Tesla cuts US prices for 6th time this year ahead of quarterly results

Tesla Inc cut prices for some of its Model Y and Model 3 vehicles in the US for the sixth time this year to juice demand as competition among electric-vehicle makers heats up around the world.

The cuts came ahead of Tesla's first-quarter earnings, due after markets close on Wednesday (April 19), that will show how previous cuts have affected Tesla's industry-leading profit margins.

Tesla has slashed prices in numerous markets worldwide to stay ahead of legacy US competitors such as Ford Motor, while it strives to catch up with Chinese automakers such as BYD Co Ltd in its second-largest market.

Tesla's shares fell 2.3 per cent in morning trading. The stock has risen a little under 50 per cent this year, after posting their biggest annual drop in 2022.

The company's website showed late on Tuesday that it cut prices of its Model Y "long range" and "performance" vehicles by $3,000 each and of its Model 3 "rear-wheel drive" by US$2,000 (S$2,700) to $39,990.

Tesla cut US prices of its base Model 3 by 11 per cent so far this year and that of its base Model Y by 20 per cent, moves that come as the United States, its largest market, prepares to introduce tougher standards that will limit EV tax credits.

It also recently lowered prices in Europe, Israel and Singapore, as well as in Japan, Australia and South Korea, expanding a discount drive it started in China in January.

Tesla has been able to stay ahead of large US and Japanese automakers that are making inroads in EVs by cutting sticker prices, but Chinese automakers are starting to take the lead in that market and others with even lower-cost offerings.

However, Tesla's quarter-over-quarter rise of four per cent for first-quarter deliveries was much less than the 17.8 per cent sequential climb in the prior quarter.

For the first quarter, Wall Street expects the company's auto gross margin to fall to a more than three-year low of 23.2 per cent, according to 17 analysts polled by Visible Alpha.

Revenue is expected to rise 24 per cent year-on-year to $23.3 billion, but analysts' average profit estimate has fallen by about 2.4 per cent in the last three months, according to Refinitiv data.

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