Tesla recently announced that they are bumping up the price of their Model Y electric vehicle (EV) after the recent adjustment to the federal EV tax credit. The tax credit, which was previously $7,500, was reduced to $1,875 at the start of 2021.
Tesla’s Model Y, which is the company’s most popular EV, will now have a base price of $52,990, up from the previous $49,990. The bump in price is due to the fact that Tesla has decided to pass the cost of the reduced tax credit onto consumers.
Tesla is not the only automaker to raise prices due to the reduced tax credit. General Motors, Ford and Volkswagen have all announced that they are increasing prices on their EVs as well.
The EV tax credit was introduced in 2009 to encourage the purchase of electric vehicles. It was designed to help offset the cost of the vehicles, making them more affordable for consumers. However, as the industry has grown and the number of EVs on the roads has increased, the government has decided to reduce the tax credit to encourage more competition in the EV market.
Tesla’s decision to pass the cost of the reduced tax credit onto consumers has been met with criticism from some EV advocates, who argue that the company should absorb the cost themselves. Tesla has defended their decision, arguing that they are still offering the most competitive prices on their EVs and that the reduced tax credit is simply a reflection of the changing market.
Regardless of the criticism, it is clear that the reduced tax credit is having an impact on the EV market. Automakers are now having to adjust their prices to account for the change, and consumers will have to pay more for their EVs. It remains to be seen how this will affect the EV market in the long run, but it is clear that the reduced tax credit is having an immediate impact.