Tesla cuts prices on new models in U.S.

Photo taken on Oct. 26, 2020 shows the Tesla China-made Model 3 vehicles at its gigafactory in Shanghai, east China.

Tesla Model 3 vehicles at the company’s gigafactory in Shanghai, China, in 2020. Photo: Ding Ting/Xinhua via Getty Images

Tesla has made significant cuts to the costs of new electric vehicle models in the U.S., according new prices listed on its website.

Driving the news: The site shows that Elon Musk’s firm cut the cost of its Model Y vehicle by 20% to $52,990, excluding some fees, while the price of its Model 3 sedan dropped 14% to $53,990, per the Wall Street Journal.

  • There were also price cuts to Tesla’s Model X sport utility vehicles and Model S luxury sedans.

Of note: The price changes could enable some buyers to qualify for the $7,500 federal tax credit that affects many electric vehicle models, the WSJ notes.

The big picture: The cuts come as Tesla experiences a declining market share and analysts say the firm is facing a “significant demand problem.”

  • The company saw its stock plunge 65% in 2022, marking its worst-ever annual drop.

Our thought bubble, via Axios’ Hope King: The latest price cuts, along with those in Germany, China and other Asian countries, add to the worries of a demand slowdown for Tesla at a time when investors are already casting doubt on Musk’s leadership abilities, with Twitter taking more of his time and more EVs coming to market from legacy competitors.

  • Some investors have suggested the price cuts are welcome amid new competition especially as higher volumes could make up for smaller about margins.