Tesla Rings in the New Year with an Unprecedented Discount, Takes Advantage of Revamped Federal Credits

In a surprising turn of events, Tesla Inc. is offering a colossal discount on its Model X SUV, slashing the starting price by $41,000 to $79,990. This aggressive price cut qualifies the Model X for federal tax credits under the Inflation Reduction Act, President Joe Biden's signature climate initiative.

A 180 from Previous Stance

This move is especially eye-catching given Tesla CEO Elon Musk's previous comments on federal subsidies for electric vehicles. In December 2021, Musk urged the Biden administration to eliminate these incentives, citing concerns about government spending. At that time, Tesla had already reached the limit for the federal tax credit phase-out. Musk reiterated his stance at a Wall Street Journal conference, declaring his intent to rid Tesla of all subsidies.

New Rules, New Opportunities

The Inflation Reduction Act has done away with limitations on the number of vehicles an automaker can sell before federal credits begin to decline. It sets maximum retail prices at $80,000 for electric SUVs, vans, and pickups, and $55,000 for electric cars. Tesla's price cut for the Model X strategically positions the SUV just below the maximum limit for eligibility.

Tesla's Portfolio Shift

The Model X has been a smaller player in Tesla's lineup, overshadowed by the cheaper Model 3 and the more popular Model Y, which accounted for a staggering 97% of deliveries in the first half of the year. Tesla also announced price reductions for the Model Y and unveiled a refreshed version of the Model 3, featuring aesthetic and functional upgrades.