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Some Tesla models are now priced well below average new cars in the U.S.

While the average price of gas-powered vehicles continues to climb in the U.S., Tesla juices its sales volumes, and ignites an EV price war, with recent price cuts

SHARE Some Tesla models are now priced well below average new cars in the U.S.

A row of Teslas sit parked outside a Tesla dealership in Salt Lake City on Tuesday, July 12, 2022.

Ben B. Braun, Deseret News

Electric vehicle market leader Tesla pulled a surprise move in January, slashing prices on some of its most popular models in the U.S., Europe and Asia.

Now, thanks to an arc of steep price accelerations for most new, gas-powered vehicles over the past few years, some of which were fueled by pandemic-wrought supply chain snarls that skewed the supply-demand balance, you can now snag a new Tesla for less than the price of the average new car in the U.S.

And, by taking advantage of some new federal EV incentives, in some cases you can beat that average price mark by thousands of dollars.

According to an analysis published by Bloomberg News this week, Tesla’s Model 3 sedan now sells for $4,930 less than the average new vehicle sold in the U.S. And, that’s the cheapest price Tesla has ever had relative to the typical U.S. vehicle. Prices for the Model 3 start at $42,990.

Tesla’s Model Y sport utility vehicle saw the biggest dollar value price cut in January, with the company knocking $13,000 off select models. According to Kelley Blue Book, the Model Y was the third bestselling SUV overall in the U.S last year and 2022’s bestselling electric vehicle. Tesla’s Model Y starts at $65,990.

On an earnings call with investors and analysts late last month, Musk said the price cuts had ignited new demand for Tesla EVs and said the reductions “really make a difference for the average consumer,” per Reuters.

Besides juicing sales volumes, Tesla’s January sticker cutbacks have ignited a price war among other EV makers who would love to carve off a slice of the Austin-based company’s 60% share of the electric vehicle market.

Per Bloomberg, Ford Motor Co. quickly followed Tesla’s moves by slashing prices of its electric Mustang Mach-E, Lucid Group Inc. began offering $7,500 discounts and Rivian Automotive Inc. announced more layoffs.

In the meantime, the average cost of a new, gas-powered vehicle in the U.S. continues to escalate, up by some $10,000 since the pandemic and coming in at $47,920 in January, according to Bloomberg’s report.