Model Y gets $3,500 discount as AWD price falls under $40,000 in California

Tesla, Hyundai, Kia, Chevrolet, and Ford can now sell their electric vehicles with a discount amounting to nearly 50% of the original tax rebate that the federal government let expire last year.

First-time electric vehicle buyers in California can get the Model 3 or Model Y for $3,500 less in the form of state and manufacturer rebates as long as they get registration and delivery in the state.

When the Trump administration announced that it will nix the tax credit program that spearheaded EV adoption in the US, California said it will step in and compensate. At first, the state wanted to exclude Tesla from the state rebate program; it has now approved the application of Elon Musk's automaker but says only "manufacturers headquartered in California and who only manufacture ZEVs are exempt from the MSRP and sales price cap."

Said caps are $50,000 per new EV and $25,000 per used one that is at least two model years older. Used electric cars get 50% of California's new EV rebate, or $1750. The Model Y discount of $3,500 is immediate and taken at the point of sale, just like the federal tax rebate used to be and is valid for cash purchases and financing or leases alike.

California has set aside $135.5 million for the EV purchase incentive program, but manufacturers are required to contribute half of the rebate, so tens of thousands of Model Y, Model 3, or other EVs can now be bought with a $3,500 discount while the funding lasts.

With the combined point-of-sale state and OEM discounts, the price of a base AWD Model Y now falls below $40,000 for the first time since the federal tax credit expiration, and the program could be a nice boon for Tesla after a disastrous Q2. Tesla moved a record number of vehicles the previous quarter but had such a large capital expenditure program and offered so many incentives, down to a 0% APR program, that its revenue and earnings took a giant hit.

It has now increased the interest rate on financing and is actively advertising California's new MyFirstEV program that essentially lowers the price of a Model 3 or Model Y by $3,500, so Q3 might look better in terms of finances.

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