Tesla seems to be just making pricing up as at it goes, or is there a larger plan?
Just days after slashing the prices of the Tesla Model Y and Model 3 by a couple of grand, Tesla has increased the price of the Model S and Model X by a couple of grand. The Model S and X have raised in price with no warning overnight by $2,500 and now start at $87,490 and $97,490, respectively. This eats into the price drops of the cars earlier in the year but leaves both vehicles less expensive than they were at the start of 2023.
At this point, it looks like Tesla has no idea what it's actually doing with prices and changing them on a whim, then being reactive to the results. So, is Tesla simply making more wealthy Model S and Model X customers pay for the cuts on the Model Y and Model 3 just days ago?
The fact of the matter is that Tesla's aggressive price cuts through the beginning of the year have hurt the first quarter's profit margins. That, in turn, has hurt Tesla's share price, which dropped by 9.7% on April 20.
“We've taken a view that pushing for higher volumes and a larger fleet is the right choice here versus a lower volume and higher margin,” Elon Musk told analysts following the first quarter earnings call.
The reality is that Tesla is now in an EV price war, and not just in China. Here in the US, automakers are swamping the market with both affordable and luxury EVs.
The new cars hitting the market are also new designs, while Tesla's lineup is starting to look as old as it is. The Model S is now 13 years old, and the Model X is eight years old. Tesla sold just 10,695 units of the aging models in the first quarter of 2023, equating to 2.5% of total deliveries. And, there's still no sign of the new Roadster and the Cybertruck.
After a decade of dominating the EV market it invented, Tesla is in danger of becoming a discount automaker. Musk is relying on the autonomous driving technology the brand is developing for future profits, but that's in the face of much larger automakers deciding it is not realistic to perfect, as well as Musk's own unrealized claims and promises.
Keyword: Tesla Just Increased Pricing For The Model S And Model X