Elon Musk justifies Model Y price drop with seasonal demand as he also 'pays full price for a Tesla'

Just like last year, Tesla started a Model Y price cut campaign as soon as the New Year's festivities were over. After witnessing BYD surpass it in Q4 sales numbers to become the world's largest EV maker, Tesla started with China and dropped both the Model 3 Highland and the Model Y prices there. For the ongoing Chinese New Year celebrations it even introduced extra incentives like free autonomous driving software transfers, or 50% discount on options packages.

Then came Europe which witnessed up to 9% Tesla Model Y price cuts. Then Canada followed and the Model Y now costs exactly as much as the Model 3 there, a rather jaw-dropping fact. That's not to mention federal and state incentives which can bring it down to the equivalent of US$31,300, too.

Tesla kept the biggest Model Y price surprise for the US, though. After listing the Model Y starting tag with the tax credit already applied and stacking incentives like free FSD transfer to inventory discounts for the first time, it just introduced a direct Model Y price drop to $35,490 with instant federal rebate.

Why? Well, according to Elon Musk, Tesla reduced the Model Y price tag "since most people don't love to buy cars in the middle of winter." Tesla warns that the price cut is temporary and prices will revert back to the previous level on March 1, again a very unorthodox mid-quarter promo.

"This is the essential quandary of manufacturing," added Musk, as "factories need continuous production for efficiency, but consumer demand is seasonal." It remains to be seen if those Tesla price cuts in the winter will become a thing, but Elon Musk was quick to counter a fan who teased him for a free car that "everyone pays full price for a Tesla, including me."

At the last earnings conference, however, Tesla warned that it may experience a "slowdown" in 2024 sales but didn't attribute it to softening demand for EVs. Its argumentation was that 2024 will be a transitional year when it tries to ramp up Cybertruck and 4680 battery cells production as fast as it can with no new car on the horizon but the Model 2 which is not expected before 2025.

Thus, it makes sense that Tesla is trying to pad the slow Q1 sales numbers any way it can, including by cutting the price of its bestselling vehicle and even with ads like the one below touting the Model Y's reduced pricing.

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