On the day that Tesla (TSLA) posted quarterly results, the company announced aggressive price cuts for its vehicles in the U.S. The Model Y AWD, Long Range, and performance vehicles have a $3,000 price tag cut. The Model 3 RWD standard range price will fall from $41,990 to $39,990.
For the first time, the Model 3 is below $40,000. This is a substantial game changer that will force competitors to re-forecast their expectations. Customers who delayed buying a Tesla last Dec. 2022 took advantage of the last round of price cuts. This time, a sub-$40,000 EV from the leading brand should increase sales.
Tesla reported higher revenue, lower profit margins, and lower free cash flow. It will follow Apple’s (AAPL) business model of increasing its market share at the mid-range price. It increased the price of Model S Plaid and Model X Plaid on April 21. This protects Tesla’s premium branding. Those units are priced at $107,490, up from $104,990.
Avoid China EV
Nio (NIO) pledged it would not cut prices. This will only hurt its sales and increase its losses. Xpeng (XPEV) cut costs through a new vehicle manufacturing platform. Still, Xpeng vehicle sales are weakening.
In the U.S., Ford (F) keeps pledging to spend more as unit prices fall. General Motors (GM) will fall behind Tesla after the price cut.
