Tesla has adjusted its model lineup in a bid to boost sales of its most popular vehicle.
Tesla sold 96,729 Model Y EVs in the U.S. in the first quarter of 2024, according to data provider Cox Automotive.
The new version is more attractive than the old—and looks like a good deal—while tax credits continue to skew value in the U.S. electric vehicle market.
Over the weekend, Tesla added a long-range rear-wheel drive Model Y to its website that gets about 320 miles of range per charge. It starts at about $45,000. Before the update, the rear-wheel drive Model Y got about 260 miles per charge and started at about $43,000.
There wasn’t a long-range option. Now, the standard-range Model Y is no longer listed for configuration. Tesla essentially upgraded the range of the base Model Y by 60 miles per charge for about $2,000.
The all-wheel, dual-motor Model Y options and pricing are unchanged. There is a long-range all-wheel drive model that gets about 310 miles per charge starting at about $48,000 and a performance model that gets about 280 miles per share starting at about $51,000.
Tesla didn’t immediately respond to a request for comment about the change.
All of the Model Ys qualify for a $7,500 purchase tax credit from the federal government, which is taken off at the time of purchase. The effect of the credit is the new long-range Y costs a buyer about $37,500 before any other configuration changes and delivery fees.
The standard range Model 3 gets about 270 miles per charge and doesn’t qualify for any tax credit. It starts at $39,000. So it’s a smaller car, with similar acceleration and less range for more money.
The new Y looks like a much better deal. The impact of the credit continues to be a quirk of the U.S. EV market.
The performance version of the Model 3 is the only version that qualifies for the federal tax credit. Vehicle-level qualifications depend on things such as where batteries and battery materials were sourced from. Tesla manufactures some of its batteries and sources others from battery makers such as China’s Contemporary Amperex Technology Co. Ltd., which is better known as CATL.
Credits matter. Tesla sold 30,842 Model 3s in the U.S. in the first quarter of 2024, according to data provider Cox Automotive, down 44% from the same time a year ago. Tesla, however, said it had manufacturing to work through in the quarter at its Fremont, Calif., plant.
It sold 96,729 Model Ys in the U.S. in the first quarter of 2024, up only about 1.4% from last year. Still, the Y accounted for about 35% of all U.S. battery electric vehicle sales in the quarter.
Tesla appears to be hoping more range can juice the sales growth of its most popular model.
Coming into Monday trading, Tesla stock is down about 27% so far this year, underperforming the S&P 500 by some 35 percentage points. Shares, however, are up about 28% from a 52-week closing low reached on Apr. 22, just before better-than-feared first-quarter earnings improved investor sentiment.