US electric vehicle maker Tesla Inc cut the price of its Model S “Long Range” sedan in the United States to $69,420, its website showed, following a tweet 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, reports Reuters.
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 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).
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.