Tesla Model Y pricing set to rise over tax credit deadline extension creating excessive demand

Tesla is preparing to raise the Model Y price as inventory is running low, and it aims to increase its factory output to meet demand, resulting in urgent component orders that come in more expensive.

The Model Y price increase is not yet certain, as Tesla's Vehicle Service lead explained that they are "trying hard" to avoid it. If history is any indication, however, Tesla tends to bump its tags in periods of high demand, so the Model Y price rise may happen by the end of August.

After several weak sales quarters that saw demand for Tesla vehicles plummet due to Elon Musk's political activism and a soft EV market, the news that the federal government will be ending the $7,500 in tax credit brought Model Y demand back up.

Model Y price increase ahead of tax credit expiration

Those who want to buy a Model Y with the tax credit were originally scheduled to do so if they take delivery by September 30. The IRS tweaked its guidelines to allow a tax credit deadline extension of sorts, though. Anyone who puts even a small down payment or initiates a trade by the end of the third quarter will be given the government subsidy now, even if they take delivery after September 30.

Still, the rush to buy the Model Y before the federal tax credit expires has created an ordering scramble that resulted in areas like Austin being devoid of a single inventory vehicle in a 200-mile radius. Tesla apparently didn't plan for such a healthy demand situation in the last quarter when the tax credit is available, and is now trying to catch up with output, which may reflect on the Model Y's pricing.

It already yanked most of the Model Y promos that were introduced in the beginning of the quarter when Tesla still didn't know if the EV tax credit demise will spur demand, or to what extent. The Model Y's 2.99% APR financing rate deal is now gone, as is the free options upgrade for inventory vehicles.

Tesla is also ending the zero APR financing promo for the Model 3 on September 1, but mum's the word if it aims to increase the price of its popular sedan, too, as it may have to do with the Model Y.

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