In the ever-evolving landscape of the electric car market, Tesla has been known for frequently adjusting its prices. As we enter 2023, Tesla has already made its sixth price change, and this time it’s a price cut. This is quite the contrast from the past two years, where Tesla prices rose significantly. However, since late 2022, Tesla has been dropping prices by up to 25%. In this article, we’ll take a closer look at Tesla’s latest price adjustment and see just how much the prices have dropped this time around.
The Model 3 Receives Another Price Cut, But Long Range AWD Remains To Be Seen
Tesla has made another price adjustment to their popular Model 3, marking the sixth price change of 2023. This time, the Rear-Wheel Drive (RWD) Model 3 has dropped from $42,990 to $41,990, making the lowest-priced Tesla even more affordable. The Model 3 Long Range remains unavailable for the time being, while the Model 3 Performance has been reduced to $52,990. However, it is worth noting that Tesla now advertises that the RWD Model 3 will lose half of the EV tax credit due to new battery sourcing rules. The battery supplier for the LFP batteries, CATL, is almost certainly the reason for the Model 3 losing half of the credit.
Model Y Price Drops in 2023 – We’re Back to Where We Were
Tesla’s new 4680 Model Y is now on sale.
A brand new configuration is now available. The Standard Range AWD Model Y is now on the menu! The Standard Range Model Y is EPA-rated for 279 miles, and starts at $49,990. You can only order it in the 5-seater configuration. What makes the Standard Range Model Y so special? It is the first Tesla to include the new 4680 battery cells. These batteries are more energy dense, and are currently produced in Austin, Texas. The interior of the Standard Range Model Y is identical to the higher trim options.
The best-selling EV in America, the Model Y Long Range AWD, is back down to $52,990. In early 2023, Tesla had increased the price for this spec by $2,000, but has now eliminated that price hike. We’re back to where prices were several weeks ago.
The Model Y Performance received a price cut too, and is now down to $56,990.
The Model S sedan now starts at $84,990, a $5,000 cut from last month’s price. The Model S is rated for up to 396 miles of range. The Model S and X both feature the controversial yoke steering wheel.
Model X Price Drop
The Model X starts at $94,990, also a $5,000 drop. The Model X is rated for up to 333 miles of range. It’s the quickest SUV on the market (and third-row at that…), with a 0-60 mph time of just 2.5 seconds.
Tesla Prices as of Today
With and without the EV tax credit, here’s where Tesla prices stand after the latest price cuts.
Model 3 SR
Model 3 LR
Model 3 Perf.
Model Y SR
Model Y LR
Model Y Perf.
Current Price
$41,990
$48,990
$52,990
$49,990
$52,990
$56,990
Eligible Credit
$3,750
$7,500
$7,500
$7,500
$7,500
$7,500
Price With Tax Credit
$38,240
$41,490
$45,490
$42,490
$45,490
$49,490
Why Is Tesla Dropping Prices?
The automaker delivered 422,875 vehicles globally in the first quarter. That’s a record for Q1 for Tesla, but it shows a slowed pace of growth. With the economy on shaky ground, many drivers are cutting back on discretionary spending. Yes, that includes your favorite Tesla. Throw in new federal guidance on the EV tax credit, and it starts to look like Tesla had more reasons to drop prices than not to.
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January 2023 Update: Tesla slashed prices for new models by up to 20% overnight. The top-selling Long Range Model Y dropped from $65,990 to $52,990. This means that not only are all Teslas cheaper now, but most Model 3 and Model Y spec options are now eligible for the $7,500 EV tax credit in the U.S., at least until March when more detailed eligibility requirements are to be released by the government.
Lower new Tesla prices will immediately hit used Tesla prices hard. With these changes, in 2023, expect used Tesla prices to be at least 20% lower than they were in 2022.
Now, on to the original article.
Used car prices have fallen over 25% in 2022, and have a lot further to fall. Generally, used electric car prices have been reluctant to drop, at least compared to the steep declines seen in other vehicle classes such as luxury SUVs, crossovers and compact cars. The picture is different for used Tesla prices heading into 2023. Long the best-selling EVs by raw numbers and market share (more on that here), Tesla became the darling of auto market speculation in 2022. Thousands of Tesla buyers flipped their new cars for a profit on the used car market just weeks to months after taking delivery.
In 2023, used electric car prices are in for a rude awakening. Here’s where things stand today, and where prices are headed in the near future.
Used Tesla Prices Plummet
According to Edmunds data shared with Reuters, used Tesla prices were down 17% in December for the July peak. In July, the average price of a used Tesla was $67,297, but six months later the average price had fallen to $55,754. It’s all about perspective here: the overall used car market dropped 4% at the retail level during the same period, and wholesale prices dropped much more, as you can see here.
Used Teslas are sitting on dealer lots for much longer these days. In November, used Teslas sat on dealer lots for 50 days before selling on average, compared with 38 days for all used cars.
Who would’ve guessed it? Tesla cars couldn’t remain appreciating assets forever. “You can’t sell your current Tesla for more money than you paid for it, which was true for a lot of the past two years,” said Karl Brauer, executive analyst at car sales website iSeeCars.com.
Tesla Inventory and Days to Sell Rising
As we approach the new year, there are 1,085 used 2022 model year Teslas for sale on CarEdge Car Search. A third of these nationwide listings have less than 5,000 miles on the odometer. In fact, roughly one third of ALL used Tesla listings are 2022 models. More noteworthy is how long used Teslas are remaining on the market.
As recently as July 2022, analysts at iSeeCars found that the Tesla Model Y was the fastest-selling used car in the United States. The Model 3 and Model X were #5 and #6 on the list, right behind the Toyota Prius hybrid and the all-electric Ford Mustang Mach-E. It was a time of record gas prices, and electric mobility was very appealing.
Fast forward to the last days of 2022, and 69 percent of the 5,800 used Teslas on the market nationwide have been listed for greater than 38 days, the overall industry average. Nearly 40 percent have been listed for sale for over 90 days.
Tesla Flippers Out of Luck
And then there were the flippers. Tesla flippers made good money for a while. Wait times were between two and six months for factory-ordered Tesla EVs. Flippers would order a brand-new Tesla from the factory (often paying cash), with the intention of selling for a premium to an impatient buyer weeks if not days after taking delivery. The LA Times featured once successful Tesla flippers in this fascinating story.
The Tesla flippers flooded the market with gently used Teslas, the buyers vanished, and we’re left with plummeting prices for used Teslas.
Used Tesla Prices in 2023
These are the biggest factors that will influence used Tesla prices in 2023:
Interest rates
Gas prices
EV tax credits
The competition (quality AND quantity)
We recently took a deep dive into why our auto experts think used car prices will continue to decline in 2023. Historically, Tesla has bucked the mainstream trends, but that era may have come to a close. Here’s a summary of what our team expects in 2023:
Why are used car prices so likely to drop further?
New car inventory is now the highest it has been since 2020. More buyers are considering new models, reducing demand for used cars.
Interest rates for auto loans have doubled since 2021. The average used car loan APR is now close to 10%, while used car loan APRs average under 5%.
We expect used Tesla prices to soften in 2023, especially when considering yet another factor, revised EV tax credits. More on that below.
Tesla Tax Credits Return, With a Catch
The Inflation Reduction Act of 2022 replaced the original EV tax credit in place since 2009 with new rules and eligibility requirements. These are the biggest changes taking effect in 2023 for new EVs:
The 200,000 sale cap is replaced with an expiration date of December 31, 2032.
The tax credit is back for Tesla, GM, Toyota and all other EV automakers, but only if strict requirements are met.
New vans, SUVs, and trucks with MSRPs up to $80,000 qualify. Sedans priced up to $55,000 MSRP qualify.
The tax credit will remain at $7,500, however it is now divided into $3,750 for battery mineral sourcing and $3,750 for battery component sourcing.
Final assembly must be in the United States, Canada or Mexico as soon as the bill is signed into law.
The EV tax credit is income-limited to individual tax filers with adjusted gross incomes of $150,000 or less, and joint filers with incomes of $300,000 or less.
There’s now a used EV tax credit, but before you get too excited, the used EV tax credit has the following eligibility requirements in 2023:
Used EVs would now be eligible for a $4,000 federal tax credit, with a price cap of $25,000. Used EVs must be at least two years old, and the used credit can only be claimed once in the life of the vehicle.
Tax filers can claim only one used EV tax credit every three years.
Used Tesla prices have fallen, but they’ll have to fall a whole lot more to approach the $25,000 price cap. Barring an astonishingly severe downturn, used Teslas won’t qualify for the used EV tax credit in 2023.
New Tesla Models Again Eligible
In addition to higher interest rates, rising competition, a flooded market and general economic worries, consumer demand for used Tesla cars will decline further simply because brand new Teslas will again qualify for EV tax credits, for the first time since 2019. Of course, they’ll have to fall under the strict price caps of the new law. Few buyers will want to pay over $50,000 for a used Tesla Model 3 when a brand-new one could be had for less with the new tax credit. This continues in 2024, when the EV tax credit becomes a point-of-sale rebate.
Tesla Depreciation Data
CarEdge provides depreciation forecasts for Tesla models using real market data. The graph below shows expected depreciation for the Tesla Model Y over the next decade.
Now more than ever, you CAN negotiate used Tesla prices. Floorplanning costs are high, meaning that car dealers are paying more each day that a used Tesla sits on their lot. With CarEdge Car Search, you can see exactly how long a car has sat on the lot, and then use that information as leverage to negotiate lower prices.
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Until charging stations are commonplace, owning an electric vehicle will require more planning and preparation than one would expect for a day’s drive. Range is the new MPG, however real-world range isn’t easy to pin down. When the U.S. EPA provides official range ratings, the figures are based on vehicles driving in controlled environments on a predetermined track. EV ownership is full of nuances, and one of the greatest is the affect of weather on range. Let’s explore how electric vehicles perform in cold weather, hot weather, rain and wind.
Electric Vehicles in Cold Weather
Cold weather reduces EV range, but how much depends on how toasty you keep the cabin. Sub-freezing temperatures reduce range by between 12% and 30%, but that’s without the climate control on to warm the cabin. Data from AAA found that once the heater is turned on, EV range can drop by as much as 41%. Some real-world tests have found range losses closer to 50% with below-zero temperatures. That’s not good if you travel long distances across the northern states or the Interior West. More on specific impacts below.
Electric Vehicles in Hot Weather
Yes, hot weather does reduce EV range. According to research conducted by AAA, hot temperatures don’t have quite as great of an impact as cold temperatures, but it’s still noticeable. In temperatures of 95 degrees Fahrenheit and the air conditioning on, driving range decreases by 17% on average.
A 17% drop in range would mean that a Model Y normally rated for 330 miles on a charge would get closer to 273 miles. Not too big of a deal. For electric vehicles with less EPA-rated range, it matters more. The standard range 2022 Nissan Leaf normally gets 150 miles on a charge, but that would drop to 124 miles in 95-degree weather. Ouch.
Does Rain Affect EV Range?
Rain, snow and anything else falling from the sky does lower EV range. Why? It creates drag, and EV efficiency is all about aerodynamics. The heavier the rain, the greater the impact on range, even if temperatures are perfect for battery performance.
Speaking of which, what is the ideal temperature for electric vehicle battery performance? Geotab’s analysis of data from 4,200 EVs found that 70 degrees Fahrenheit (21.5 Celsius) is ideal for battery performance. That’s not only perfect for maximum range, it’s great weather all around. Learn more in Geotab’s full report.
How Much Does Wind Impact EV Range?
Similarly, wind’s impacts on electric vehicle range have to do with drag. Drag is in essence aerodynamic friction. Your fancy new electric car can’t slide through the air so efficiently with friction working on it.
Wind can work against you or for you. With a steady tailwind pushing you along, it’s common to exceed range expectations even on the highway. When there’s a substantial headwind, range drops, and sometimes by quite a lot. The impacts of wind on EV range are much more noticeable at highway speeds. It’s possible to gain or lose up to 20% of expected range depending on wind direction.
Weather Impacts Depend on Model and Battery Chemistry
Temperature impacts battery performance differently depending on battery type and overall vehicle engineering. Features such as a heat pump, advanced battery preconditioning and even heated seats are just some of the many ways that engineers can do their best to optimize EV performance in suboptimal weather.
EV data specialists at Recurrent looked at data from all of the popular electric vehicle models. They found that EV range in hot and cold weather varies widely from one make and model to another.
Here’s how some of America’s most popular electric vehicles are affected by cold weather and summer heat.
Make
Model
Rated Range
Real-World Range (70 deg F)
Cold Weather Range Loss
Tesla
Model 3
353 miles
339 miles
335 miles (-5% from rated range)
Tesla
Model Y
330 miles
320 miles
323 miles (-2% from rated range)
Tesla
Model S
405 miles
397 miles
380 miles (-6% from rated range)
Tesla
Model X
351 miles
326 miles
326 miles (-7% from rated range)
Ford
Mustang Mach-E
305 miles
284 miles
198 miles (-35% from rated range)
Chevrolet
Bolt
259 miles
254 miles
171 miles (-34% from rated range)
Nissan
Leaf
226 miles
237 miles
205 miles (-9% from rated range)
Hyundai
Kona
258 miles
288 miles
240 miles (-7% from rated range)
Audi
e-tron
222 miles
224 miles
206 miles (-7% from rated range)
For a full breakdown of Recurrent’s findings, check out their 2021 report here.
It’s Not Just EVs….
The U.S. Department of Energy says that vehicles powered by traditional internal combustion engines (ICE) also suffer efficiency losses as a result of hot and cold weather. ICE vehicles are especially impacted by hot weather due to air conditioning power requirements. The Department of Energy estimates that ICE vehicles lose about 25% of their typical fuel economy when operating with air conditioning on high settings.
One major difference between EVs and ICE vehicles is the affect of cold weather. Electric vehicles use quite a bit of energy to run the heater, whereas ICE vehicles redirect heat generated by the engine and therefore avoid significant effects on efficiency.
Although EV charging stations are becoming commonplace around major cities, many interstate highways have sparse charging infrastructure. Until charging stations are more reliable and easier to find, driving an EV in cold and hot weather will complicate EV ownership and delay EV adoption. A national charging network is on the way, and public fast-charging networks are growing quickly. With EV market share soaring every month, it’s imperative that we find solutions to this seasonal challenge that affects millions.
What does 2022 have in common with the 1939 World’s Fair? It’s the feeling that autonomous vehicles are right around the corner. Nearly every automaker, from Tesla to Ford, has overpromised and underdelivered on their plans for autonomous driving. Tesla CEO Elon Musk said it himself recently in an interview with researcher Lex Fridman. “I thought the self-driving problem would be hard, but it’s harder than I thought. I thought it would be very hard, but it was even harder than that,” Musk reflected. He’s not the only one to misjudge the enormity of the task at hand. You’d think automakers would stop giving themselves deadlines that are destined for letdowns.
It turns out that there’s been one overarching theme in the learnings from the past decade of development. Engineers now see that in order for self-driving cars to be safe and successful, cars will have to learn to think like a human. Computers are exceedingly good at performing repetitive tasks. What they’re not great at is responding to unique situations full of unknowns. The human brain is more capable than some give it credit for. We’re very good at dealing with unknowns and making complex decisions on the fly.
After reading this article, you’ll better understand what self driving cars are, the difference between self-driving cars and autonomous vehicles, and the terms and jargon associated with self-driving cars. Let’s dive in.
As you’re soon about to learn, the world of autonomous cars and self-driving technology is full of terms worth defining. For starters, what is self-driving in the world of transportation? Self-driving cars can drive in some or even all situations without driver input, but a human must always be ready to take control. Think of them as a crucial stepping stone on the path to full autonomy.
Self-driving cars are not fully autonomous. In the world of professional engineering, ‘automation’ is the preferred term for the sliding scale of vehicle operation status. In fact, the United States National Highway Traffic Safety Administration (NHTSA) refrains from using the term “self-driving” at all, and most engineers disagree with the use of the term. Let’s dive into the terms and definitions that relate to so-called self-driving cars, and the future of automation as a whole.
Terms and Definitions: A Self-Driving Primer
First, let’s clear the confusion. Talking about automated cars warrants a glossary of its own. Being well-informed is the key to knowledge, and we all know knowledge is power. Here’s a list of the terminology you’re likely to encounter in a self-driving world. In most cases, the difference is in the finest of details.
Advanced Driver Assistance System (ADAS)
These are technological features designed to improve driving safety. These software-based systems improve a driver’s ability to react to adverse situations on the road. Examples include adaptive cruise control, forward collision warning and lane departure warning. ADAS features are very common in newer car models.
Autonomous or Automated Vehicle
This term is thrown around a lot, but a true autonomous vehicle is capable of sensing its environment and operating without human involvement. Human passengers can take their eyes off the road and just enjoy the ride. Imagine entering the destination address, and that’s it. Autonomous vehicles can do everything that an attentive human driver can do.
Autopilot
Usually referring to Tesla Autopilot, which is a suite of ADAS features that enable the vehicle to steer within a lane and adjust speed in response to surrounding traffic. It’s essentially adaptive cruise control plus lane centering. Autopilot is standard on all new Tesla models.
Full Self-Driving
Tesla “Full Self-Driving” in its current iteration is not much different from driver assistance technologies. Tesla enthusiasts, relax. That’s likely to change as Tesla updates the software regularly via over-the-air updates that simply require WiFi to install. Automotive engineers generally refrain from using this term altogether, as it’s more associated with marketing than with engineering automation. A true full self-driving car can navigate roads with human supervision. Tesla’s program is getting close, but as thousands of videos online will show you, Tesla FSD is not quite there yet. It is impressive though. Tesla FSD can be yours (someday) for an additional $12,000 when you buy a new Tesla vehicle.
Geofencing
This is when a vehicle’s operation is limited to a restricted geographic area. For example, Waymo’s driverless vehicles are geofenced to only operate in the Phoenix metropolitan area. Geofenced autonomous vehicles will grow in popularity before true, independent autonomous vehicles put rubber on public roads.
LiDAR
Light Detection and Ranging. LiDAR is the go-to ‘radar’ technology for nearly all self-driving innovators. Except of course for Tesla, who seems to think image processing with cameras is the way to go. LiDAR can ‘see’ through low visibility conditions, including fog and heavy rain.
Self-Driving Vehicle
When a vehicle can perform most driving tasks in a geofenced area, but with constant human monitoring and intervention when needed, some in the automotive industry consider it to be self-driving. The degree of human input varies. More on that below…
The Six Levels of Automation
2022 Tesla lineup
But wait, there’s more! Engineers rate the levels of automation based on how independently the system can perform tasks, and how much human input and supervision is required. Here are the basics of the five levels of automation, according to the Society of Automotive Engineers.
Level Zero – Limited to warnings and brief takeover of vehicle control. Ex: auto emergency braking, blind spot warning, lane departure warning
Level One – Steering OR acceleration/braking. Ex: lane centering OR adaptive cruise control
Level Two – Provides both steering AND acceleration/braking. Ex: lane centering AND adaptive cruise control
Level Three – The car can drive independently under certain conditions. Ex: automated driving at slow speeds
Level Four – Geofenced automated driving; steering wheel optional. Ex: Waymo’s local driverless taxi
Level Five – The autonomous vehicle can operate anywhere without driver input or attention
Now that we’ve covered the engineering and industry jargon, let’s revisit our definition.
What exactly is self-driving technology? The most agreeable definition is that self-driving cars fall within level 3 or level 4 automation, in which the vehicle can perform most driving tasks in a geofenced area, but with constant human monitoring and intervention when needed. Fully autonomous vehicles fall within the ultimate frontier of automotive engineering, Level 5. A true autonomous vehicle can operate from start to finish without driver input or attention. Imagine reading a book or taking a nap on your way to work.
Are There Any Self-Driving Cars Today?
No cars on today’s roads are capable of fully autonomous driving. Automated driving remains years away, however tremendous resources are committed to the cause of unraveling the ultimate challenge in automotive engineering. Tesla’s Autopilot and Full Self-Driving features are branded as Level 2 systems, which means that constant supervision is required, and intervention is to be expected. This discrepancy between the Level 2 classification of Tesla’s driver assistance systems and the names of the products remains the source of much controversy among engineers and driver safety advocates alike. Can’t we all agree that honest advertising is always in the interest of safety and responsibility?
Aside from automakers, there are dozens of other companies innovating in the autonomous driving space. Waymo, Argo AI and Cruise are all putting geofenced autonomous cars on the road today for real-world testing and limited customer use for ride-hailing. What is a self-driving car in 2022? It’s likely a prototype with limited use.
What’s Next?
Tesla is the clear leader in advanced driver assistance systems. However, the extent of Tesla’s lead among industry competitors is not nearly as clear as it was a few years ago. Tesla has taken a bold step away from using radar for sensory inputs. The decision to remove LiDAR from new Tesla models starting in 2020 was so controversial that some senior engineers quit in protest.
2022 Mercedes EQS
Remarkably, Tesla is no longer the only automaker breaking autonomy barriers. In 2021, Mercedes-Benz became the very first automaker to get regulatory approval for Level 3 autonomous driving on limited public roads. For now, Mercedes Drive Pilot is available on 8,197 miles of German highways at speeds up to 37 miles per hour. What makes Mercedes Drive Pilot so special is that it is the first approved consumer-ready system to permit the driver to take their attention away from the road while the vehicle is in motion. Even Tesla’s Full Self-Driving feature does not permit the driver to direct their attention elsewhere, despite evidence of the contrary on social media.
Level 2 For Now
For the foreseeable future, American roads will see even more Level 2 driver assistance systems calculating their way through traffic as nearly every automaker in the market steps up their autonomy game. Level 3 remains in development, even for Tesla. Mercedes has not announced if it will seek approval in the US anytime soon, likely due to the murky regulatory environment.
Fully automated driving is likely in our future, but no one knows when it will be safe and accessible to all. The pace of innovation ebbs and flows. Engineers, regulatory agencies and insurance companies have some hard problems to solve. For now, proceed with caution when at the wheel of a “self-driving” vehicle. Their arrival is a great reason to look twice when crossing the street. You never know who (or what) might be coming around the corner.
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The word “recall” sure is thrown around loosely these days. By now, you likely know that Tesla fixes the vast majority of recalls with an over-the-air software update. In the tenth recall in just four months, Tesla is addressing a pedestrian safety concern brought up by the US National Highway Traffic Safety Administration (NHTSA).
During the 2020 holiday season, Tesla sent a gift of sorts to all of their customers. The cars received an update that turned the external speakers into a boombox. The Tesla Boombox can play a number of customizable sounds (music, jokes, fart noises…) out of the same speakers that are meant to alert pedestrians of the approaching, silent electric car. It’s the customizable feature that seems to be at the center of this recall. Under certain circumstances, the Boombox can disrupt the federally-mandated pedestrian warning risk sounds.
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In typical Tesla fashion, the pioneering automaker will push an over-the-air update to all of the affected cars. Tesla cars just need a WiFi connection to receive these frequent updates. Some OTA updates even increase performance or battery life.
Check out Tesla’s official response to the NHTSA investigation here. It’s interesting to observe the automaker interacting with the federal agency that is always on their case. Here’s how simple the Tesla Boombox recall remedy is:
“Tesla will perform an over-the-air (OTA) software update that will disable the Boombox functionality when the vehicle is in Drive, Neutral and Reverse modes, free of charge. Owner notification letters are expected to be mailed April 5, 2022.”
Tesla Boombox will only work in Park mode it seems. Perhaps that was common sense all along? Tesla’s engineers typically work quickly to send such urgent recall fixes over-the-air. While the notice says that owners will receive notices by mail in April, it’s very likely that the remedy will update cars much sooner.
Lots of people aren’t fans of Tesla for one reason or another. However the EV pioneer does have an undeniable advantage when it comes to updating their vehicles. With well over 2 million Tesla vehicles on the road today, OTA updates are a key selling point for car buyers in the electric vehicle market. Other automakers are rushing to implement the capability in their future models, as seen by recent announcements from GM, Ford and literally every EV startup today.
We recently took a deep dive into over-the-air updates, and shared automaker plans for adding the feature to their lineups. Learn more about OTA update capabilities.
Let us know what you think in the comments. Does the Tesla Boombox recall make sense? Would you buy a Tesla? Does OTA update capability factor into your decision?
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