Tesla Inc TSLA CEO Elon Musk on Wednesday opined that a lot of the incentives in place for EVs do not make its vehicles immediately cheaper. If a Tesla were indeed as cheap as a Toyota RAV4, nobody would buy the Japanese SUV, the CEO said.
What Happened: A lot of the incentives in place for EVs including tax credit is very difficult for the average person to access, Musk said.
“A large number of people are living paycheck to paycheck, and with a lot of debt. They've got credit card debt and mortgage debt. So, that's the reality for most people,” Musk said. As a result, a lot of people can’t wait for a tax credit of $7,500, Musk said, noting that this makes Tesla ultimately more expensive than an RAV4.
“I mean, to be totally frank, if our car costs the same as an RAV4, nobody would buy an RAV4 or at least they're very unlikely to,” the CEO said.
Why It Matters: Tesla has been cutting prices on its vehicles in the U.S. since the start of 2023. Though the company also raised prices intermittently, all Tesla vehicles are presently cheaper as compared to the start of the year.
However, with rising interest rates, the monthly payments customers pay for the cars haven’t really changed, Musk said.
“When you look at the cost or the price reductions we've made in, say, the Model Y and you compare that to how much people's monthly payment has risen due to interest rates, the price of the Model Y is almost unchanged,” Musk said.
Currently, all the versions of Tesla’s lower-end vehicles, the Model 3 and Y, are eligible for a tax credit of $7,500. Tesla’s cheapest Model 3 RWD starts at $38,990 and even with the tax credit is priced higher than the 2024 RAV4 which starts at $28,475.
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