Effective immediately, Tesla has dropped the price to order a Model S, Model 3 or Model X. Model Y prices don’t appear to have changed.

My guess is this move was made in response to a slower economy, reduced battery costs, and more orders for the Model Y than the company is able to produce. By dropping the price of every vehicle except Y, they can move some demand from the Y to other vehicles that already have available inventory all over the world.

Here are the prices I see for the United States right now:

Model S

Long Range Plus –– $74,990

Performance –– $94,990

What a steal! Base Model S is about $10,000 more than the top configured Performance Model 3 and only $1,000 more than the top end 7 seater Performance Model Y.

Model 3

Standard Range (“Off Menu”) –– $35,000

Standard Range Plus –– $37,990

Long Range –– $46,990

Performance –– $54,990

With a $2,000 price drop Tesla inched the Standard Range Plus closer to the $35,000 Standard Range Model. Considering Basic Autopilot is included and you get an extra 30 miles of range, choosing Standard Range Plus over Standard Range is now more of a no-brainer than ever.

Model X

Long Range Plus –– $79,990

Performance –– $99,990

Wow, a Performance Model X under $100k. That’s fantastic. The $5,000 price cut will make this pill easier to swallow for many people. It’s still an extravagant luxury SUV, but the monthly payment just went down.

Model Y

Long Range –– $52,990

Performance –– $60,990

Model Y prices haven’t dropped. This is probably because it wouldn’t help to cut prices when they can’t produce enough to meet existing demand. The Model Y is now $6,000 more expensive than the Model 3.

What this tells me is that demand for the Model Y is too strong for Tesla’s liking. They need to get rid of the inventory they already have around the world, and encourage people to buy Model S, Model X, or Model 3 over the Model Y.

This means we should expect fireworks once Model Y production is ramped worldwide in Fremont, Gigafactory America, Gigafatory Shanghai and Gigafactory Berlin.

Full Self Driving Price Increase

Cutting the prices of the vehicles while increasing the price of the Full Self Driving package is a smart strategy. The lower base price makes the vehicles more affordable for anyone who wants one, while the higher FSD price increases margins on sales from new and existing customers.

Every car will buy the FSD package or sign up for a subscription sooner or later, whether it’s with this owner or the next. As long as lower battery costs, localized production, and increased cost efficiencies lower the base price, they can continue raising the price of the FSD package without consumers feeling like they’re paying a lot more. This should also encourage people to place their orders before the FSD price increase on July 1.

Go to Tesla.com