Tesla (TSLA.O) has increased lease prices across all its models in the United States following the expiration of the $7,500 federal electric vehicle (EV) tax credit, which had significantly boosted EV demand over the past two years. The company’s website showed the new rates on Wednesday.
The price adjustment comes after Congress allowed key EV incentives to expire on September 30, ending tax breaks of $7,500 for new EVs and $4,000 for used EVs that were introduced under earlier clean energy legislation. Tesla and other automakers had used these credits to offer more attractive leasing options to consumers.
Higher Lease Prices Across the Lineup
Tesla’s Model Y, its best-selling vehicle, now leases for $529–$599 per month, up from $479–$529 previously. The Model 3, which recently underwent a design refresh, saw lease prices climb to $429–$759 per month, from $349–$699 before.
Despite these leasing changes, vehicle purchase prices remain unchanged on Tesla’s official site.
Market Pressure Mounts as Incentives Fade
The expiration of federal tax credits threatens to cool U.S. demand for electric vehicles, which had already shown signs of slowing after years of rapid expansion. Industry executives and analysts have warned that the loss of subsidies could deter new buyers, especially as higher interest rates and economic uncertainty weigh on household budgets.
According to Cox Automotive, Tesla’s U.S. market share fell to 38% in August, its lowest level in nearly eight years — a sharp decline from the over 80% share it once commanded. The fall reflects growing competition from established automakers like Ford, Hyundai, and GM, as well as new entrants from China and Europe.
Analysts said the lease price hike may further limit Tesla’s competitiveness in the short term, especially as rivals introduce lower-cost EV models and attractive financing options to capture former Tesla customers.