Since the start of 2023, Tesla has (for the most part) reduced the cost of several of its best-selling vehicles, such as the Model 3 base variant with standard range. It now has a starting price of $42,990, which is $4,930 less than the typical price of a new car sold in the US. As comparison to the typical vehicle sold in the U.S., that makes the rear-wheel drive Model 3 the most affordable vehicle Tesla has ever created. A Model 3 is about $12,500 less expensive than the typical new car pricing when you factor in the $7,500 vehicle tax credit.
This trend can also be seen to some extent in the larger and more expensive Model Y. At $54,990, it may not be less expensive than the average new car, but it is much more affordable now than it was before the $13,000 price reduction. The price has now increased to $12,500 after Tesla sold out of build slots in the United States during the first quarter.
These price reductions have prompted other automakers, like Ford and Lucid, to imitate them in order to take advantage of the new restrictions on the $7,500 Tesla EV tax credit.
Internal combustion engines are becoming more expensive as prices for EVs are falling. According to Bloomberg, the average cost of a new car has increased by almost $10,000 since the pandemic began, reaching $47,920 in January. The lack of chips, the rising cost of raw materials, and the decision by automakers to maintain low stocks and high prices are all blamed.