Tesla cuts prices on new models in U.S.
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New vehicles at the Tesla Gigafactory in Shanghai, China, in 2020. Photo: Ding Ting/Xinhua via Getty Images
Tesla has made significant cuts to the prices of new electric vehicle models in the U.S., according to listings on its website.
Driving the news: Elon Musk's firm has cut the price of its bestselling Model Y and Model 3 vehicles, along with its Model X sport utility vehicles and Model S luxury sedans.
- The price changes could enable some buyers to qualify for the $7,500 federal tax credit that can be applied to many electric vehicle models.
The big picture: The price cuts come as Tesla experiences a declining market share and analysts say the firm is facing a "significant demand problem."
- The company saw its stock plunge 65% in 2022, marking its worst-ever annual drop.
Our thought bubble: The latest price cuts, along with those in Germany, China and other Asian countries, add to the worries of a demand slowdown for Tesla at a time when investors are already casting doubt on Musk’s leadership abilities, with Twitter taking more of his focus.
Worth noting: Some investors, including Cathie Wood, have suggested price cuts could be welcome amid growing competition, especially as higher volumes could reduce production costs and make up for smaller margins.
- On the other hand, growing competition could push the company into a pricing war with other EV startups, particularly in China.
- As for his attention and focus, Musk has said he hasn't missed "a single important Tesla meeting" since taking over Twitter.
Be smart: In "addition to the $13,000 price drop, the base Model Y is another $7,500 cheaper for those who qualify for the full tax credit, meaning a Model Y ordered today could be more than $20k cheaper than one ordered yesterday — assuming delivery is taken before mid-March, when the tax credit is expected to be reduced to $3,750," Electrek noted.
What to watch: How angry recent customers might be. In China, customers who missed out on new deals have been protesting and demanding rebates.
- Tesla missed analyst estimates for fourth quarter deliveries, and the company will report full year financial results for 2022 on Jan. 25.
Editor's note: This article has been updated with additional details throughout.
