Tesla CEO Elon Musk
Representational Image // The Summit 2013 – Picture by Dan Taylor / Heisenberg Media – http://www.heisenbergmedia.com

Tesla, the most popular EV maker and the most valuable carmaker on the face of the Earth, seems to have headed into a price war with another American electric automaker, Lucid. After Lucid announced its new electric car ‘Lucid Air’ yesterday, Tesla CEO Elon Musk, in his usual self, took to Twitter to announce a price cut for its Model S cars, which is in clear competition to the new EV from the company.

Elon Musk tweeted, “The gauntlet has been thrown down! The prophecy will be fulfilled. Model S price changes to $69,420 tonight!”. The price drop might be masqueraded as a dumb joke, and we all know Elon Musk likes those, but there’s something pretty smart behind this seemingly juvenile quip.

Tesla has continued its price-cutting spree this week after it secretly brought down the cost of Model S by $3k earlier this week foreseeing the launch of Lucid Air. With a new price point of $69,420, Tesla is effectively going into competition with the just-launched Lucid Air that costs $77,400 with a US tax credit of $7,500, which leaves it at a price of $69,900.

With this move, the Model S will be priced lower than the new competitor, without the customers construing it as a sign of desperation.

And not just the US, Tesla has even slashed the cost of the Model S in China earlier this week by 3%.

The new Lucid Air was launched yesterday and carries a 480 HP powertrain, a range of 406 miles on a single charge and a dual-motor option. This is relatively the cheapest sedan offered by the company and is aimed at reaching a wider consumer base. The Lucid Air is very similar to the Tesla Model S, which offers the same range as its competitor with dual-motor and all-wheel-drive options

The Tesla Model S has been a huge hit since its launch in 2012, however, the introduction of cheaper EV models from the company lately has seen the sales of the Model S slumping. The Model 3 sedan, which starts at $37,990, has become more of a favorite among the user base and has slightly put the Model S in the shadows. The Model S currently makes up only around 5% of Tesla’s overall unit volume, which means that even Tesla has lowered the production of its Model S sedans.