Tesla Has Cut Prices Again. Is Now a Good Time to Go Electric?

Tesla has cut its prices again. At The Ascent, we previously discussed how Tesla had slashed its prices at the beginning of 2023. Now with even lower prices, you may be wondering if it's a good time to purchase an electric vehicle. While an electric car is an investment, you could save on car maintenance and gasoline costs. If you've been saving for a Tesla, now could be a smart time to buy if you want to get a deal on the price.

Tesla vehicles now cost less

Everyone loves a good deal -- but how good are these new prices? With the most recent price cuts, every Tesla model is more affordable. How much money will you need to spend on your new car? Here's a breakdown of the latest starting price by brand-new car model:

These prices are significantly lower than at the start of the year. If you've been stashing extra cash in your high-yield savings account to save for a down payment for a new EV, you may want to consider whether now is a good time to buy a Tesla affordably.

EV tax credit changes begin April 18

While the newly lowered prices are good news for your wallet, it's essential to understand that the U.S. EV tax credit rules officially change on April 18, 2023. Some vehicles that previously qualified for the $7,500 EV tax credit may no longer be eligible due to more strict battery mineral and battery components requirements.

Beginning on April 18, vehicles that meet only the critical minerals requirement will qualify for a $3,750 credit. Cars that only meet the battery components requirement are eligible for a $3,750 credit. Vehicles that meet both requirements qualify for a $7,500 credit.

Taxpayers hoping to take advantage of the EV tax credit are encouraged to verify vehicle eligibility before buying. Tesla has outlined which of its vehicles qualify under the new rules. When purchased new, the following Tesla models qualify for tax credits to eligible taxpayers:

• Model 3: $3,750
• Model 3 Performance: $7,500
• Model Y: $7,500
• Model Y Long Range: $7,500
• Model Y Performance: $7,500

Vehicles must also meet MSRP price cap requirements under the new rules. You can purchase optional equipment packages when buying a new Tesla. Under the EV tax credit new rules, vehicles can't exceed the price caps below to qualify for tax credits:

• Model 3: $55,000
• Model Y: $80,000

When purchasing a qualifying new vehicle, taxpayers must also meet the adjusted gross income (AGI) requirements outlined below:

• Married couples filing jointly: $300,000
  Heads of households: $225,000
• All other filers: $150,000

Note: Used electric vehicles may also qualify for EV tax credits. If you're considering purchasing a used electric car, be sure to review the tax credit requirements before buying.

What potential savings look like for electric drivers

You may wonder how much money you can save by switching to a fully electric vehicle. According to the U.S. Department of Energy's National Renewable Energy Laboratory, drivers can save as much as $14,500 on fuel costs over 15 years by driving an electric car instead of a similar one fueled by gasoline. Drivers can also save on maintenance costs. Before making any costly purchase, be sure to consider how your decision will impact your personal finances.