Tesla’s back-to-back price cuts bring sticker on U.S. Model S below $70,000
Thu Oct 15 2020
Lucy Harlow (3401 articles)

Tesla’s back-to-back price cuts bring sticker on U.S. Model S below $70,000

U.S. electric vehicle maker Tesla Inc TSLA.O cut the price of its Model S “Long Range” sedan in the United States to $69,420, its website showed, following a tweet bit.ly/2H0JCP0 flagging the cut earlier on Wednesday from Chief Executive Elon Musk.

The cut is Tesla’s second this week for the high-end sedan, following a 4% cut to $71,990 on Tuesday.

Tesla shares closed 3.3% higher at $461.30 on Wednesday and were little changed in after-hours trade.

The company also on Tuesday reduced by 3% the price of its Model S in China, where it had previously cut the starting price of its Model 3 sedan.

The starting price for Model S is now a thousand times that of a pair of red satin shorts that Tesla started selling in July for “$69.420” to poke fun at the company’s naysayers.

Tesla introduced its Model S in 2012, but in recent years the car has faced competition from the automaker’s less expensive, mass-market Model 3 sedan, launched in 2017, which currently starts at $37,990. The Model S makes up only around 5% of Tesla’s unit volume, said a Credit Suisse analyst in a client note on Wednesday.

The analyst said the Model S price reduction was likely in response to price cuts by electric vehicle startup Lucid Motors, which sells its luxury sedan Air model at a starting price of $69,900. That includes a $7,500 U.S. government electric vehicle tax credit, for which Tesla vehicles are no longer eligible.

The price cuts also come as competition in the electric vehicle market – long dominated by Tesla – heats up, with several automakers launching new electric vehicles next year.

Germany’s Daimler AG DAIGn.DE is scheduled to release an electric version of its Mercedes-Benz S-class luxury sedan, the EQS, next year. Analysts expect the EQS to be significantly more expensive than the Model S, however, with the latest version of the gasoline-powered S-class retailing at more than 100,000 euros ($117,500).

Lucy Harlow

Lucy Harlow

Lucy Harlow is a senior Correspondent who has been reporting about Commodities, Currencies, Bonds etc across the globe for last 10 years. She reports from New York and tracks daily movement of various indices across the Globe

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