Tesla Delivers New Price Cuts in a Bid to Spur Demand
Electric vehicle (EV) maker Tesla (TSLA:US) made new changes to the pricing of its models in the United States as the company continues to fight a demand weakness.
Tesla updated the prices of its Model S sedan and the Model X on its website. As a result, the Model S sedan is now available for $84,990, down from the prior price of $89,990. Moreover, the Model X starts at $94,990, also a $5,000 price drop relative to prior prices.
Tesla decided to cut prices of not-so-popular products as Model S and X made up nearly 2.5% of total deliveries in the first quarter of the year. Last weekend, Tesla said it delivered 422,875 vehicles globally in the first quarter.
Other, more popular and affordable products such as Model 3 and Model Y saw their prices slashed by $1,000 and $2,000, respectively.
The latest move represents a smaller decrease in EV prices as the company delivered a massive cut in January in a bid to allow buyers to qualify for a $7,500 U.S. government tax credit.
The move is also not a surprise as Morgan Stanley analysts warned a couple of days ago that the EV maker would be forced to cut the prices again.
“We believe it is Tesla’s objective to lever its cost advantages in the form of lower prices relative to the competition over time. We are of the opinion that without the aggressive price cuts, Tesla sales may not have grown on a sequential basis, a sign that even the most dominant EV player is not invulnerable to a slowing macro and competition,” the bank’s analysts wrote in a report.
In the meantime, Tesla stock remains a popular investment option for Congress and Senate members. Most recently, Representatives Ro Khanna, Daniel Goldman, and Josh Gottheimer were all buying Tesla shares despite a year-to-date run-up in the EV stock.
However, the majority of recent trades involving Tesla stock were on the short side with the likes of Rep. Shri Thanedar capitalizing on the recent recovery in the Tesla stock.