After pricing adjustments made throughout the first quarter resulted in an additional sales gain, Tesla reduced the prices of every vehicle it sells in the US once more.
Each version of the company’s more popular Model 3 and Y electric vehicles received a minimum $1,000 discount, and variants of its more expensive Model S and X vehicles received a $5,000 discount. It also unveiled a new Model Y base model with a starting price of $49,990.
Following lineup cuts in mid-January, this is Tesla’s second significant price reduction of the year, Reuters reported.
Tesla boss Elon Musk has stated that in order to maintain the company’s growth in the face of rising interest rates and a potential recession, he is ready to sacrifice the company’s profitability. In contrast to established players like Ford Motor Co. and more recent entries like Rivian Automotive and Lucid Group, the company has the unusual advantage of having high-profit margins to deal with, a Bloomberg report said.
Musk stated during an earnings call on January 25 that orders were growing at a rate that was almost twice as fast as production following Tesla’s first lineup-wide price decreases early this year. Deliveries increased by nearly 4% over the fourth quarter, and Tesla produced almost 18,000 more cars than it delivered to consumers. However, the business was unable to maintain this supply-demand dynamic.
Tesla delivered just 10,695 of the Model S and X in the quarter, the lowest number since the third quarter of 2021, despite a second round of reductions to those models in early March.
Since the beginning of the year, Tesla has decreased the price of each of those vehicles by at least $20,000 and as much as $34,000.
The US manufacturer similarly reduced the price of automobiles earlier this year in China, sparking a price battle in the biggest market for new-energy vehicles worldwide. According to preliminary figures given earlier this week by China’s Passenger Car Association, it exported a total of 88,869 vehicles from the Shanghai factory in March.
In China, a base Model 3 starts at 229,900 yuan ($33,400), while the Model Y starts at 261,900 yuan ($38,086). As a result, there is still a sizable pricing difference between the two Tesla models.