Tesla Model Y sees 20% decrease in price Tesla did not say how long the lower prices would remain in place. The Tesla website shows the Model Y with the largest drop in sticker price, from $65,990 to $52,990, a 20% decrease. The lowest-priced Model 3 dropped to $43,990 from $46,990, a 6.4% drop. The most expensive vehicles on the market dropped as much as $21,000, including the company’s Model S Plaid, which had a 15% price drop. Tesla's popular five-seater Model Y, which the company considers an SUV, previously did not qualify under federal rebate guidelines with a previous list price of $65,990. The vehicle did not reach the weight minimum to be considered an SUV by the government standards, and as of last week cost too much to qualify as a smaller vehicle. Musk already took to Twitter to say it was "Messed up!" earlier this month. Under the legislation, consumers can qualify for as much as a $7,500 tax credit on new EVs and plug-in hybrids, but the vehicles have to meet certain criteria: It must weigh less than 14,000 pounds, must be assembled in North America, and must use a battery with at least 7-kilowatt hours of capacity. Vans, SUVs or pickups, which are defined by weight, must have a suggested retail price below $80,000, while smaller vehicles like sedans must have a sticker price of $55,000 or less. Why Tesla dropped prices Dan Ives, an industry analyst with Wedbush Securities, said the price cuts were a strategic move by Musk and Tesla, as the company has been seeing less demand for its products. "It was the right medicine at the right time. They need to cut prices amid softer demand," Ives said. "They're no longer the only game in town, it's a softer macro, and also they needed to cut prices to qualify Model Y for the tax credit." The price cuts follow lower-than-expected delivery numbers for 2022. The company will issue its quarterly earnings report later this month, but has already announced that it sold a record 1.3 million vehicles last year. But those sales numbers fell short of Musk's goal to grow sales by 50% every year.