Tesla cuts US Model S and X prices for the third time this year

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(Bloomberg) – Tesla Inc. has slashed Model S and X prices in the US for the third time this year in an effort to boost surging demand for its iconic electric vehicles.

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CEO Elon Musk has vowed to pursue volume over profit margins. The flagship Model S sedan now starts at $84,990, down $5,000 from last month’s price. The Model X starts at $94,990, also $5,000 off.

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The cuts come as the auto industry grapples with rising inflation and rising interest rates that make buying new cars increasingly expensive. Tesla, which sells cars directly to consumers, regularly adjusts prices. The Austin, Texas-based company currently manufactures the Model S, X, 3, and Y.

“Price really matters,” Musk said during the company’s January earnings press conference. “I think there is – just a huge number of people who want to buy a Tesla car, but can’t afford it. And so these price changes really make a difference for the average consumer.”

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Tesla allows old age to have its most expensive cars

Tesla delivered 422,875 vehicles globally in the first quarter, but only 10,695 of those were S and X.

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Tesla has slashed the price of the Model 3 sedan and Model Y sport utility vehicle by $1,000 and $2,000, respectively, and lowered the starting prices of the two models to $41,990 and $49,900, according to its website. It also added a new version of the Model Y.

The US automaker’s price cut in China earlier this year has also sparked a price war in the world’s largest new energy vehicle market. It shipped a total of 88,869 vehicles from its Shanghai plant in March, according to preliminary data released by the China Passenger Car Association on Tuesday.

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A significant price disparity remains for vehicles made in China, where the base Model 3 starts at 229,900 yuan ($33,400) and the Model Y costs 261,900 yuan ($38,086). ).

Tesla cuts Model S and X prices for the second time this year (2)

While Tesla continues to outpace other automakers in global electric vehicle sales, it is facing ever stiffer competition from BYD Co. of China. Analysts at BloombergNEF expect the maker, led by Berkshire Hathaway Inc. backing will challenge for the No. 1 spot this year.

Tesla will also need acceleration to continue growing at a pace that investors are familiar with. Last year, the company failed to meet its goal of increasing the number of vehicles delivered annually by an average of 50%, instead increasing it by 40%. Its growth rate slowed to 36% in the first quarter.

Tesla will report earnings on April 19.

(updated with more context)