Tesla Marked Down Prices for the Second Time this Year

There was an incremental sales gain of 2% from Tesla Inc. in the US during the first quarter of this year after the company cut the prices on all of its vehicles again.

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Each version of the company's high-volume Model 3 and Y electric vehicles has been discounted by at least $1,000, while the versions of the company's more expensive Model S and X electric vehicles have been discounted by at least $5,000. There was also a new base version of the Model Y launched at a price of $49,990, which is the lowest price for the Model Y.

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It is the second time Tesla will slash prices across its entire lineup this year after the company reduced prices across its entire lineup in mid-January.

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In the face of rising interest rates and a possible recession, Tesla's CEO, Elon Musk, has said that he is willing to sacrifice Tesla's profitability to keep the company growing. In a rare circumstance among EV makers, this company has the luxury of having big profit margins to work with, while incumbents such as Ford Motor Co. and newer entrants like Rivian Automotive Inc. and Lucid Group Inc. find it difficult to make money with lower volume sales.

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As a consequence of Tesla's first price cuts across its entire lineup early this year, Musk noted on a Jan. 25 earnings call that orders were running at almost twice the pace of production at the time. The company, however, was not able to sustain that supply-demand dynamic. Deliveries rose about 4% over the fourth quarter, and almost 18,000 more cars were produced than were handed over to customers in the quarter.

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

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As a result of these recent changes, each of these vehicles has now been reduced by at least $20,000 and most likely by as much as $34,000 since Tesla started offering them at the beginning of this year.

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As part of the price war in the world's largest market for new-energy vehicles, the US automaker also marked down vehicles in China earlier this year. The China Passenger Car Association released preliminary data at the beginning of this week showing that the company shipped 88,869 vehicles from its Shanghai factory in March.

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The price differential remains significant for Tesla's vehicles within China, where the starting price for a Model 3 is 229,900 yuan, which equals $33,400, and the starting price for a Model Y is 261,900 yuan, which equals $38,086).

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Chinese manufacturer BYD Co. is expected to challenge Tesla for the top spot this year despite the fact that it continues to lead other automakers in global EV sales, according to analysts at Trade Algo, as the Berkshire Hathaway-backed automaker continues to lead the charge in global EV sales.

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In order for Tesla to continue growing at the rate that investors are used to, it will also need to pick up the pace. In the last year's quarter, the company was unable to reach its goal of increasing vehicle deliveries by 50% on average annually, instead expanding only by 40%. The growth rate of the company slowed to 36% in the first quarter of the year.

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On April 19, the Austin, Texas-based company will report its earnings for the quarter.