Tesla cuts prices of Model X and Model S
Elon Musk’s car manufacturer has lowered the price of its Model X and Model S vehicles to boost demand on a competitive market.
Tesla Inc. lowered the prices of two of its most expensive models in the U.S., the Model S and Model X, in its latest round of price cuts as the company tries to boost demand in a competitive market.
Tesla dropped the base price of its Model S luxury sedan from $94,990 to $89,990, which is about a 5% cut, 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, which is roughly a 9% decrease. The two high-end models represented only about 5% of Tesla’s total vehicle production last year.
Tesla also cut prices in January for its two bestselling vehicles, lowering the price of its baseline Model Y by 20% and its high-performance Model 3 sedan by 14%. Some investors and Wall Street analysts believed Tesla dropped the prices to squeeze competitors, to respond to waning demand and to allow some buyers to qualify for a $7,500 federal tax credit.
Tesla afterward reversed some of the earlier cuts, and Chief Executive Elon Musk has suggested the price adjustments fueled buyer interest. Tesla found that “even small changes in the price have a big effect on demand, very big,” Mr. Musk said last week at an investor presentation.
Tesla didn’t immediately return a request for comment.
The company’s market value has fluctuated in recent months over investor concerns about Tesla’s ability to keep growing, as well as over questions surrounding Mr. Musk’s other ventures. The billionaire took over Twitter Inc. last year and has implemented a number of dramatic changes at the company.
Tesla stock fell 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 have purchased nearly $14 billion in shares, The Wall Street Journal reported on Friday. Tesla shares, up more than 50% this year, were down over 1% in Monday trading.
The company opened 2023 with the earlier round of price cuts, which reverberated through the auto industry. Some car makers followed and lowered their prices at a time when those companies are trying to lure investors and customers.
Tesla sells vehicles to consumers directly, without going through a dealership, and routinely adjusts prices online. There’s generally less transparency in the pricing of cars made by traditional auto makers. Those companies typically suggest prices to their dealers, but what customers pay typically differs because of individual negotiations or dealer incentives.
Tesla is pushing to stay ahead of rivals with plans to scale up production to around 20 million vehicles a year from around 1.3 million in 2022. The company last week said it planned to open a new car production plant in Mexico.
WSJ
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