Tesla raises Model Y pricing following federal tax credit change

Tesla has quietly raised the price of its best-selling Model Y crossover. As of Saturday, the automaker’s US website lists the Long Range and Performance models at $54,990 and $57,990, respectively. For the former, that represents a $2,000 increase from the all-time low it hit when Tesla dramatically cut prices in the middle of January. As for the Performance variant, it’s currently $1,000 more than it was after last month’s price adjustment.

As The Wall Street Journal notes, the price hikes come after the Biden administration this past Friday modified eligibility criteria related to the $7,500 federal tax credit to treat more vehicles as SUVs rather than sedans. Before the change, it was possible to get the full $7,500 Inflation Reduction Act incentive on the five-seat Model Y, but you had to configure the vehicle in a way so that it fell under the $55,000 sedan threshold. Now, all Model Y variants, including the Performance model, fall under the $80,000 SUV ceiling.

The automaker did not say if it increased Model Y pricing in response to Friday’s announcement. Following the January price cut, Tesla CFO Zach Kirkhorn said the move was partly an effort to ensure more of the company's cars fell under the $55,000 threshold. With the Model Y now comfortably under the $80,000 limit, Tesla has more freedom to price the vehicle as it sees fit.

Kentucky, United States - February 27, 2022: Side view of a white Tesla Model Y, parked on the street, of a city. In the background a building.