Tesla discounts Model S by $30,000, and Model X by $41,000

Tesla Inc.’s latest discounts will newly qualify one of its models for federal subsidies that Elon Musk said years ago the U.S. should scrap.

By dropping the starting price of the Model X to $79,990 — a $41,000 reduction from the start of the year — Tesla made the sport utility vehicle eligible for the federal tax credits revamped by the Inflation Reduction Act, President Joe Biden’s signature climate bill.

Musk in December 2021 called for the Biden administration to get rid of the incentives, citing concerns about government spending and the deficit. At that time, Teslas were no longer eligible for the tax credits because the company had already reached a limit that triggered a gradual phase-out of the benefit.

“I’m literally saying, get rid of all subsidies,” the chief executive officer said during a Wall Street Journal conference. When asked if his opposition had anything to do with the effect this would have on competitors, Musk replied: “Maybe they need it, I don’t know.”

With the Inflation Reduction Act, Biden discarded a cap on how many vehicles each automaker could sell before the credits began to wind down. The administration also set maximum retail prices at $80,000 for electric SUVs, vans and pickups, and $55,000 for cars.

Tesla’s Model X is a bit player in the company’s lineup, with the cheaper Model 3 sedan and Model Y crossover making up 97% of first-half deliveries. The carmaker also dropped the starting price of the Model S sedan to $74,990, from $104,990 at the start of the year.

Tesla dropped prices of the Model S and X after unveiling a refreshed version of the Model 3 with a sleeker front end, more battery range and a new rear touch screen.