How and why Tesla is cutting the prices of its existing EVs?

According to the company’s website, Tesla Inc. has reduced pricing on its two most costly electric cars in the US, days after chief executive Elon Musk claimed that previous price reductions on other models had boosted demand. The price reductions, which marked Tesla’s fifth change in pricing since the year’s beginning, varied from 4% on the performance-oriented Model S to 9% on the more expensive Model X.

All About Tesla’s Strategy!

Musk has emphasized numerous times in recent months that the EV giant will concentrate on lowering prices to increase demand and that the company has experienced success in generating orders with the global discounts implemented in January.

“The desire to acquire a Tesla is tremendous. Their financial capacity to purchase a Tesla is the limiting constraint” Musk stated last week at the investor day for Elon Musk’s company. Requests for feedback on the most recent price reductions received no immediate response from Tesla. In what many observers believed to be the beginning of a pricing war by the market leader in electric vehicles, Tesla lowered prices on its automobiles across all of its markets in January, providing reductions of up to 20%.

Since then, it has been doing so at a pace and regularity that exceeds what traditional automakers have tried to do in a market where a car’s base price is still referred to as a “sticker price” for a vehicle that is in stock. Around 4% of Tesla’s global deliveries in 2022 were of the Model S and Model X, which are available in performance “Plaid” and base all-wheel drive (AWD) models. The remaining two of its vehicles, the Model 3 sedan, and Model Y crossover, were more affordable.

On its website, Tesla announced a $5,000 price reduction for both versions of the Model S. Model S’s entry-level pricing was reduced by 5% to $89,990, while the performance, Plaid variant’s price was down by 4% to $109,990. According to the website of the electric vehicle manufacturer, prices for both the performance and entry-level Model X models were reduced by $10,000.

The cost of the Model X’s entry-level AWD model was reduced by 9% to $99,990, while the price of its performance-oriented Plaid model was reduced by 8% to $109,990. Tesla has a new model of the Model 3 code-named “Highland” planned for release later this year, as well as a modified Model Y dubbed “Juniper” for release the following year.