For years Tesla buyers have had to wait weeks if not months for their new electric car to be delivered. Not right now. If you want a new Model 3 sedan, one could be parked in your driveway within a week—thanks to a glut of inventory right before the quarter ends.
The EV company run by billionaire Elon Musk slashed prices by thousands of dollars across its lineup in January to goose sales and help the Model 3 and Model Y crossover meet price qualifications for buyers to get a $7,500 federal tax credit. Estimated delivery for both the base version of the 3, priced at $42,990 before options and taxes, and an all-wheel-drive performance grade, starting at $53,990, have estimated delivery dates of this month. The tax credit’s availability for Tesla models that use China-sourced battery cells likely ends after March 31.
The Austin-based company also appears to have many Model 3s available immediately in most major U.S. markets and is offering additional discounts of up to $900 off existing inventory in March. Tesla didn’t respond to an email inquiry about its inventory situation.
Carrying lots of inventory, particularly for electric vehicles, has been unusual in the past few years, due to a pandemic-fueled supply crunch of computer chips and other key components. Musk frequently says on earnings calls that Tesla has more demand than it can fulfill, which makes the current availability of the most-affordable vehicle in its lineup surprising.
By comparison, supplies of Toyota’s fuel-saving Prius, which shifts to a new model in the coming weeks, are almost nonexistent across the U.S. (Longo Toyota in suburban Los Angeles, the world’s largest Toyota dealership by sales volume, has no new 2023 or 2024 Prius models in stock.)
Tesla is the world’s biggest EV brand but the arrival of new models from companies including General Motors, Ford, Volkswagen, Hyundai and Kia, and startups such as Rivian are expanding the market at Tesla’s expense.
“We have been anticipating that the new competition in the EV space will eventually cut into Tesla’s market share,” said Michelle Krebs, executive analyst for Cox Automotive. A challenge for Model 3 is also that it’s a car and “people want sport utility vehicles, which is why you’re seeing tighter demand for Model Y,” she said.
The average transaction price for new EVs dropped by over $1000 last month to $58,385 due to price cuts by Tesla and other manufacturers. Still, rising interest rates are impacting auto sales this month, pushing up monthly loan and lease payments, Krebs said.
On its website, Tesla notes that “New Model 3 and Model Y vehicles qualify for a federal tax credit for eligible buyers. This $7,500 credit is in effect for deliveries taken before an update to the federal guidance, which Treasury and the IRS intend to issue no later than March 31, 2023.”
The Treasury Department is likely to announce modified rules to qualify for the credit next week, eliminating vehicles that use batteries made with cells sourced from China, said Sam Abuelsamid, principal analyst for Navigant Research and a Forbes contributor. In particular, tighter requirements for battery components to be produced in North America may reduce tax credits for EVs produced by GM and other automakers that currently receive the full $7500 incentive.
“They probably did build more Model 3s to try to take advantage of the tax credit. Whatever Treasury announces, the standard range Model 3 will absolutely not be eligible anymore after this month because it uses Chinese CATL batteries,” he said.
Tesla shares fell about 1% to $189.77 in late afternoon Nasdaq trading.
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