Tesla lowers prices on its Model X and Model S vehicles

Tesla lowered prices on two of its cars this week as the automaker jockeys for dominance in the electric vehicle market, marking its second price cut this year.

Tesla’s hatchback, the Model S, now costs $89,990, down from $94,990 a week ago, according to its website. The upgraded Model S Plaid’s price fell to $109,990 from $114,990 a week ago. Tesla’s mid-sized sedan Model X is now $99,990, down from $109,990 while the price for its Plaid version fell to $109,990 from $119,990. 

Automotive industry experts say affordability is key to driving widespread acceptance of electric vehicles as the U.S. tries to loosen its dependency on fossil fuels as well as gas-powered cars. Charging stations are sprouting up nationwide to encourage consumers to buy electric, but price points will ultimately determine if the vehicles are financially within reach of the middle class, experts said.

Tesla did not immediately respond Monday to a request for comment. 

The company, owned by Elon Musk, dropped the price on its Model Y in January in a move that set off a pricing war among EV manufacturers, analysts said. Weeks after Tesla’s move, Ford reduced the price on its electric Mustang.

More price drops likely

Tesla prices could fall even further in the near future now that the company is planning a new factory in Mexico, analysts say. The Monterrey facility, along with Tesla’s factory in Texas, will focus on building a new powertrain that’s cheaper to produce, analysts at Wedbush Securities said in a research note last week. 

“This, in our opinion, will set the stage for a sub-$30k vehicle likely to be introduced in a separate event over the coming year — with a late 2024 target date our estimate,” Dan Ives said in the note. 

Other analysts said they believe Tesla is dropping prices because of slower demand, pushing the company to prioritize sales volume over profitability. 

The price drops come as Tesla is receiving increased scrutiny on its self-driving feature. Since 2016, the National Highway Traffic Safety Administration (NHTSA) has launched investigations into 35 separate Tesla crashes, 19 of which were fatal. The federal agency also pressured Tesla into recalling nearly 363,000 vehicles after its self-driving feature failed to follow posted speed limits or stop at intersections.

The electric vehicle market — which is expected to reach $1.1 trillion globally by 2030 — has indeed had its own starts and stops in recent years, ignited by supply-chain woes caused by the pandemic and Russia’s ongoing war in Ukraine. In 2022, automakers hiked the price of EVs as they struggled to get raw materials for making lithium-ion batteries. 

Tesla’s stock price was down 2.1% Monday afternoon, trading at roughly $194 a share.