Tesla hikes Model Y's price in this country. Know why

Tesla has announced a price hike for the Model Y electric crossover in the US after the country has altered the tax credit rule. The price of the Model Y Long Range version has been increased by two per cent, while the Performance version has become pricier by 2.7 per cent, reveals the car brand's official website. AP reports that this price hike has been introduced due to rising demand and changes in the US government rules that make more versions of the small SUV eligible for tax credits.

Interestingly, this price hike comes three weeks after the auto manufacturer reduced prices by nearly 20 per cent on some versions of the Model Y, which is currently the bestselling EV from the brand. The price cuts were announced in a bid to boost the sagging demand after Tesla witnessed slumping sales amid rising competition. Also, the decision was fuelled by the automaker's worst-ever stock market performance in 2022, which was caused by several factors. The price cuts made several versions of the Model Y eligible for the EV tax credit under the Inflation Reduction Act in the US, which are available at least till March this year.

Also, the change comes after automakers lobbied with the US government to change the vehicle definitions to allow expensive vehicles to qualify for maximum credit. Tesla CEO Elon Musk, along with the company's top officials, met with US President Joe Biden last week to discuss various aspects of the EV industry and the broader goals of electrification.

Now, after the January price cuts worked for the automaker to boost its sales, Tesla is back on the path of increasing the price of its vehicle. Tesla CEO Elon Musk said a few days ago that the automaker had seen the strongest number of orders to date in the company's history. He also stated that the Tesla Model Y price hike comes in response to that.