After several rounds of reductions, the starting prices of Tesla’s two high-volume models are substantially lower than they were to start the year. The base Model Y is 29 per cent cheaper, and the Model 3 can be had for 15 per cent less.
Musk has pushed back against media coverage of the cuts. “We’re not ‘starting a price war,’” the chief executive officer tweeted April 15. “We’re just lowering prices to enable affordability at scale.” Following Tesla’s first line-up-wide price cuts in January, Musk said weeks later that orders were running at almost twice the rate of production. But the carmaker was unable to sustain that dynamic – first quarter deliveries rose about 4 per cent from the prior three months, and Tesla produced almost 18,000 more cars than it handed over to customers.
Despite a second set 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. 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. – Bloomberg