Tesla is having a tough time in the market, but it’s still doing what it does best- creating innovative technology that we can all use. The price cuts for its electric vehicles are great news for those looking to purchase a car, and Tesla continues to lead the way with cutting edge innovations.
Tesla’s stock plunged Tuesday following concerns about the company’s margins after a series of price cuts this quarter. While Tesla was able to trim its expenses in light of slumping demand for electric cars, investors are worried about the profitability of the automaker long term. Tesla has signaled that it may continue to lower prices in order to stimulate sales and boost margins, but this strategy is likely only sustainable if more customers adopt electric cars as their default mode.
Tesla is known for its continual cutomership orientated discounts and loyalty programs, in order to keep buyers interested and coming back. Tesla’s December discounts were also meant to entice new buyers into the marketplace as the company looks to fend off increasing competition.
The dramatic price cuts by Tesla Motors have struck fear in the hearts of some of its competitors, who are now slashing prices in a bid to lure buyers away from the electric automaker. So far, the move has proven successful, with Tesla’s share of the global electric car market growing significantly over the past two quarters.
Tesla’s sales growth in Q1 was helped by record-breaking discounts and increased production, but analysts say it may come at the cost of margin pressure.
The Model Y AWD, Long Range and Performance vehicles have been cut by $3,000 each, resulting in a savings of $9,990. The new prices make the Model Y more affordable than ever before and give drivers even more range and performance options.
The move to offer Model 3 vehicles for less than $40,000 is indicative of Tesla’s goal to make electric cars more accessible. By making the price point lower, Tesla is able to reach a larger population of potential customers who may be interested in purchasing an electric car. With this new lower price point, Tesla may be able to bring more people onto its platform and encourage them to purchase an electric car.
The Model 3, Tesla’s only direct-to-consumer model, is now worth less due to the federal government’s updated battery sourcing guidance. This could impact investor confidence and potential sales of the car.
Tesla CEO Elon Musk has stated that the company is still working on making the Model 3 Performance available at a lower price. It remains to be seen when this will happen, but customers who are interested in purchasing this model should expect to pay more for it than other variants of the Model 3.