Business News | Tesla Cuts Prices on All US Models for 3rd Time This Year
Get latest articles and stories on Business at LatestLY. The largest of the cuts that appeared Friday on Tesla's website were USD 5,000 per vehicle for the company's slower-selling more expensive models, the S large sedan and the X big SUV.
Detroit (Michigan) [US], April 8 (ANI): Tesla cut prices on its entire US electric vehicle model lineup for the third time this year in an apparent effort to lure more buyers amid rising interest rates, Asia Nikkei reported.
The largest of the cuts that appeared Friday on Tesla's website were USD 5,000 per vehicle for the company's slower-selling more expensive models, the S large sedan and the X big SUV.
The company lopped USD 2,000 off the price of the Y small SUV, its most popular model, and added a lower-cost dual-motor version priced at USD 49,990, according to Asia Nikkei. The 3 small sedan saw a USD 1,000 price cut.
This comes as Tesla's first-quarter sales grew 36 per cent but fell short of analysts' expectations. The company said Sunday that it delivered a quarterly record of 422,875 vehicles worldwide from January to March, up from just over 310,000 a year ago. But the increase fell short of analyst estimates of 432,000 for the quarter, according to FactSet.
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A message was left Friday, seeking comment from the Austin, Texas-based Tesla on why the prices were cut, Asia Nikkei said.
Guidehouse Research e-Mobility Analyst Sam Abuelsamid said the cuts are a sign of slowing demand for Tesla. The company, he said, needs to sell more vehicles to keep its factories running at full capacity to protect high-profit margins. "Overhead of underutilised plant eats up margin extremely quickly," he said.
Tesla has added a huge plant near Austin to its US factory footprint, in addition to its original plant in Fremont, California, according to Asia Nikkei. The company also has built new plants in Shanghai and near Berlin.
Other analysts, according to Asia Nikkei, have speculated that Tesla was cutting prices to take advantage of its profit margin per vehicle, which is larger than most automakers. The move could increase market share and put pressure on startups and legacy automakers now rolling out EVs.
On Twitter, Tesla CEO Elon Musk on Friday wrote that demand is limited by affordability. "There is plenty of demand for our products, but if the price is more money than people have, that demand is irrelevant," he wrote.
The biggest of Friday's cuts came on Tesla's aging S and X, which saw sales drop 38 per cent from January through March. The Model S two-motor price dropped 5.6 per cent to USD 84,990, while the S tri-motor Plaid was trimmed 4 per cent to USD 104,990. (ANI)
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