Tesla slashes prices in two biggest economies to sustain EV market share

Tesla has slashed prices across multiple key markets, including two of its biggest – the US and China – in a bid to ensure it maintains market share after its own delivery targets fell short of expectations in the first quarter.

The price cuts – delivered just a few days before the company’s first quarter earnings results are released, and just a few days after announcing major job cuts and the departure of several key executives – affect all its models in its home market of the US, which it still dominates.

In China, where Tesla is facing increased competition from the local end of the market, the price cuts are focused on the Model Y and the Model 3.

In the US, the Tesla Model Y now starts as low as $US42,990 for the most popular variant the brand makes. That’s the single-motor RWD variant, which was priced at $US44,990 as of last week.

The other two Model Y variants also see a similar cut with the dual-motor Long Range now starting at $US47,990.

At one stage during the Covid-19 pandemic, the pricing of the mid-spec Long Range variant was as high as $US65,990, making the new pricing $US18,000 cheaper than those highs.

The Performance variant coming in at $US51,490. This makes the Model Y Performance at the lowest price it has ever been in the US. 

On top of this, eligible drivers can apply for a point-of-sale EV rebate of up to $7,500, bringing the Model Y Performance down to $US43,990. 

Similarly, the more expensive, Model S and Model X models have also seen a $US2,000 price cut with the Model S starting at $US72,990 and the Model X bumping it up to $US77,990.

In China, the prices of the Model 3 have dropped on average by 5% which translates to around $A3,000 for the Model 3 which now starts at under $A51,000. This was first reported over the weekend by cnevpost.

Like the Model 3, the Model Y with the new price cut starts at under $A54,000, a decrease of around $A4,000.

China is a significant market for Tesla as in 2023, the brand sold around a third of all its vehicles in the country, making up 603,664 sales. The majority of these were the Shanghai-built Model 3 and Model Y vehicles.

On the back of the newly reduced prices, Elon Musk clarified on X why Tesla was adjusting prices in various markets: “Tesla prices must change frequently in order to match production with demand.”

It’s unclear if this will increase sales during these economic times but it’s a strategy that has worked for the company before.

Earlier this month in Australia, Tesla also slashed the prices on all variants of Tesla Model Y and the Long Range Model 3, the two best selling EVs in the local market. The prices were cut by up to $8,500 on some variants. There is no indication at this stage of any further price reductions.