Tesla’s Model 3 Performance Price Rises to $54,990, Near Tax Credit Limit

Tesla has raised the Model 3 Performance price to $54,990, affecting eligibility for the $7,500 tax credit. With just $10 below the threshold, buyers must avoid optional extras to qualify.

Tesla introduced the new Model 3 Performance on April 23, 2024, with an initial MSRP of $52,990. However, just days later, the price was increased to $53,990. This rapid change is not unusual for Tesla, which has a history of adjusting prices frequently. For instance, the Model S Plaid initially launched at nearly $130,000 but is now available for under $90,000. Recently, Tesla raised the Model 3 Performance price again, bringing it to $54,990.

This price increase has significant implications, particularly concerning the Inflation Reduction Act and the $7,500 tax credit available for vehicles with U.S.-manufactured batteries. Among the updated Model 3 lineup, the Performance variant is the only one that meets these criteria and also adheres to the government’s $55,000 MSRP limit for non-SUVs and trucks to qualify for the tax credit. With the latest price hike, the Model 3 Performance is just $10 under this threshold, meaning buyers must opt for the base model with no additional features to benefit from the tax credit.

Previously, even selecting the Ultra Red paint option, priced at $2,000, would push the car’s price above the eligibility limit, demonstrating how narrow the customization band has become. Now, only the Stealth Grey Model 3 Performance with 20-inch Warp wheels qualifies. Fortunately, the white and black interior, which used to cost $1,000, is now a no-cost option, allowing some degree of personalization without losing the tax credit.

Uncertainty remains about whether the $8,000 Full Self-Driving (FSD) Capability cost affects the MSRP in the government’s view. The legislation defines MSRP as the base retail price plus any manufacturer-suggested retail price for each accessory or optional equipment attached to the vehicle at delivery, excluding destination charges, dealer-added options, or taxes and fees. The ambiguity arises because the hardware necessary for FSD is pre-installed in the car and can be activated later through the Tesla App, suggesting it might not be part of the MSRP.

Given Tesla’s unpredictable pricing strategy, waiting to purchase the Model 3 Performance is risky. The company might lower prices again or increase them, and any further increase over $10 would disqualify the car from the tax credit, resulting in a substantial financial loss for the buyer.