Tesla Strikes Again

Tesla Strikes Again

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  • Tesla’s (TSLA) two most expensive models in the U.S. just got a little cheaper. It recently slashed prices on two models in the U.S., the Model S and Model X, in an effort to stoke demand for its cars with recent price cuts. The price cuts range from 4% for the Model S Performance model to 9% for the top-of-the-line Model X.
  • Price cuts that were once unexpected have now become the new norm for the Texas-based car manufacturer, Tesla. In January, Musk and his team slashed prices on all models by up to 20%, making their cars more accessible and qualifying them for the $7,500 EV subsidy from the Biden administration. Musk has praised the success of the discounts, noting that demand has risen since the price reduction. It seems that when it comes to Tesla, affordability is the name of the game. 

Why it matters

Analysts surmised that the decrease in prices at the start of the year was due to a decrease in demand. Tesla had the upper hand, as they can make more money on each car sold than their global competitors. This could be the beginning of a price battle, causing competitors to lower their prices in the face of rising material costs and interest rates. China and other Asian countries have already seen two rounds of Tesla price cuts in recent months, indicating that the war might have already begun.


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