Dana Hull and Danny Lee Bloomberg Hyundai was poised to become Tesla’s top contender. Then the U.S. government blindsided it Hyundai’s and Kia’s popular new EVs are turning heads and sales were skyrocketing — until the Inflation Reduction Act took their customer rebates away. Feb. 28, 2023 Tesla shares closed down 2% on Monday. The stock has climbed 61% this year after plunging 65% in 2022. Advertisement The Models S and X were just over 5% of Tesla’s vehicle deliveries last year, so changing their pricing will have less of an effect on the company’s bottom line and EV market dynamics than adjusting the cost of higher-volume vehicles. Still, the cuts are consistent with comments Musk and other executives made last week about squeezing expense out of how Tesla designs, engineers and manufactures vehicles in order to unlock more demand. “Tesla is sprinting in a global automotive marathon to cut costs, as they strive to be a global manufacturing champion that can give the company a sustainable competitive advantage,” said Joel Levington, a Bloomberg Intelligence credit analyst. Tesla’s dynamic pricing is unique in the automotive world, where manufacturers typically make changes to what they suggest their retailers charge only from one model year to the next. Reductions to the Model 3 and Y in January made those vehicles cheaper relative to the average price of a new vehicle in the United States than ever before. Advertisement The changes to the 3 and Y were at least in part driven by Tesla wanting those models to qualify for tax credits made available by the Inflation Reduction Act. After the Biden administration changed how it distinguished between passenger cars and sport utility vehicles in early February, thereby raising the price limit for Model Ys to be eligible for credits, Tesla bumped prices back up.