Tesla cuts US prices for 6th time this year on eve of earnings

HONG KONG – Tesla has cut the price of several of its models yet again in a further sign chief executive Elon Musk is willing to sacrifice the electric carmaker’s profitability in the face of rising interest rates that may dent consumer demand.

Tesla’s sixth price cut in the United States in 2023 will see the price of its Model Y long-range all-wheel drive model drop by 9.1 per cent to US$49,990 (S$66,760) while the price of the Model Y performance will drop by 8.5 per cent to US$53,990. The cost of a Model 3 rear-wheel drive will be cut by 7 per cent to US$39,990.

The move comes after the company recently cut prices for its electric vehicles in Europe, Israel and Singapore, expanding a global discount drive it began in China in January, while raising concerns about its industry-leading profit margin.

Tesla seeks to stoke demand after several quarters of disappointing deliveries. The company is in the rare position among electric vehicle makers of having big profit margins to work with, as incumbents including Ford Motor and newer entrants like Rivian Automotive and Lucid Group struggle to make money at lower volumes.

After Tesla’s first lineup-wide price cuts in early 2023, Mr Musk said on a Jan 25 earnings call that orders were running at almost twice the rate of production.

But the company was unable to sustain that supply-demand dynamic: deliveries rose about 4 per cent from the fourth quarter, and Tesla produced almost 18,000 more cars than it handed over to customers.

Despite a second round of discounts to the Model S and X in early March, Tesla delivered just 10,695 of those vehicles in the quarter, the lowest since the third quarter of 2021.

Tesla is due to report first-quarter earnings on Wednesday in the US, where investors will be focused on the hit to margins from the earlier price cuts.

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