edmunds for current Tesla owners trying to figure out how much their used vehicles had dropped in value, since cuts to new prices depress residual values for used vehicles.
“Appraisals jumped as current Tesla owners sought real-time updates on the effect the cuts have on the value of their vehicle,” Edmunds said. Search data from Jan. 13, the day Tesla announced the price cuts, shows Tesla appraisals more than tripled in volume, climbing to 3.1 percent of all vehicles, compared to 0.8 percent the day prior.
Edmunds said Tesla used-vehicle prices had already been falling sharply as they lingered on dealer lots.
“Edmunds analysts note this slowdown is the result of a unique combination of factors driving down residual values and demand, including car flippers jumping into the market as used prices hit their peak, followed by a drop in used values and interest rate hikes, controversy surrounding Elon Musk’s Twitter acquisition and incentives introduced by Tesla in November and December,” the firm said.