Tesla has reduced prices across its entire portfolio in the United States for the third time this year, ostensibly to entice more consumers amid rising interest rates.
The reduced prices listed on Tesla’s website ranged from $5,000 to $10,000 per vehicle for Tesla’s slower-selling higher-priced models, the S large sedan and the X large SUV.
The company also reduced the price of its most popular model – the Y compact SUV – by $2,000 and released a lower-cost dual-motor version for $49,990. On the other hand, the price of the 3 entry-level sedan was also slashed by $1,000.
Despite reducing prices, Tesla’s last-quarter sales had actually increased 36% and even broke records, but fell short of analysts’ predictions. The automaker announced on Sunday that it delivered 422,875 automobiles worldwide from January to March, a new quarterly record, up from around 310,000 a year ago. However, the gain fell short of FactSet’s forecast of 432,000 for the quarter.
Tesla adds on its website that under the new IRS guidelines, all Model Y variations are eligible for up to $7,500 in federal tax credits, so buyers who qualify for incentives can get an even lower price on every available Model Y.
According to Sam Abuelsamid, an e-Mobility Analyst at Guidehouse Research, Tesla has to sell more vehicles in order to maintain its factories functioning at full capacity. “Overhead of an underutilized plant eats up (profit) margins extremely quickly,” he explained.