Tesla Model Y
Credits: Wikimedia Commons

With the market expanding and competition heating up, EV maker Tesla has dropped prices of its basic level Model 3 electric sedan and Model Y electric crossover in the States. The prices dropped 2.6% to US $36,990 for Model 3 and 4.8% for Model Y which is now priced at $39,990. On the other hand, the company raised the prices for the Performance versions of the same. The price for performance variant of Model 3 increased to $55,990 and Model Y performance is now priced at $60,990 in the market.

Similar price changes were seen in Japan and will soon be seen in Australia as well. These changes are at the heels of Tesla updating its Model S and X. The new prices are before any gas savings or state incentives.

CEO Elon Musk has often lamented the high prices of their vehicles, and such adjustments are usual business for Tesla. Often these changes are seen as important quarterly milestones, as the company hopes to increase its deliveries. However, this also hints at rising competition, as other companies try to make their presence known in the EV market. Tesla competitor Ford is continuously updating its EVs and has also announced that starting 2030, it will only produce electric vehicles.

Moreover, many companies like Nikola and Rivian are also catching up to the EV maker, with the latter ready to deliver the world’s first electric pick up trucks by summer this year.

Tesla delivered nearly half a million vehicles over 2020, but its predicted that deliveries this year would slow down in the first half and are expected to pick up over the second half. Moreover, 500,000 deliveries is a very small number when compared to some of the other automobile companies that Tesla is competing with, even though it dwarfs its competitors in terms of valuation.

This shuffling of prices is hence being seen as an incentive for customers.

“Adjustments may reflect mix strategy,” analyst Dan Levy of Credit Suisse said. “We believe Tesla strategy is to cut price (funded by cost cuts) to spur volume increase.” Only three months prior, CEO musk had promised to develop a $25,000 fully autonomous electric car, which according to sources should be on the road by the end of 2021.