It’s a new year, and nobody is happier to see 2022 in the rear-view mirror than Tesla, which suffered some devastating setbacks of late. Whether or not you’re a diehard Tesla-stan, it cannot be denied that Tesla is one of the most influential automotive brands of the last decade. And when thinking of Tesla, it’s impossible not to associate the company with its outspoken, larger-than-life CEO, Elon Musk.But recent events, mostly revolving around Musk’s purchase of social media juggernaut Twitter, have soured both investors and the car-buying public on the electric car pioneer. Musk’s controversial leadership decisions at Twitter are not solely to blame, though. Increasing competition in the EV space from legacy brands, coupled with Tesla’s price increases, delivery issues, and reports of unreliability have conspired to create the perfect storm. To wit, shares of Tesla stock dropped in value 65% over the course of 2022.RELATED: The Tesla Model Y Is About To Get More Affordable

The Model Y Is Just Too Pricey

A blue Tesla Model Y parked on the sand.
Tesla

If Tesla wants to win back consumers, it needs to act quickly. Considering the popularity of small crossover SUVs in general, it’s no surprise that the Model Y is currently one of Tesla’s best-selling vehicles. But with a starting price of $65,990, the Model Y is nosebleed expensive compared to the alternatives. For reference, a base model Hyundai Kona Electric starts at only $34,845, and the Chevy Bolt EUV in LT trim is just $33,995.

Apparently, Tesla recognizes this conundrum and plans to reduce the price of the Model Y by offering a version with a smaller battery and a lesser range. This might sound familiar because Tesla already offered a cheaper Model Y in the United States in 2021, but it was quickly withdrawn because CEO Elon Musk reportedly disliked the shorter range. However, Tesla continued selling the vehicle in Europe and Asia. In a bizarre twist, U.S.-based Tesla employees were still able to order the lower-range Model Y after it was pulled from the public.

Tesla 4680 Battery cell specifications
Tesla

The backbone of the (slightly) cheaper Model Y is Tesla’s "4680" battery, so named because its individual cells are 46mm in diameter and 80mm high. This was the first cell to be developed in-house from the ground up. In the past, Tesla’s involvement in cell development was limited to fine-tuning the chemistry of existing 18650 and 2170 cell formats. The vehicle still has a dual motor all-wheel-drive powertrain, but the new battery pack delivers 279 miles of range. In comparison, the current long-range Model Y has 330 miles of range.

That 51-mile reduction in range brings the Model Y’s price down to $61,990 based on research done by Electrek, which is a savings of $4,000 versus the standard Model Y. What, you expected more? Well, at least it’s a step in the right direction. As for other performance metrics, the 4680-cell version of the Model Y accelerates from 0-60 mph in 5.0 seconds flat, which is just 0.2 seconds slower than the standard range model.

In another move that is sure to alienate North American buyers, Tesla just announced that it'll be cutting prices in China to stoke demand. The price tag of the Chinese Model Y will be cut by 10%, which translates to a starting price of $37,899, according to calculations from Reuters.

It should however be noted, that the lowest-priced Model Y in China is rear-wheel-drive only. Its single electric motor propels it from 0-60 MPH in 6.9 seconds and the claimed range is 283 miles. According to Tesla, there is zilch, nada, zero chance that the really cheap RWD version will ever be sold on U.S. soil.

RELATED: 2023 Hyundai Kona Electric Review: The Perfect First EV

The Model Y May Not Get Tax Credit

Third row seating in a Tesla Model Y
Tesla

A recent update from the US Treasury about which electric vehicles are eligible for the new $7,500 federal credit has raised some questions about the definition of an SUV. It appears that the IRS is defining an SUV only by the vehicle’s Gross Vehicle Weight Rating or GVWR, which needs to be over 6,000 lbs to be considered an SUV. Apparently, only the Model Y with seven seats meets the weight requirement and is eligible for the maximum tax credit.

Many EV enthusiasts have been vocal in their disdain for this requirement since vehicles with lighter weights are inherently more efficient, so there is a possibility that the regulations will be changed. But as it stands right now, the five-seat Model Y isn’t eligible for the $7,500 tax credit unless it gains some weight. Needless to say, this is another unwelcome headwind for Tesla.

RELATED: Elon Musk Says The Tesla Cybertruck Can "Serve Briefly As A Boat"

World's Best-Selling Car?

A red Tesla Model Y parked in front of some mountains.
Tesla

Tesla CEO Elon Musk recently stated that he intends to make the Model Y the world's best-selling car. If there is any chance whatsoever of that happening, affordability needs to become a huge focal point for Tesla. Especially when faced with such formidable newcomers like the Hyundai Ioniq 5 and Volkswagen ID.4, both of which sell for a massively lower price than the Model Y. Granted, the Tesla name still has an air of exclusivity, but if the company wishes to remain a luxury brand, they’ll need to address the unreliability that is associated with its vehicles.

The arrival of the new, cheaper Model Y in North America appears to coincide with a goal being met. Tesla recently tweeted that it’s now producing enough 4680-cell batteries to build over 1,000 of these Model Y vehicles per week. The big question is: Can it attract that many excited buyers with a paltry $4,000 discount?