The Tesla Inc (NASDQ: TSLA) stock price fell 1.45% after announcing a new series of price cuts on the Model 3 and Y to meet its ambitious goal of delivering 476,000 vehicles in Q4 2023 to meet its annual target of delivering 1.8 million cars to its customers.
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Tesla has cut prices by 2.7% to 4.2%, which means that the standard Model 3 is now $1,250 cheaper priced at $38,990, while the Model Y long-range variant now costs $2,00 less at $48,490, according to data from the automaker’s website.
The new price cuts put additional pressure on Tesla’s peers, who have been playing catch up ever since the company started a price war in January by announcing deep price cust to its popular models to lure in more clients amid a cost of living crisis that has seen consumers cut their discretionary spending.
Consumers are holding on to their current cars longer as they wait for interest rates to fall to get new cars, forcing many automakers to review their prices. Those car manufacturers that have not lowered their prices have, at the very least, kept them stable despite the rising inflation that warrants higher prices.
Tesla is in stiff competition in the United States against the Detroit-based legacy automakers, including Ford and GM, with its latest price cuts heating the supremacy battles between the US auto manufacturers. The three Detroit automakers are also dealing with a massive strike as employees demand higher wages.
The company is also facing stiff competition in international markets, especially China, where local companies have a large market share. Tesla is trying to acquire more market share in the world’s largest vehicle market. The Chinese market is crucial for Tesla.
Tesla has lowered the Model 3 price by 17% since the year started, while the Model Y long-range variant has seen its prices drop by over 26%. The price drops have squeezed Tesla’s margins, which were among the best in the EV manufacturing industry.
Analysts now expect Tesla’s margins for Q4 2023 to come in at 19.1%, which is a far cry from the record margin of over 32% in Q1 2022.
Tesla stock price.
The Tesla stock price was trading down 1.45% at $256.22, from Thursday’s closing price of $260.05.
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