Tesla Cuts Prices for Three Models in US to Counter Sales Dip

Tesla, the electric vehicle giant led by the well-known billionaire Elon Musk, has recently adjusted the pricing of several of its models in the United States, signaling a strategic move amidst growing challenges. The price reduction affected three of its five models late Friday, with notable decreases on the Model Y, Tesla's most popular model and the leading electric vehicle in the US market, as well as on the older and more premium Models X and S. However, the prices for the Model 3 sedan and the Cybertruck remained unchanged.

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The adjustments brought down the starting price of a Model Y to USD 42,990, while the Model S and Model X saw their starting prices reduced to USD 72,990 and USD 77,990 respectively. This decision came in the wake of Tesla's stock plummeting below USD 150 per share on Thursday, erasing all gains it had made over the past year. The Austin, Texas-based company has seen a roughly 40% decline in its stock price this year, amid decreasing sales figures and heightened competition.

Elon Musk took to X (formerly Twitter) early Saturday to highlight that with a federal tax credit and gas savings considered, an entry-level Tesla could cost as low as USD 29,490. This move appears to be an attempt to boost sales through more attractive pricing. Despite industry anticipation for Tesla to unveil a small electric vehicle priced around USD 25,000, dubbed the Model 2, recent reports suggested Musk had plans to cancel this project. Musk refuted these claims as untrue.

The price cuts concluded a tumultuous week for Tesla, which announced a global workforce reduction of 10%, equating to about 14,000 jobs. Additionally, nearly 4,000 of its 2024 Cybertrucks are being recalled due to an issue where the accelerator pedal could become stuck, increasing crash risks. Amidst these challenges, Musk postponed a planned trip to India for discussions with Prime Minister Narendra Modi due to "very heavy Tesla obligations," expressing hopes to reschedule later in the year.

Tesla is poised to announce its first-quarter earnings on Tuesday. The company has already reported a significant drop in worldwide sales from January through March. This period marked Tesla's first year-over-year quarterly sales decline in almost four years, amidst slowing electric vehicle sales growth globally and insufficient traction from earlier price reductions.