Tesla Inc. has lowered its Model S and X prices in the US for the third time this year to support declining demand for its iconic electric vehicles.
Tesla CEO Elon Musk has pledged to track volume rather than profit margins. The Model S sedan, known as the company’s flagship, will now be available at a starting price of $84,990, a $5,000 discount from last month’s price. Likewise, the Model X will be available at a starting price of $94,990, with a $5,000 discount.
The discounts come as the auto industry struggles with high inflation and rising interest rates that are making new vehicle purchases increasingly costly. Tesla, which sells its vehicles directly to consumers, regularly makes fine adjustments to its sales prices. The electric vehicle giant currently manufactures the Model S, X, 3 and Y.
“Price really matters. I think there are a lot of people who want to buy a Tesla vehicle but can’t afford it. So these price changes really make a difference to the average consumer,” Musk said at the company’s January earnings call meeting.
Although Tesla delivered 422,875 vehicles worldwide in the first quarter of the year, only 10,695 of them were S and X models.
According to Tesla’s website, it slashed the price of Model 3 sedans and Model Y sports cars by $1,000 and $2,000, and lowered the starting prices of the two models to $41,990 and $49,900. It also added a new version of the entry-level Model Y.
The US automaker, which lowered prices in China earlier this year, triggered a price war in the world’s largest new-energy vehicle market. Tesla shipped a total of 88,869 vehicles from its Shanghai factory in March, according to preliminary data released Tuesday by the China Passenger Car Association.
A significant price disparity remains for vehicles manufactured in China, where a basic Model 3 starts at 229,900 yuan ($33,400) and a Model Y starts at 261,900 yuan ($38,086).
As Tesla continues to outpace other automakers in global electric vehicle sales, analysts at BloombergNEF and Berkshire Hathaway predict the company is facing tougher competition than ever from China’s BYD and will be challenged.
It is assessed that Tesla will need to increase its pace to continue growing at the rates investors are used to. The company achieved an annual average increase of 50 percent in vehicle deliveries last year. under remained and instead grew by 40 percent. In the first quarter, the growth rate decreased to 36 percent.