Enlarge (credit: Tesla)

In the past, Tesla CEO Elon Musk has repeatedly claimed that his company's cars are appreciating assets. But this week, Tesla dropped the prices of its cars—and not for the first time this year. As we reported on Monday, despite sales growing by 36 percent globally, the automaker missed its ambitious target and will need to grow even faster in the remaining months of the year to satisfy investors.

Perhaps these cuts will help. The biggest price decreases are for the Model S sedan and Model X SUV. All versions of these electric vehicles are now $5,000 cheaper than they were last week, following similar $5,000 price cuts a month ago and much larger price cuts in January that saw the Model S Plaid shed $21,000 from its MSRP.

Model 3 sedans are now $1,000 cheaper across the board, marking their third price cut in recent months. A rear-wheel-drive Model 3 now starts at $41,990—in January, this version cost $43,990; it then dropped another $500 in February. Tesla notes that the RWD Model 3 will also lose half of the IRS clean vehicle tax credit starting on April 18, although all-wheel drive Model 3s and all Model Ys will still be eligible for the full $7,500 credit.

Enlarge (credit: Getty Images)

On Friday the US Treasury Department published an update to the way it implements the new clean vehicle tax credit. Introduced in the Inflation Reduction Act of 2022, the new rules restrict the number of EVs that qualify for a federal tax credit of up to $7,500 with income and price caps, as well as a requirement for final assembly in North America and, once the Treasury has written some more guidance, a requirement for domestic content and value in the EV battery.

When the new rules came out in January, there were some complaints that some five-seat crossovers—the Cadillac Lyriq, Tesla Model Y, and Volkswagen ID.4—were being counted as sedans, with a $55,000 MSRP cap; anyone buying any of those EVs with a purchase price of more than $55,000 was ineligible for the tax credit, although the seven-seat Model Y was classified as an SUV and therefore only subject to an $80,000 MSRP limit.

The reason for that was the Treasury using the US Environmental Protection Agency's Corporate Average Fuel Economy standard classification, which categorizes light trucks (including SUVs and minivans) differently from passenger cars. But there's a separate EPA fuel economy labeling standard, used in consumer-facing applications, that already counted the Lyriq, Model Y, and ID.4 as crossovers and not sedans.