Tesla raises Model Y price $500 after cutting it by $13,000

After cutting the price of its popular Model Y crossover by $13,000 this month, Tesla Inc. has now raised the starting sticker by $500 without explanation.

The most inexpensive version of the EV, the Model Y Long Range, now starts at $53,490 before the $1,390 shipping fee and $250 order fee. That means it still qualifies for the new $7,500 tax incentive that’s part of the Inflation Reduction Act signed into law last year.

The $500 price change appeared on Tesla’s U.S. shopping site Tuesday.

Since the standard, two-row Model Y is classified as a car by the IRS, it faces a price cap of $55,000 for the tax incentive. Shipping and other fees are excluded from the price limit.

The less popular version of the crossover, the three-row Model Y for an extra $4,000, is classified as an SUV and has a price cap of $80,000 under the preliminary IRS guidance.

The Treasury Department is still developing regulations around the EV credit, with a March deadline for final guidelines.

Tesla CEO Elon Musk has complained on Twitter about the classification of the two-row Model Y as a car and urged Tesla fans to complain directly to the IRS. Musk is expected to participate in Wednesday’s earnings call after the stock market close.

Industry analysts saw this month’s $13,000 price drop as Tesla’s response to softening demand due to a slowing economy and relatively high prices since the automaker sharply raised stickers over the last two years. Tesla’s three other models also received price cuts earlier this month.

But the $500 about-face on just the Model Y, and not the other models, sparked speculation by the brand’s fans on social media Tuesday. Tesla no longer has a press office and didn’t respond to an email requesting comment on the price increase.