Tesla cuts prices of Model 3, Model Y EVs again; its second price cut this month
US EV maker Tesla has slashed the prices of its Model 3 and Model Y electric vehicles for the second time this month in order to stoke customer demand in the face of rising interest rates. CEO Elon Musk is yet again willing to sacrifice the company's profitability after several quarters of delivery targets being missed.
The automaker has cut the price of its Model Y long-range all-wheel drive model by 9.1% to $49,990 while the price of the Model Y performance will drop by 8.5% to $53,990. The cost of a Model 3 rear-wheel drive will be cut by 7% to $39,990.
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While other EV rivals in the US market such as Ford, new entrants Rivian and Lucid find it difficult to make money at lower volumes, Tesla is in a position where it has big profit margins to work with, Bloomberg reported.
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After the company made its first lineup-wide price cuts early this year, Musk informed in the January 25 earnings call that the company has been receiving orders at almost twice the rate of production. However, the company was unable to sustain that supply-demand dynamic. Deliveries have risen about 4% from the fourth quarter, and Tesla produced almost 18,000 more cars than it handed over to customers.
However, despite a second round of discounts to the Model S and X in early March, the company delivered only 10,695 of those vehicles in the quarter, the lowest since the third quarter of 2021. The company is due to announce its first-quarter earnings on Wednesday in the US, where investors will be focused on the hit to margins from the earlier price cuts.