Tesla announces price cut for certain models
FILE - A Tesla Model X charges at a supercharger location in Scotts Valley, California, US, on Thursday, June 1, 2023. Photographer: Philip Pacheco/Bloomberg via Getty Images
Elon Musk's Tesla slashed the U.S. prices of its Model Y, Model X and Model S vehicles by $2,000 each on Friday after first-quarter deliveries came up short of expectations.
The valuable electric-vehicle maker lowered the prices for its Model Y base variant to $42,990, while the long-range and performance variants now cost $47,990 and $51,490, respectively, the Tesla website now shows.
"Affordabiity is key to our mission," Tesla North America posted on X, the social media platform owned by Musk. "Model Y now starts at $29,490 after US federal tax credit & estimated gas savings."
The basic version of the Model S now costs $72,990 and its plaid variant $87,990. The Model X base variant now costs $77,990 and its plaid variant is priced at $92,900.
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But with the price cuts comes some bad news for customers: the company's referral program benefits will end in all markets on April 30.
Tesla's referral program allows buyers to earn exclusive benefits by referring other first-time customers or being referred by an existing customer.
The changes come after Tesla's quarterly deliveries declined for the first time in nearly four years and fell short of Wall Street analysts' estimates.
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Earlier this month, Tesla announced that it delivered roughly 387,000 vehicles in the first quarter – well below expectations of about 443,000 and an 8.5% decrease compared to the first quarter of last year.
Dan Ives, managing director and equity analyst of Wedbush Securities, called the first quarter report an "unmitigated disaster" for Musk and Tesla.
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Tesla faced an escalating price war in China, a key market for the EV maker, as low-cost competitors like BYD forced it to reduce prices and cut into its margins.
High interest rates in the U.S., a byproduct of the Federal Reserve's fight against inflation, have also made it more expensive for American car buyers — a dynamic Tesla has sought to counteract with temporary discounts to entice customers and now U.S. price cuts.
The company also experienced production issues at its Gigafactory near Berlin, Germany. It announced a nearly two-week production pause at the facility in late January and early February due to a parts shortage caused by the shipping crisis in the Red Sea precipitated by Iran-backed Houthi militants. The facility also was forced to pause production for nearly a week in March due to an arson attack by an environmental activist against an electricity transmission facility that helped power the plant.
Tesla will release its first-quarter earnings report on Tuesday.
FOX Business' Eric Revell and Reuters contributed to this report.