Tesla Again Cuts Prices for More Expensive Models

Elon Musk
Elon Musk sitting in a chair.

 Lifewire / Lance Ulanoff

Tesla Inc. (TSLA) took markets by surprise with another batch of price cuts for its more expensive models.

Key Takeaways

  • Tesla cuts the price of its higher-end Model S/X by $5,000 each.
  • The company is reacting to strong Q1 deliveries, reduced tax credits, and plunging lithium prices.
  • Previous price cuts helped drive deliveries

The automaker slashed the price of its higher-end Model S and Model X by $5,000 each to $84,990 and $94,990, respectively. Tesla also cut the price of Model 3 and Model Y vehicles again with a $1,000 and $2,000 price drop, respectively.

Tesla’s move comes after the company reported record deliveries in the first quarter of about 423,000 vehicles. Previous price cut strategies drove that 4% increase, alongside the economic reopening in China, one of Tesla's key markets.

Surging demand for BYD electric vehicles, one of Tesla’s Chinese competitors, is likely one of the reasons for another drop in prices. The price of lithium, a key component in the manufacture of EVs, has also been plummeting, with a 57% drop for the year—likely giving Tesla some room to price in the cuts.

This is the second time the automaker has slashed prices on its vehicles. In January, the company cut the prices on some of its vehicles by up to $21,000 in the U.S. and parts of Europe.

Morgan Stanley analyst Adam Jonas, a long-time Tesla bull, said he believes the company can reach 2 million deliveries this year, but suggested additional price cuts earlier in the week.

"We are of the opinion that without the aggressive price cuts, Tesla sales may not have grown on a sequential basis," Jonas said.

He added that a production rampup at the company's Freemont and Shanghai factories would also be needed.

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  1. Barrons. "BYD Grew EV Sales 2.5 Times Faster than Tesla".

  2. CNBC. "Why Some Analysts Think Tesla has More Cuts Ahead."

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