Tesla cuts prices, allowing certain models to qualify for tax rebates

Both of those models now qualify for tax incentives under the Inflation Reduction Act, the landmark climate change, tax policy and health-care bill championed by President Biden and congressional Democrats.

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Buyers of new vehicles that have a requisite proportion of American-made parts are eligible for the $7,500 tax rebate, provided that the cost of the vehicle does not exceed $80,000 for vans, SUVs and pickup trucks, or $55,000 for sedans.

Despite aiming to appeal to the mass market, Tesla has long priced its models at rates that made them far too expensive for middle-income car buyers. Some competitors have taken advantage of that pricing regime in recent months.

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Tesla still owned the lion’s share, 65 percent, of new electric light-vehicle registrations in the United States in the first nine months of 2022, according to S&P Global.But that’s down from 79 percent in 2020, thanks to a surge of competition, including from some lower-priced models, according to the data provider.

Ford is in second place, with about 7 percent of new EV registrations in the United States, followed by Kia at 5 percent, and Chevrolet and Hyundai at 4 percent. Mercedes-Benz and others are rolling out EV models that are challenging Tesla in the luxury market.

As car prices soared during 2022, baseline models of Tesla vehicles suddenly fell in step with their competition’s pricing. The baseline Model 3 costs $43,990, or $36,490 with the tax rebate. That’s well below the average purchase price on a new non-luxury car at the end of 2022.

The average non-luxury car sold for $44,584 in November, the most recent data available, according to Kelley Blue Book. The average luxury buyer paid $67,050, a record high.

Jeanne Whalen contributed to this report.