Tesla's Latest EV Price Cuts Are Record-Setting
Earlier today, without warning, Tesla cut the prices of its flagship vehicles. The Model Y's Performance and Long Range variants can now be picked up for $2,000 less — with the Performance model retailing for $52,490, and the Long Range for $48,490. However, the Model Y Rear-wheel drive variant did not receive a discount.
Another EV that is now cheaper is the Model 3. The Rear-wheel drive trim can now be picked up for $38,990 — $1,250 less than it previously went for, making it the cheapest Tesla on the market. The Long Range variant was discounted by the same amount, now retailing at $45,990.
The Model 3's Performance model got a bigger discount, with its price being slashed by $2,250, resulting in the model getting a $50,990 price tag. However, if you factor in the $7,500 federal credit and the discount referral program, these EVs can be picked up for even less.
These new retail prices aren't a limited-time special promotion, but are apparently the new standard. Those closely watching Tesla may have an idea of why it is slashing prices.
The company is committed to hitting its 2023 goals
The timing of these price cuts likely isn't random. Earlier this week, the company stated that it produced 430,000 and delivered over 435,000 EVs in this year's third quarter. This is around 7% fewer vehicles delivered compared to the second quarter. The press release claimed that this decline resulted from scheduled breaks in production for factory upgrades.
Despite that, Tesla is still committed to its 1.8 million vehicle volume target goal, meaning it will need to deliver 476,000 vehicles in the next three months. With that context, it makes sense why Tesla slashed some of its prices to get more EVs out the door this year.
This isn't the first time the popular EV company has discounted its flagship vehicles. Over this year alone, the Model Y long-range variant has been made 26% cheaper, and the Model 3 has dropped 17%. Although good for customers, these cuts have affected the company's profitability.
According to Reuters, using data provided by Visible Alpha, Tesla is expected to hit 19.1% in gross margins for this quarter. If accurate, this is a substantial drop from the 32% margins from the first quarter of 2022. Since its record-breaking first quarter of 2022, Tesla's profitability has continued to drop as the company attempts to fight off competition and meet its goals. We won't know for sure what the company's third-quarter earnings look like until Tesla releases them on October 18.