Tesla Is About to Put More Pressure on EV Prices
As the world continues to move towards a more sustainable and electric future, Tesla has consistently stood at the forefront of this movement. The company is known for its innovative technologies and groundbreaking electric vehicles shaping the auto industry. The brand continues to push the boundaries of what’s possible, and its recent EV price cuts are about to exert more pressure on competitors.
Tesla announced another round of price cuts
Tesla recently unveiled a refreshed Model 3, but that’s not the only news. The brand announced a reduction in price for Models S and X by 15-19% on all trim levels. The company launched shorter-range variants of the vehicles, and owners looking to drive the models can now do so for $10,000 less.
According to Nasdaq, the new Model S Standard Range Model starts at $74,990, a 15% decrease in price from $88,490, while the Model X Standard Range Model starts at $79,990, an 18.8% drop from $98,490. The tri-motor plaid versions of Models S and X also receive price cuts, dropping from $109,880 to $91,390.
Another significant change is the larger battery for both vehicles, with an increased EPA range of 405 miles for the S and 348 miles for the X. Due to the price cuts, the SUV is now eligible for the $7,500 federal EV tax credit.
The Model X isn’t eligible for the tax credit because the Inflation Reduction Act caps the prices of vehicles. The threshold is $80,000 for SUVs and trucks and $55,000 for cars, and since the Model X costs $24,000 more, it fails to qualify. Buyers also don’t have to trade between price and color, as Tesla has made all the colors available at the same price.
This isn’t the first time Tesla has cut its prices
Over the past year or so, Tesla has adjusted the price of its four models plenty of times, and it caused a rippling effect across the industry. Earlier this year, the automaker slashed its EV prices globally by nearly 20%. This move came after Tesla CEO Elon Musk warned that higher interest rates and recession might force the brand to lower costs to sustain growth, even if it meant making losses.
Musk admitted that EV prices had risen in 2022, which could hurt demand. The price cuts affected the Model 3 sedan and Model Y crossover SUV, with Reuters estimating that the Model Y base trim cost $52,990 after the price cuts. The recent price cuts again put immense pressure on startup EV companies like Rivian, forcing them to slash their prices to catch up and maintain their audience.
Tesla is an industry leader today, but that wasn’t always the case. The brand’s lineup took years to start turning a profit, and its round of price cuts may not be favorable for EV startups. Experts say the price cuts will strengthen Tesla’s competitive advantage as more people will be drawn to the cheaper Tesla EVs than expensive models from other brands. However, this will force other automakers to respond by reducing their process or risk losing their market share.
The new Tesla prices are a win for consumers
The new prices are a win for consumers, as price has long been a primary concern for people looking to own EVs. EVs offer various benefits, including lower operating costs, reduced emissions, and enhanced sustainability.
With lowered prices, more and more people may finally consider switching from traditional gasoline-powered vehicles and take the plunge. Additionally, the tax credit makes EVs more enticing to consumers as it puts money back into their pockets.