Tesla Inc slashed U.S. prices on its Model S and X for the third time this year in a bid to boost sluggish demand for its signature electric vehicle. Chief Executive Elon Musk has vowed to go after volume over profit margins. The flagship Model S sedan starts at $84,990, down $5,000 from last month’s price. The Model X starts at $94,990, a $5,000 price cut.
The layoffs come as the auto industry grapples with soaring inflation and rising interest rates, making it increasingly expensive to buy new vehicles. Tesla, which sells cars directly to consumers, regularly adjusts prices. The Austin, Texas-based company currently makes the Model S, X, 3 and Y.
Also read: Tesla teases two new EVs, one of which could be the brand’s cheapest ever
“Price really matters,” Musk said on the company’s January earnings call. “I think there are a lot of people who want to buy a Tesla car, but can’t afford it. So these price changes really have an impact on the average consumer.” Tesla delivered 422,875 vehicles worldwide in the first quarter, but only 10,695 were S and X.
more cuts
Tesla cut prices on the Model 3 sedan and Model Y sport-utility vehicle by $1,000 and $2,000, and lowered the starting prices of the two models to $41,990 and $49,900, respectively, according to its website. It also added a new version of the entry-level Model Y.
The U.S. automaker cut prices in China earlier this year, also sparking a price war in the world’s largest market for new energy vehicles. The Shanghai factory shipped a total of 88,869 vehicles in March, according to preliminary data released by the China Passenger Travel Association on Tuesday.
The Chinese-made cars still have huge price differences, with the base Model 3 starting at 229,900 yuan ($33,400) and the Model Y starting at 261,900 yuan ($38,086).
Tesla slashes Model S and X prices for second time this year
While Tesla continues to lead other automakers in global electric vehicle sales, it faces unprecedented competition from China’s BYD, which analysts at Bloomberg New Energy Finance expect the Berkshire Hathaway-backed The manufacturer will challenge for the No. 1 position this year.
Tesla also needs to pick up the pace to maintain the pace of growth investors are used to. Last year, the company missed its target of an average annual growth of 50% in vehicle deliveries and instead increased by 40%. Its growth rate slipped to 36% in the first quarter. Tesla will report earnings on April 19.
First published date: April 8, 2023 at 17:16 PM UST
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