it just raised the price of its Model Y, but used-car buyers looking for an EV in 2023 could end up paying more than the price of a new EV if they’re not careful. Fluctuating prices and new tax credits are why.
Used car online seller
(ticker: CVNA), for example, appears to be having trouble adjusting prices quickly enough to keep up with Tesla’s (TSLA) changes.
A low-mileage 2022 Tesla Model Y performance edition on the site is listed at $63,990. Brand new, the same vehicle costs $59,490. Additionally, the new Tesla qualifies for a purchase tax credit of up to $7,500 from the federal government.
did not immediately respond to a request for comment on used vehicle pricing.
The performance version of the Y started the year at around $70,000. Tesla drastically cut its prices in the United States on January 12, lowering the Y base price of the performance to around $57,000. It was not yet low enough to qualify for the government purchase tax credit that was passed as part of the Inflation Reduction Act.
When the IRS, the Treasury Department responsible for implementing the tax credit, listed the cars eligible for the credit, it considered the Model Y to be more like a car than an SUV which capped the price for a new Y to qualify for $55,000. The IRS reconsidered last week and now considers the Y an SUV, meaning it can cost up to $80,000 and still qualify for the new tax credit.
After the IRS raised the price cap, Tesla raised the base price of a Model Y from $1,000 to about $58,000.
There is a lot to do. The upshot is that a Black Y, like the one listed on Carvana’s site for about $64,000, costs a new Tesla buyer about $52,000 after crediting it, but before paying any shipping costs.
It’s a big gap and another sign that this is a strange year for the auto industry. The economy is slowing and interest rates are rising, but sales could still rise because auto production has been limited for years by a shortage of semiconductors. Additionally, the new tax incentives are expected to result in more EVs being sold.
Battery electric cars account for just under 6% of all new cars sold in the United States in 2022.
There is a tax credit for buying a used EV, but it applies to EVs priced under $25,000. It can be 30% of the purchase price up to $4,000.
Despite any pricing confusion, Carvana stock has had an incredible start to 2023. The stock is up about 205% year-to-date. However, they have decreased by about 90% in the last 12 months. Some stocks may rebound at the start of any year after the fiscal sale ends. Carvana shares are down about 98% in 2022.
Tesla stock hasn’t had a year like Carvana, but the stock is down about 65% in 2022. The stock is up about 54% year-to-date. THE
they have increased respectively by approximately 8% and 15% since the beginning of the year.
Email Al Root at [email protected]