Tuesday, September 16, 2025

Tesla Model Y Is Now Cheaper Than The Average New Car In The US

Last week, Tesla (Nasdaq: TSLA) cut US prices for the fifth time for the Model Y. The aggressive move has now brought the starting price of Tesla’s best-selling model below the average price of a new vehicle in the US.

The Model Y SUV is now $759 cheaper than the average new car or truck at $46,990 for its base model. Bloomberg tracks that the differential between these two prices has changed by over $20,000 since the middle of last year.

Apart from the price war that it appears to have started, which Tesla CEO Elon Musk denies, the cuts could also impact the future of the broader EV space. In a note last week, Morgan Stanley analyst Adam Jonas said that the cuts could lead some carmakers to cool their aggressive investments in EVs, rather than have to compete with Tesla amid an uncertain economy.

“We are questioning whether this is the ‘moment’ where the boards of the legacy OEMs can reconsider dialing back the magnitude and timing of their EV capex and R&D plans,” Jonas said. The analyst rates Tesla as “Overweight” (a Buy) but revised his price target to $200 from $220.

In the near term, the price cuts — the scale of which has never been seen from a carmaker — have brought Tesla’s gross margins down to 19.3% in Q1 from 23.8% in the previous quarter and 29.1% in the same period last year. It’s “keeping investors up at night,” says Wedbush analyst Dan Ives, who maintains an “Outperform” rating for the carmaker but also brought down his price target from $225 to $215.


Information for this story was found via Bloomberg, Teslarati, Markets Insider, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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