Tesla cuts prices on new models in U.S.
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.