Tesla Inc. cut the price of its highest-volume models yet again in a further sign Chief Executive Officer Elon Musk is willing to sacrifice the electric-car maker’s profitability to stoke demand.
(Bloomberg) — Tesla Inc. cut the price of its highest-volume models yet again in a further sign Chief Executive Officer Elon Musk is willing to sacrifice the electric-car maker’s profitability to stoke demand.
The Austin, Texas-based automaker marked down its long-range Model Y sport utility vehicle by 5.6% to $49,990, while the performance version dropped 5.2% to $53,990, Tesla’s website shows. The cost of the base Model 3 fell 4.7% to $39,990.
Tesla shares fell as much as 1.9% to $180.88 before the start of regular trading Wednesday.
This is Tesla’s second price cut in the US this month after several quarters of deliveries fell short of some analysts’ expectations. The company is in the rare position among EV makers of having big profit margins to work with, as incumbents including Ford Motor Co. and newer entrants like Rivian Automotive Inc. and Lucid Group Inc. struggle to make money at lower volumes.
After Tesla’s first lineup-wide price cuts early this year, Musk said during a Jan. 25 earnings call that orders were running at almost twice the rate of production. But the company was unable to sustain that supply-demand dynamic — first quarter deliveries rose about 4% from the prior three months, and Tesla produced almost 18,000 more cars than it handed over to customers.
Despite a second round of price cuts for the Model S and X in early March, Tesla delivered just 10,695 of those vehicles in the quarter, the lowest since the third quarter of 2021.
Read More: Tesla Gives Buyers Reason to Wait as Prices Keep Falling
Tesla is due to report first-quarter earnings on Wednesday in the US, where investors will focus on the toll that earlier price cuts are taking on profit margins. Another concern is the extent to which legacy manufacturers are ramping up EV production and luring consumers from Musk’s limited portfolio of models, Bloomberg Intelligence analysts wrote in their preview note.
(Updates with early trading in the third paragraph. An earlier version of this story corrected the price cut percentages.)
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