Tesla Slashes Prices Again, But at What Cost?
By Tesla has cut the prices of its luxury vehicles once again.[0] The base version of the Model S sedan now sits at $89,990, a reduction of around 5%, while the Plaid performance version has been dropped to $109,990, down 4%.[1] Meanwhile, the base long-range version of the Model X SUV is now priced at $99,990, a cut of around 9%, with the Plaid performance version now costing $109,990, down 8%.[2]
These price cuts come after Tesla's CEO Elon Musk said at the company's Investor Day that the brand wanted to make their vehicles more affordable, as the desire for Teslas is “indistinguishable from infinite”.[3] This move follows four more cuts in the past two months, most notably in January when the automaker slashed prices up to 20%.[3]
However, Tesla's dynamic pricing has led to some anger from buyers who purchased vehicles just before the discounts were introduced, as they feel their vehicles have lost value as a result.[4] Some skeptics have said that the price cut is due to a lack of demand, as companies are always looking to pad their sales stats during the final month of a quarter.[5]
The price cuts have been made across the board, including the performance versions of the Model 3 and Model Y, and the Plaid versions of the Model S and Model X. At $109,990, Plaid iterations of the S and X now cost $26,000 and $29,000 less than they did in early January.[1]
Tesla's modifications to the 3 and Y models were, to some extent, motivated by their desire to have the models qualify for the tax credits offered by the Inflation Reduction Act.[6] In February, due to the Biden administration's alteration of how they differentiate between passenger cars and sport utility vehicles, the eligibility limit for Model Ys to receive credits was increased. Consequently, Tesla raised their prices once again.[6]
Tesla's dynamic pricing is unique in the automotive world, where manufacturers typically only make changes to what they suggest their retailers charge from one model year to the next.[7] The Model 3 and Y saw price reductions in January, making them less costly than the average new car in the US.[8]
A price war among electric vehicle makers in China is taking a toll on even the most resilient players, as evidenced by BYD's staggering $18 billion drop in the past month.[9] The United[10]
0. “Tesla slashes U.S. Model S and Model X prices to boost demand” Seeking Alpha, 6 Mar. 2023, https://seekingalpha.com/news/3944300-tesla-slashes-us-model-s-and-model-x-prices-to-surge-consumer-demand
1. “Tesla again cuts EV prices in US” Greatandhra, 6 Mar. 2023, https://www.greatandhra.com/articles/special-articles/tesla-again-cuts-ev-prices-in-us-127723
2. “Tesla Cuts Prices of Models X and S in Attempt to Boost Demand” The Wall Street Journal, 6 Mar. 2023, https://www.wsj.com/articles/tesla-cuts-prices-of-model-x-and-model-s-1898bc5d
3. “Tesla Slashes Model S and X Prices Amid Softening Demand” ExtremeTech, 6 Mar. 2023, https://www.extremetech.com/extreme/343567-tesla-slashes-model-s-and-x-prices-amid-softening-demand
4. “Tesla slashes Model S and X prices again by up to $10,000” Fox Business, 6 Mar. 2023, https://www.foxbusiness.com/lifestyle/tesla-slashes-model-s-and-x-prices-again-by-up-to-10000
5. “Tesla Reduces Prices of Model S and Model X; Significant Discounts for Plaid Variants” Not a Tesla App, 6 Mar. 2023, https://www.notateslaapp.com/news/1244/tesla-reduces-prices-of-model-s-and-model-x-significant-discounts-for-plaid-variants
6. “Tesla slashes Model X prices in Canada for second time this year” Driving, 6 Mar. 2023, https://driving.ca/auto-news/news/tesla-slashes-cut-model-x-prices-canada-second-time-year
7. “Tesla drops Model S and Model X prices, now starts at just $90K” Electrek, 6 Mar. 2023, https://electrek.co/2023/03/06/tesla-drops-model-s-x-prices/
8. “Tesla Stock Eyes Breakout After U.S. Luxury Model Price Cuts | Investor's Business Daily” Investor's Business Daily, 6 Mar. 2023, https://www.investors.com/news/tesla-stock-eyes-breakout-after-u-s-luxury-model-price-cuts
9. “BYD's $18 Billion Rout Shows Fallout of Tesla Price War in China” Bloomberg, 6 Mar. 2023, https://www.bloomberg.com/news/articles/2023-03-06/buffett-backed-byd-s-18-billion-rout-shows-tesla-s-price-war-heats-up-in-china
10. “BYDs $18 bn rout shows fallout of price war among EV makers in China” Business Standard, 6 Mar. 2023, https://www.business-standard.com/article/international/byd-s-18-bn-rout-shows-fallout-of-price-war-among-ev-makers-in-china-123030600288_1.html
