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dropped the prices of two of its most expensive models in the United States, the Model S and Model X, in its latest round of price cuts as the company tries to stimulate demand in a competitive market.
Tesla dropped the base price of its Model S luxury sedan from $94,990 to $89,990, a reduction of about 5%, according to the company’s website. It also lowered the base price of its Model X sport utility vehicle from $109,990 to $99,990, a decrease of about 9%. The two top models accounted for only about 5% of Tesla’s total vehicle production last year.
Tesla also slashed prices in January of its two best-selling vehicles, lowering the price of its base Model Y by 20% and its high-performance Model 3 sedan by 14%. Some investors and Wall Street analysts believed Tesla lowered prices to put pressure on competitors, to meet lower demand and to allow some buyers to qualify for a $7,500 federal tax credit.
Tesla later reversed some of the earlier cuts, and chief executive Elon Musk suggested the price adjustments stoked buyer interest. Tesla has found that “even small price changes have a large, very large effect on demand,” Musk said last week during an investor presentation.
Tesla did not immediately return a request for comment.
The company’s market value has fluctuated in recent months due to investor concerns about Tesla’s ability to continue to grow, as well as questions about Mr. Musk’s other businesses. The billionaire took over Twitter Inc. last year and implemented a number of dramatic changes to the business.
Tesla stock has fallen 65% in 2022, losing more than $700 billion in market valuation in the worst year in the stock’s history. The company’s value has since recovered some of those declines, in part because loyal individual investors bought nearly $14 billion worth of stock, The Wall Street Journal reported Friday. Shares of Tesla, up more than 50% this year, were down more than 1% in Monday trading.
The company opened 2023 with the previous round of price cuts, which trickled down to the auto industry. Some automakers have followed and lowered their prices at a time when these companies are trying to attract investors and customers.
Tesla sells vehicles directly to consumers, without going through a dealership, and regularly adjusts prices online. There is generally less transparency in the pricing of cars made by traditional automakers. These companies usually quote prices to their dealers, but what customers pay usually differs due to individual dealer negotiations or incentives.
Tesla is working to stay ahead of rivals with plans to increase production to around 20 million vehicles a year from around 1.3 million in 2022. The company announced last week that it plans to to open a new car production plant in Mexico.
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