Jan 18, 2023 3:28 p.m. Colored lights on automated machinery showcased the process of building Tesla vehicles at the company's new Austin plant. Jay Janner, Nate Chute, Austin American-Statesman Buying a Tesla just got a lot cheaper, after the Austin-based electric automaker slashed prices by as much as 20% likely in an effort to increase demand. The price cuts apply to vehicles sold in the United States and range from 6% to 20% reductions for Model 3 and Model Y SUVs and some higher-end models. Tesla made similar reductions in Europe and dropped prices on its cars in China last week. Advertisement More:Tesla plans $700 million in growth at Austin facility, documents show 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. The price has now dropped to $52,990. 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. Advertisement