Tesla is facing a major decision as demand for its Model Y continues to surge with the impending expiration of the EV tax credit on September 30. Customers are eager to take delivery of their vehicles before the deadline to take advantage of the $7,500 tax credit.
The IRS recently made a slight adjustment to the EV tax credit rules, allowing customers to enter into a legally binding contract with a marginal down payment by September 30 and still qualify for the credit, even if the delivery occurs after that date. This change has led to a spike in demand for Tesla’s Model 3 and Model Y.
In response to the overwhelming demand for the Model Y, Tesla is considering a price increase on the all-electric crossover. Raj Jegannathan, the company’s VP of IT, AI Infrastructure, Apps, Infosec, and Vehicle Service Operations, hinted at a potential price adjustment in a recent tweet. He mentioned the need to expedite production output, which could necessitate a price increase in the near future.
While a price increase could boost Tesla’s margins, it may not sit well with potential buyers who were hoping to take advantage of the EV tax credit before it expires. Some customers may rush to place their orders sooner to avoid a potential price hike, while others may hold off on purchasing a vehicle if the price increase is significant.
Tesla has recently raised the prices of its Model S, Model X, and Cybertruck models, but introduced a “Luxe Package” to justify the increase. The package includes Free Full Self-Driving, lifetime Supercharging, four years of premium service, and lifetime Premium Connectivity.
As Tesla navigates the challenges of balancing supply and demand for its popular Model Y, the company will need to carefully consider the implications of a potential price increase on consumer behavior and overall sales performance. With inventory dwindling in several markets and strong demand for electric vehicles, Tesla is poised for a successful quarter in terms of deliveries, but must tread carefully in adjusting pricing to meet production demands and maintain profitability.