Elon Musk drops prices on all Tesla models in the US

It is the second time this year that the electric car maker has reduced the cost of its vehicles

Tesla chief executive Elon Musk has said he is willing to sacrifice Tesla’s profitability to keep growing amid rising interest rates and a possible recession. Reuters

Tesla has marked down all of its vehicles again in the US after price tweaks throughout the first quarter yielded an incremental sales gain.

The company discounted each version of its higher-volume Model 3 and Y electric vehicles by at least $1,000, and versions of its costlier Model S and X vehicles by $5,000.

It also introduced a new base version of the Model Y starting at $49,990.

This is the second broad-based markdown for Tesla this year, following cuts across the line-up in mid-January.

Watch: A look inside Abu Dhabi's new Tesla taxis

Chief executive Elon Musk has said he is willing to sacrifice Tesla’s profitability to keep growing in the face of rising interest rates and a possible recession.

The company is in the rare position among electric vehicle makers of having big profit margins to work with, as incumbents including Ford and newer entrants such as Rivian Automotive and Lucid Group struggle to make money at lower volumes.

After Tesla’s first line-up-wide price cuts early this year, Mr Musk said on a January 25 earnings call that orders were running at almost twice the rate of production.

But the company was unable to sustain that supply-demand dynamic: deliveries rose about 4 per cent from the fourth quarter, and Tesla produced almost 18,000 more cars than it handed over to customers.

Despite a second round of discounts to the Model S and X in early March, Tesla delivered only 10,695 of those vehicles in the quarter, the lowest since the third quarter of 2021.

Following the latest changes, Tesla has now dropped the price of each of those vehicles by at least $20,000 and as much as $34,000 since the start of the year.

The US car maker also marked down vehicles in China earlier this year, triggering a price war in the world’s largest new-energy vehicle market.

It shipped a total of 88,869 vehicles from the Shanghai factory in March, preliminary data released earlier this week by China’s Passenger Car Association showed.

A significant price differential remains for Tesla’s vehicles in China, where a basic Model 3 starts at 229,900 yuan ($33,400) and the Model Y begins at 261,900 yuan.

While Tesla continues to outpace other car makers in global EV sales, it is facing stiffer competition than ever before from China’s BYD, with analysts at BloombergNEF expecting the Berkshire Hathaway-backed manufacturer to challenge for the number one spot this year.

Tesla field engineers heat test vehicles in Dubai — in pictures

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  Tesla field quality engineers have been in Dubai at the hottest time of the year, analysing the electric cars for their durability and performance in extreme temperatures. All photos: Tesla

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  Tesla posted about the tests on Instagram, saying the cars had experienced temperatures greater than 50°C.

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  The line-up of cars tested includes the Model Y, the refreshed Model X and the Model 3.

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  The engineers took on sand, mountain roads and gravel-strewn tracks.

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  Testing a car for durability requires it to be pushed to the limit.

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  The company does its cold weather testing in Alaska, the US.

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  The engineers may also have looked at the performance of the new heat pump, which was introduced into the Model Y last year.

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  Hitting the dunes.

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  Tesla field quality engineers will study the data to help improve the performance of the electric vehicles.

Tesla also needs to pick up the pace to keep growing at the rate investors are used to.

Last year, the company fell short of its target for a 50 per cent average annual increase in vehicle deliveries, expanding by 40 per cent. Its growth rate slipped to 36 per cent in the first quarter.

The Austin, Texas-based company will report earnings on April 19.