New York - Tesla reduced the prices of three of its five models in the United States by $2,000 late on Friday, signaling ongoing challenges for the electric vehicle maker led by billionaire Elon Musk.
The price reductions affect the Model Y, Tesla’s best-selling small SUV and the top electric vehicle in the U.S., along with the Models X and S, which are its older, higher-priced offerings. The prices for the Model 3 sedan and the new Cybertruck remained unchanged.
After the cuts, the base price for a Model Y fell to $42,990, while the starting price for a Model S dropped to $72,990, and for a Model X to $77,990.
These reductions came a day after Tesla's stock price dipped below $150 per share, erasing all gains made over the past year. Tesla’s stock has declined by approximately 40% this year due to declining sales and growing competition in the electric vehicle market. Lowering prices is one strategy to attract more customers.
Musk mentioned in a post on X, the platform formerly known as Twitter, that with federal tax credits and gas savings, the effective cost of an entry-level Tesla could be as low as $29,490.
Industry observers had been anticipating a new Tesla model in the $25,000 range, the Model 2. However, reports earlier this month suggested that Musk might have abandoned the project, leading to further uncertainty about Tesla's direction. Musk later refuted these claims.
The price cuts capped a tumultuous week for Tesla. On Monday, the company announced plans to lay off 10% of its global workforce, totaling about 14,000 jobs. It also recalled nearly 4,000 of its 2024 Cybertrucks due to a risk that the accelerator pedal could get stuck, potentially leading to unintended acceleration and increasing the risk of accidents.
Additionally, Musk confirmed that he had postponed a scheduled trip to India to meet with Prime Minister Narendra Modi, citing "very heavy Tesla obligations." He plans to reschedule the visit later in the year.
Tesla is set to announce its first-quarter earnings on Tuesday.
Earlier this month, the company reported a significant drop in global sales from January through March due to increased competition, slowing growth in electric vehicle sales, and a failure to attract buyers with earlier price cuts.
This marks Tesla's first quarterly year-over-year sales decline in nearly four years.