As seen on Thursday's website, Tesla has once again reduced prices in the United States, with cuts ranging from 2% to almost 6%. This marks the fifth price cut since January, prompting analysts to warn that this discount strategy on electric vehicles could impact the company's profitability.
U.S. EV Tax Credits Facing Limitations Amid Tesla's Price Cuts
The latest round of price reductions comes as the United States is gearing up to implement stricter standards this month. These changes are anticipated to limit the available tax credits for electric vehicles. Since January, Tesla has acknowledged that the more stringent regulations will reduce the $7,500 tax credit available for its base, rear-wheel drive Model 3.
Tesla Model 3 and Model Y Prices Drop, and Model S and Model X Also Affected
According to Tesla's website, the company has lowered prices on both versions of the Model 3 sedan by $1,000 and on the Model Y crossover by $2,000. Furthermore, the more expensive Model S and Model X have seen a price reduction of $5,000 for both versions.
Analysts Concerned About Tesla's Profit Margins Amid Price Cuts
With some analysts expecting further price cuts, there is growing concern that Tesla's industry-leading profit margins might be in jeopardy. The price reductions come as Tesla attempts to boost demand in the United States, China, and other markets.
Tesla Reports Q1 Deliveries, Aims for 1.8 Million Deliveries in 2023
Following the price cuts in various markets, Tesla recently announced first-quarter deliveries of nearly 423,000 vehicles, a modest 4% increase from the previous quarter. This year, the company has set an ambitious target of 1.8 million deliveries. Since the beginning of the year, Tesla has cut the price of its base Model 3 by a cumulative 11% and its base Model Y by 20%.
