Tesla cuts Model 3, Model Y prices again on eve of earnings

19 April 2023 - 08:02 By Danny Lee
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Despite a second round of discounts to the Model S (pictured) and X in early March, Tesla delivered just 10,695 of those vehicles in the quarter, the lowest since the third quarter of 2021.
Despite a second round of discounts to the Model S (pictured) and X in early March, Tesla delivered just 10,695 of those vehicles in the quarter, the lowest since the third quarter of 2021.
Image: Allison Dinner/Getty Images

Tesla has cut the price of several of its models yet again in a further sign CEO Elon Musk is willing to sacrifice the electric carmaker’s profitability in the face of rising interest rates that may dent consumer demand.

The Austin, Texas-based automaker said on its website that the price of its Model Y long-range all-wheel drive model will decrease by 5.6% to $49,990 (R909,088) while the price of the Model Y performance will drop by 5.2% to $53,990 (R989,830). The cost of a Model 3 rear-wheel drive will be cut by 4.7% to $39,990 (R727,234).

It’s the second price cut this month as the automaker seeks to stoke demand after several quarters of disappointing deliveries. The company is in the rare position among EV makers of having big profit margins to work with, as incumbents including Ford and newer entrants like Rivian and Lucid struggle to make money at lower volumes.

After Tesla’s first line-up-wide price cuts early this year, Musk said on a January 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: deliveries rose about 4% from the fourth quarter, and Tesla produced almost 18,000 more cars than it handed over to customers.

Despite a second round of discounts to 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.

Tesla is due to report first-quarter earnings on Wednesday in the US, where investors will be focused on the hit to margins from the earlier price cuts.  The price cuts will pressure gross margins in 2023, Bloomberg Intelligence analysts said in their earnings preview. 

More stories like this are available on bloomberg.com


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