Teslas have never been cheaper than the average new car even before US government subsidies
Recently, Tesla cut the price tags of its electric vehicles by up to 31% when accounting for the federal subsidies of US$7,500 per new EV. Even without thе government's largesse, however, the Tesla Model 3 has never been cheaper than the average new vehicle sold in the US than it is now. While Tesla kept adjusting its prices up and down in US$500 or so increments after the drastic tag reduction, the Model 3 is still the whopping US$4930 cheaper than the average US$47,920 cost of a new vehicle in America as of January.
Whether that is more of a testament to how expensive new cars became during the pandemic when their price rose by $US10,000, or to the ruthless efficiency of Tesla's production process, but the fact remains that the price war that it started affects not only electric vehicle but the overall new car market now, too.
The Model Y is in no worse position compared to the average new SUV in the US as well. In fact, it saw the most drastic price reduction by Tesla with a US$13,000 cut which at the time represented 21% of its tag. The price cut resulted in a rapid demand increase and Tesla bumped its tag a bit as its batches started to sell out but overall it still sits only slightly above the average US car price before any subsidy is taken into account.
With the federal government shaving US$7,500 off its MSRP, the Model Y now also dives below the average US car price, making it a formidable foe not only for other EV models, but for gas-powered SUVs as well. When Tesla reveals the eventual Model 2 next week with its expected US$25,000 starting price before subsidies, the future gap between its prices and those of other automakers may become even larger.