Tesla Inc.'s price cuts across its EV lineup are having their intended effect: Shoppers are flocking to automobile websites to research America's top electric brand. That will fuel greater sales and growing market share, analysts said.
"On-site shopper consideration of Tesla vehicle pages on Edmunds jumped to 4 percent of all researched brands compared to 1.9 percent the week prior," Edmunds said Thursday. "The Tesla Model Y became the second-most researched vehicle on Edmunds, behind the Honda CR-V, up from 70th place the week prior."
As part of Tesla's surprise price reductions last week, the base Model Y crossover saw a $13,000 price drop to $54,630, including $1,390 for shipping and a $250 order fee. The cut put the Model Y below the $55,000 price cap for a new EV tax credit of up to $7,500.
The compact Model Y with optional three-row seating is eligible for the credit under the $80,000 cap, according to Inflation Reduction Act rules that qualify the three-row version as an SUV and the base two-row version as a car. The rules are subject to revision.
Until this year, Tesla did not qualify for the tax credit because it had exhausted its quota of 200,000 vehicles under the previous version of the federal incentive. Last year's Inflation Reduction Act brought back the credit for both Tesla and General Motors, which had also hit its quota, while imposing a new set of rules on local content.
With a potential savings of $20,500 on the Model Y — the bestselling EV in the U.S. and globally — Tesla will win over shoppers who had been considering other EV brands, Edmunds said.
"Consumers have grown accustomed to price hikes and the expectation to pay over MSRP for quite some time, so a discount this generous or easy to comprehend was understandably welcomed by car shoppers," said Jessica Caldwell, Edmunds' executive director of insights. "These price cuts, as well as inventory on the ground, will win Tesla market share and help consumers overlook the brand's aging lineup."