Are 2023 Tesla Prices Leading To Lower EV Costs?
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Perennial complaints among current and potential electric vehicle (EV) owners include Tesla prices and the cost of the automaker’s disruptively popular EVs. However, recent trends in the brand’s vehicle pricing have not only made the models more accessible, but it may have also dropped EV prices as a whole. So, are Tesla price drops impacting the prices of used EVs across the market in 2023?
Descending Tesla prices in 2023 are moving in tandem with lower EV prices
Tesla has cut its prices multiple times in 2023. However, the move also initiated a shift in the costs of used Tesla models, as well as a drop in high-end and mid-tier EVs.
| Model | Starting price |
|---|---|
| Tesla Model Y | $43,990 |
| Tesla Model 3 | $38,990 |
| Tesla Model S | $74,990 |
| Tesla Model X | $79,990 |
Popular used EVs have depreciated as much as 40% to remain competitive with the costs of new and used Teslas, per Recurrent. Furthermore, decreasing price trends for non-Tesla EVs follow the Tesla cost cuts. Shockingly, Recurrent reports that the average costs of the Model 3 and Model Y dropped over $20,000 since October of last year. Consequently, comparable mid-tier EVs, like the Kia EV6 and Volkswagen ID.4, dropped a similar $18,000.
Will Tesla drop prices again in 2023?
Tesla has already cut the prices of its most popular models, the Model 3 and Model Y, by 17% and 26%, respectively. However, with less than two months of 2023 remaining, it’s unlikely that the lineup’s pricing will change dramatically in Q4.
Regarding used Tesla models, depreciation could play a role in price drops. Either way, any continued lowering in the marque’s new vehicle lineup will likely force used model prices down, as consumers will be less likely to buy a used model at a similar price point to a new, under-warranty vehicle.
How much did Tesla prices drop in the US?
Tesla has, over the course of 2023 so far, dropped its new car prices by around 25% across its lineup.
| Model (2018-2022) | Used prices in February 2023 | Used Prices in September 2023 |
|---|---|---|
| Model X | $116,635 | $87,862 |
| Model S | $94,800 | $74,996 |
| Model Y | $49,988 | $40,930 |
| Model 3 | $37,279 | $31,512 |
Despite having two spots in the top 25 best-selling vehicles in the United States for 2023 so far, Tesla’s Q3 sales were underwhelming for the company’s bottom line. According to Reuters, the company’s “price war” isn’t aiding the marque’s overall profitability. Specifically, the electric car titan is expected to post Q4 margins at around 12.9% less than Q1 2022. It’s sobering news for the marque but good news for EV shoppers considering a Tesla purchase.
| Model (2023) | 2023 sales YTD (units) | 2022 sales (units) |
|---|---|---|
| Tesla Model Y | 284,498 | 225,799 |
| Tesla Model 3 | 173,501 | 195,698 |
| Tesla Model S | 22,500 | 90,473 |
| Tesla Model X | 17,501 | 24,099 |
What is the cheapest Tesla model’s price?
Tesla says its cheapest option in Q4 2023, the Model 3, starts under $30,000 with a federal tax credit applied. Specifically, the brand lists the starting price for the Model 3 Rear-Wheel Drive at $28,490, about $4,500 less than its closest sibling, the Model Y EV SUV.
However, rumors of a nascent, albeit not immediate, arrival of a $25,000 Tesla may dethrone the Model 3 as the marque’s cheapest EV. Likely to be the “Model 2,” the new entry-level option would cut material costs and, in doing so, undercut the Model 3’s starting price. Either way, Tesla’s EV market dominance might not be as total as it once was, but the brand has the power to impact the prices of the entire electric car industry.
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