In a move that has startled the automotive industry, Tesla, the world-leading electric vehicle manufacturer, has slashed the prices of three of its vehicle models. Following a challenging week colored by public criticism and setbacks, the electric carmaker announced significant reductions in the prices of its Model S, Model X, and Model Y vehicles in the United States. This move is seen as a strategic approach to attract buyers amid a tumultuous time and sustain its market leadership in the electric vehicle industry.
Tesla’s price cuts are considerable, reducing the price of the Model S sedan from $74,990 to $69,420. Meanwhile, the Model X SUV, previously retailing at $79,990, now costs $74,490. The Model Y’s price was also trimmed slightly, coming down to $49,990 from $52,990. The appreciable price cut could likely make these models more accessible to a broader audience, thereby boosting sales in the crucial U.S. market.
The arrival of these price cuts follows a disappointing week for the Palo Alto-based company. Tesla’s network suffered an outage, leading to issues in connectivity features for many Tesla vehicle owners—an incident which further bolstered verbal exchanges on Tesla’s reliability. Additionally, Tesla’s CEO, Elon Musk, announced that the much-anticipated ‘Battery Day’ didn’t go as successfully as planned. The company also faced criticism over its autopilot software from Germany’s Federal Minister of Transportation, who said that the software could possibly have legal implications. Against this backdrop, the price cut strategy may be seen as a move to regain positive media attention and consumer confidence.
However, the price cuts aren’t just in response to the challenging week. They also come at a time when competition in the electric vehicle market is intensifying with traditional automakers like Ford, Mercedes-Benz, Volkswagen, and General Motors announcing their electric vehicle lineup. Cutting prices may, therefore, give Tesla a competitive edge.
It’s also important to consider the impact of the COVID-19 pandemic on the car sales market. The global pandemic has disturbed supply chains and reduced disposable incomes, leading to a slump in vehicle sales worldwide. However, Tesla has been faring relatively well in these times, with the third quarter of 2020 marking Tesla’s fifth consecutive profitable quarter despite the pandemic. By cutting prices, Tesla is arguably making a smart move to keep its sales momentum going and endear itself to budget-conscious customers in a challenging economic climate.
In terms of the international market, Tesla