Tesla has cut prices again! This car is down nearly 15% at most, Musk: Everyone can't afford it, only the price cut

Per editor: Li Zedong

Less than a week later, Tesla announced another price cut!

Tesla Hong Kong announced on April 12 that it will adjust the price of Model 3 and Model Y on April 15, with an adjustment of up to 14%.

The largest price adjustment was the Model 3 Performance, with a 14.7% decrease in the "one-for-one" price starting from HK$440,335, followed by the Model 3 long-range version, with a "one-for-one" price of HK$399,485, a decrease of 11.06%.

The Model Y long-range version and Performance version will also be reduced by 8.7% and 9.03% respectively to HK$459,685 and HK$487,205 respectively.

According to Tesla's Hong Kong website, under the "one-for-one" program, car owners can choose to dismantle and cancel the registration of their eligible old private cars in exchange for a new Tesla through simple steps, and they can enjoy a first-time registration tax concession of up to HK$250,000.

Image source: Screenshot of Tesla Hong Kong official website

Musk: People can't afford it, and only by lowering the price of cars can they really meet the demand

According to Tesla's US official website on April 7, Tesla has reduced the starting price of the long-range version and the high-performance version of Model 3 in the United States by $1,000, respectively, to $41,990 and $52,990 respectively.

In addition, Tesla officially launched a new lower-priced Model Y in the United States with AWD powertrain for $49,990.

The price of the two existing Model Y models has also been reduced by $2,000. Model Y LR was lowered from $54,990 to $52,990; The price of the Model Y P was reduced from $58,990 to $56,990.

In addition, according to the latest guidance from the Internal Revenue Service (IRS), the $7,500 federal tax credit for the rear-wheel drive version of the Model 3 will be cut to $3,750 on April 18.

According to statistics, this is the third time Tesla has cut prices in the US market this year.

The first two occurred in January and March, respectively, and after three price cuts, the Model S fell from $104,990 (about 720,000 yuan) at the end of 2022 to $84,990 (about 580,000 yuan).

In fact, Musk revealed in Tesla's fourth-quarter 2022 earnings call that the size of the next-generation model will be smaller than the Model 3 and Model Y currently on sale, and the cost will be half of the existing platform.

Image source: Tesla China official website

On April 8, Tesla CEO Musk responded to Tesla's price cut. Musk said that the reason for the price reduction is not that everyone has no demand for Tesla, but that everyone has no money to afford it, and only by reducing the price of the car is to really meet the demand.

"Many wealthy critics don't understand that mass demand is limited by affordability. There is a lot of demand for our products, but if the price is more than the money people have, then this demand is irrelevant. Musk said.

Image source: Twitter

On April 3, Beijing time, Tesla released the latest data showing that in the first quarter of 2023, Tesla produced about 440,800 electric vehicles worldwide, a year-on-year increase of 44.3%; Cumulative delivery of about 422,900 new vehicles, a year-on-year increase of 36%, breaking Tesla's quarterly delivery record.

Previously, Cui Dongshu, secretary-general of the National Passenger Vehicle Market Information Association, told every reporter that if Tesla launches a model with a lower price and a smaller level, it will effectively occupy the markets in Europe, Japan and other markets that prefer small electric vehicles. The model could bring Tesla far more global deliveries than the Model 3.

"It's a trade-off between profit and sales" Analyst: Tesla's price cuts are not over

Tess's recent price cut is unlikely to be the last, as the electric car maker is about to report quarterly earnings, putting margins in the spotlight.

That's what analysts at Bernstein and Citi commented on Monday about Tesla's recent further price cuts.

"It's a clear trade-off between profit and volume," says Bernstein's Tony Sarknagy. "While many investors have been hoping that margins may bottom out (in the first quarter), we don't think that is necessarily the case, especially given that we think margins could be cut further."

Tesla CEO Elon Musk said at the end of January that after cutting prices in early January, orders were twice Tesla's capacity, "however, deliveries (in the first quarter) lagged behind production, which indicates a significant slowdown in order volume in the quarter." ”

"We think further price cuts are likely in other regions. We noticed that in all regions, with the exception of the Model Y in the United States, almost all Tesla models had relatively short lead times (4 weeks). "The fact that Tesla is cutting prices for its models with the longest lead times is especially indicative of the possibility that other models will do the same."

Citi's Itay Michaeli agrees that the recent price cuts "will place more emphasis on the (first-quarter) automotive gross margin outcome as a determinant of (short-term) market sentiment." "Stronger-than-expected margins" would support the view that Tesla's latest price cut is due to cost advantages and may also reflect lower input costs. ”

The Citi analyst said flat or weaker gross margins "could reignite concerns about capacity/product aging and put the consensus expectation for 2023 at risk." ”

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