Tesla Slashes Prices Again: Third Price Cut of the Year

Tesla recently made a move to try and get more people interested in buying one of its electric vehicles. They cut the prices on all their models in the United States by up to $5,000. That’s especially big savings for their S sedan and X SUV which aren’t selling too well right now.

The company reduced the price of their Y small SUV, which is their most popular model, by $2,000 and added another version that costs $49,990. They also made a price cut of $1,000 for the 3 small sedan.

Tesla’s sales in the first quarter of 2021 went up 36%, which was more than last year, but it still wasn’t enough for what analysts were expecting. Tesla sold 422,875 cars from January to March this year. This is a record, however analysts wanted them to sell 432,000. No one has responded yet if they’re lowering prices because of this.

Sam Abuelsamid, an analyst from Guidehouse Research said that big cutting orders from Tesla shows they are facing slowing demand of their cars. To make sure the factories run well and the profits stay high, Tesla needs to sell more cars. According to Sam, running factories at lower capacity than usual causes problems and eats up profit quickly.

Tesla has added two new factories in the U.S., one near Austin and the other in Fremont, California. The company also increased their production capacity by building new plants in Shanghai and Berlin.

Analysts think Tesla lowered prices to make more money from each car that they sell compared to other car makers. This could help Tesla get more customers, plus it might put pressure on regular car makers who are now selling electric cars as well.

Friday, Elon Musk from Tesla tweeted that people may want to buy their products but because of the cost, it’s not possible for everyone. He wrote: “Lots of folks would love to have our items but if they are too expensive, then buying them isn’t an option.”

Tesla’s S and X cars saw a really big drop in sales of 38% from the start of this year to March. Prices of the two-motor Model S have gone down 5.6% to $84,990 and the tri-motor Plaid by 4%, to $104,990. The X two-motor is now cheaper by 5%, which is at $94,990, while the Plaid has seen a price cut of 4.6%. Tesla also released a dual-motor Model Y car for less than $50,000 and reduced prices of the Long range model by 3.7% ($52,990) and Performance one by 3.4% ($56,990).

This past Good Friday, the price of a Model 3 rear-wheel-drive was reduced by 2.3%, meaning it now costs $41,990. The Performance version has also seen its price drop 1.9% and is now priced at $52,990.

Tesla made some major changes and reductions in March with prices of their S and X cars being cut down by up to $10,000. In January they decreased the cost on many of their Electric Vehicles so that they could be eligible for a $7,500 tax credit from the US government. The Model Y was discounted by almost 20% while the starting price of Model 3 small car was lowered by 6%.

The prices have gone down, but the interest rates are higher than before. This is meant to slow down the economy and stop inflation from getting worse. Since March last year, the average loan for a new car has gone up from 4.5% to 7%.

Experts are looking at whether the lower prices will affect Tesla’s profits and how much money their cars make them now. Tesla will tell us its earnings on April 19th after the stock market closes.