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Tesla Slashes US Prices for Sixth Time Ahead of Q1 2023 Results

Tesla has once again reduced the prices of its Model Y and Model 3 electric vehicles in the United States, marking the sixth price cut this year. This move raises concerns about the impact on the company's profit margins.

Tesla logo
Tesla logo

Details of the Price Cuts

The company is set to announce its Q1 results on Wednesday and has decreased the prices of its Model Y 'long range' and 'performance' vehicles by $3000 each, while the Model 3 'rear-wheel drive' has been reduced by $2000 to $39,990.

US Market and EV Tax Credits

Tesla has made significant price reductions on its base Model 3 and Model Y vehicles in the US this year as the country, its largest market, prepares for stricter standards that will limit electric vehicle tax credits.

Global Price Reductions to Boost Demand

Following price cuts initiated in China in January, Tesla has also lowered prices in Europe, Israel, Singapore, Japan, Australia, and South Korea to stimulate demand.

Q1 Delivery Growth Slows

Despite the price cuts, Tesla's first-quarter delivery growth only increased by 4% sequentially, significantly lower than the 17.8% sequential rise in the fourth quarter.

Concerns Over Profit Margins

Tesla's aggressive price cuts have sparked concerns about its industry-leading profit margins as its Austin, Texas-based operations face increased scrutiny.

Analysts' Profit Estimates and Stock Performance

Although Tesla is expected to report a 24.2% YoY increase in Q1 revenue, reaching $23.29 billion, analysts' average profit estimate has dropped by approximately 2.4% in the last three months. Meanwhile, Tesla's stock price has risen just under 50% this year through Tuesday.