Tesla Inc. TSLA -2.01% slashed the prices of two of its most expensive models in the US, the Model S and Model X, in its latest round of price cuts as the company tries to stimulate demand in a competitive market.
Tesla lowered the base price of its Model S luxury sedan from $94,990 to $89,990, a drop of about 5%, according to the company’s website. It also lowered the base price of its Model X sport-utility vehicle from $109,990 to $99,990, down about 9%. The two high-end models only accounted for about 5% of Tesla’s total vehicle production last year.
Tesla also slashed prices on its two best-selling vehicles in January, cutting the price of its base Model Y by 20% and its high-performance Model 3 sedan by 14%. Some investors and Wall Street analysts believed Tesla lowered prices to pressure competitors to respond to slowing demand and give some buyers a chance to qualify for a $7,500 tax credit .
Tesla has since reversed some of the earlier cuts, and Chief Executive Elon Musk has suggested the price adjustments fueled buyer interest. Tesla noted that “even small price changes have a big impact on demand, very big,” Musk said at an investor presentation last week.
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Tesla did not respond to a request for comment.
The company’s market value has fluctuated in recent months amid investor concerns about Tesla’s ability to continue growing, as well as questions about Musk’s other ventures. The billionaire acquired Twitter Inc. last year and made a series of dramatic changes at the company.
Tesla shares fell 2.01% in Monday trade to close at $193.81. The automaker’s shares are down 65% over the past year, the stock’s worst annual performance. The company’s value has since gained some ground, in part because loyal retail investors bought nearly $14 billion worth of shares, the Wall Street Journal reported Friday. Tesla’s value remains less than half what it was at its November 2021 peak, even with stocks rallying more than 55% this year.
The company kicked off 2023 with the earlier round of price cuts that resonated in the auto industry. Some automakers followed suit, slashing prices at a time when these companies are trying to lure investors and customers.
Tesla sells vehicles directly to consumers without going through a dealership and routinely adjusts prices online. Car pricing from traditional automakers is generally less transparent. These companies usually suggest prices to their dealers, but what customers pay usually varies based on individual negotiation or dealer incentives.
Tesla is pushing to stay ahead of its rivals with plans to ramp up production to around 20 million vehicles a year from around 1.3 million in 2022. The company announced last week that it plans to open a new auto manufacturing facility in Mexico.
Weeks after Tesla cut prices on a number of its models, Ford Motor cut the price of its electric Mustang Mach-E. WSJ auto reporter Nora Eckert compares the strategic steps taken by automakers and explains what this means for the industry. Photo illustration: Josephine Chu
Write to Alyssa Lukpat at [email protected]
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Appeared in the March 7, 2023 print edition as “Tesla cuts prices on premium vehicles”.