Tesla Is Bending On Price

Tesla prides itself on being different than every other car company in the world. It doesn’t advertise, except when it does. It doesn’t do profits, except when it does. It doesn’t do incentives, except when it does.

Tesla has cut the prices on its cars by up to six per cent to induce demand, according to Reuters. That isn’t particularly big but it is notable because for years Tesla’s line about its prices was that it doesn’t negotiate. The car costs what it costs, because obviously Teslas are worth every penny, or some such.

But Tesla is now changing that stance because sales are down amid the pandemic. Per Reuters:

On Wednesday, Tesla website’s showed the starting price for its Model S sedan is now $US74,990 ($113,730), down from $US79,990 ($121,313).

Its Model X SUVs are now priced at $US79,990 ($121,313), from $US84,990 ($128,896), and the lowest-priced Model 3 sedan is $US2,000 ($3,033) cheaper at $US37,990 ($57,616).

Tesla said it will also cut prices in China – as per usual after price adjustments in the United States – by around 4% for the Model X and Model S.

One caveat is that free supercharging for some customers is going away.

Tesla also said its Supercharger quick-charging service will no longer be free to new customers of its Model S sedans and Model X sport utility vehicles (SUVs).

It wouldn’t be surprising if the lower prices goose sales a little bit, and the timing isn’t so surprising as well, given that June is the last month of the second quarter and I’m sure Tesla will want its second-quarter results to look good, or at least “good” in context.

That said, the fundamentals of the situation don’t seem to have changed all that much. Anyone in the market to buy an $128,000+ luxury electric SUV will surely also be in the market to buy a $120,000+ luxury electric SUV. And, hell, if you’re already in for that much money you might as well spring for the performance version of the Model X, which starts at around $150,000.

What this really shows is Tesla is not all that different from other car companies at the end of the day. It produces cars that it needs to sell in great numbers to satisfy investors and perhaps make a profit. Any other narrative about the company is marketing.