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Tesla, other EV makers roll out cheaper models to entice new buyers

The federal tax credit that boosted electric vehicle sales for the last three years is gone, leaving EV makers to find new ways to entice car buyers.

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Tesla is among the carmakers that unveiled new, less expensive versions of some of its most popular models.
Tesla is among the carmakers that unveiled new, less expensive versions of some of its most popular models.
Kena Betancur/VIEWpress via Getty Images

We get quarterly results from Tesla after the bell on Wednesday. Earlier this month, the electric car maker unveiled new and cheaper versions of some of its most popular models.

Other automakers like Hyundai, Chevy, and Ford are also promising to discount EVs or roll out more affordable ones — a move that could help keep buyers interested but squeeze profits.

For the last three years, electric vehicle sales were getting a lot of help from federal tax credits that knocked as much as $7,500 off the price of a new EV.

“In this era of people struggling with affordability, that really helped a lot,” said Jessica Caldwell, head of insights at Edmunds.

But as of the first of the month, that incentive was ended by the GOP tax and spending bill.

“And so now it’s up to the automakers, really. The training wheels have come off,” Caldwell said. “They have to figure out how to sell these vehicles on their own merits.”

For some automakers, that means offering more budget-friendly EVs with fewer bells and whistles and price tags comparable to gas-powered cars.

That’s a product lots of car shoppers have been looking for, according to Chris Harto, senior policy analyst of tansportation and energy with Consumer Reports.

“There has been sort of a limited supply of vehicles in that sweet spot between $30,000 and $40,000, which is really where a lot of Americans who buy new cars are looking,” he said.

Those smaller, cheaper models won’t turn as much profit, Harto said, but automakers hope they’ll keep the EV market growing so that they can sell more expensive ones down the road.

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