Tesla is slashing the prices of its Model 3 compact sedan and Model Y SUV in the U.S., intensifying its price war only days after the world’s most valuable automaker’s third-quarter deliveries fell short of market estimates.
The most recent cuts occur as the company works extremely hard to deliver a record of 476,000 vehicles in the final three months of 2023 to reach the annual aim of delivering over 1.8 million vehicles.
Tesla began cutting prices in January to boost sales in an unsteady economy and ward off competition from American automakers like Ford and China’s BYD. The price reductions are currently between 2.7% and 4.2%.
The company’s market-leading margins, which had already fallen to almost four-year lows in the April-June quarter, are expected to be further eroded by the cuts. Sending Tesla’s shares to plunge by 2.1% lower amid broader market volatility.
According to Tesla’s website, the base Model 3 car is now priced at $38,990, and the long-range Model Y is now $48,490. Additionally, Tesla cut the cost of its more expensive versions of the two models.
Since the beginning of the year, costs for the basic Model 3 have decreased by nearly 17%, and those for the long-range Model Y have reduced by more than 26%. The pricing reductions will put additional pressure on the “Detroit Three” as they attempt to manage an unprecedented autoworkers’ union strike.