A driver uses a Tesla booster station in Corte Madera, California, U.S., Thursday, March 2, 2023.
David Paul Morris | Bloomberg | Getty Images
You’re here cut the prices of its two most expensive models in the United States, the Model S and Model X, in a new offer aimed at stimulating demand for its cars with aggressive discounts.
The Tesla Model S now starts at $89,990, according to the company’s website, down about 5% from its previous price. The Model X, meanwhile, starts at $99,990, which marks a 9% discount.
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For the top-of-the-line “Plaid” versions of the Model S and Model X, car buyers can now expect to pay $109,990. That’s a drop of 4% for the S Plaid model and 8% for the X Plaid model.
Tesla shares were down less than 1% in morning trading on Monday.
This follows a series of aggressive discounts from the company in recent months. In January, Tesla slashed the prices of its new cars by up to 20%, making the vehicles more affordable and likely eligible for federal tax credits in the United States.
Latest price cut likely unrelated to EV tax credits introduced in President Joe Biden‘s Inflation Reduction Act, as they remain above the $55,000 threshold to qualify for a maximum of $7,500 towards the purchase of new vehicles.
The pace and frequency of Tesla’s price adjustments go beyond what established automakers have attempted in the industry, where the base price of an in-stock vehicle is still referred to as the “sticker price.”
EV price war
This sparked a price war between automakers competing to lower prices in a bid to attract more customers and boost sales. After Tesla’s price cuts in January, Ford has slashed the prices of its Mustang Mach-E electric crossover by up to 8%.
Musk recently shifted Tesla’s focus to lowering prices to stimulate demand for its products.
During the company’s fourth-quarter earnings call in January, he said Tesla was seeing orders nearly doubling the rate of production. “These price changes really do make a difference to the average consumer,” Musk said at the time.
Electric vehicle arms race
“The price cuts that Tesla has already implemented globally have catalyzed demand by 30%, because this latest price cut is another smart move,” Dan Ives, managing director of equities, told CNBC. Wedbush Securities, via email.
“It’s an EV arms race unfolding and Tesla has the margins to make price cuts and still be well ahead of other automakers. In this economic cloudiness, Tesla needs to rip the band-aid off and reduce prices and the street will like it.”
To make discounts of these proportions, Tesla will have to match them with reductions in production costs. It’s a goal the company is working towards, with efforts to cut some spending in its supply chain already underway.
Last week, a Tesla executive said the company was developing an electric vehicle motor that could be built without rare earth metals – which are essential to motors used in electric vehicles – citing the need to reduce costs and environmental risks. that accompany the extraction of these minerals. .