Tesla Model Y price discount of more than $15,000 makes Model 3 look expensive

Not only did Tesla move 8.5% fewer vehicles by the end of the first quarter of the year, but the gap between production and actual sales was a gaping 46,000 units.

A lot of those were of the world's bestselling vehicle for 2023 - the Tesla Model Y - and sitting on tens of thousands of unsold but manufactured units means only one thing.

Model Y vs Model 3 price reduction

Tesla has now cut the Model Y price by more than $8,000 for some of those inventory units piling up in its parking lots across the US.

Combined with the Model Y tax credit eligibility, its pricing is not only dangerously close to the Model 3 levels again, but the specs gap has grown to the point that it makes little sense to purchase any Model 3 before an inventory Model Y.

For example, there are now brand-new Model Y Long Range units in Tesla's inventory with $8,100 price "adjustment" that qualify for the full federal tax credit of $7,500, too.

This brings the buyer to a $38,390 Model Y LR price after the tax credit that now applies directly at the point of purchase, for a whopping $15,600 total discount from the MSRP price that this particular Model Y commands.

Bear in mind that this is the price for the Long Range AWD version of the Model Y, with its 330 miles EPA estimate on a charge, and 0 to 60 miles per hour acceleration of under 5 seconds.

For comparison, the cheapest new Model 3 in Tesla's inventory now goes for $35,090 and that is for the basic rear-wheel drive sedan with 272 miles of EPA range from its CATL LFP battery, and 5.8 seconds acceleration.

Tesla analysts cite these somewhat illogical price discrepancies as one of the reasons for Tesla's abysmal delivery numbers last quarter. Those wanting to get the refreshed version of the Model 3 have to pay close to, or even above what the Model Y commands, and the latest inventory price adjustments make such a choice even harder to make.

At the same time, the market is flooded with second-hand Teslas from rental car companies that changed their fleet electrification strategy, citing drastic deprecation and high repair or insurance costs. Used Tesla prices start from a bit over $20,000 for a 2021 model at Hertz, for example, while the Model Y LR units are priced from $27,000.

That makes for a fairer spread than the price tag difference between the sedan and the bestselling SUV in Tesla's own new car inventory, at least until the leftover Q1 production works itself out through Tesla's haphazard discount system.

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