Tesla again cuts prices in its drive to meet year-end sales goals

Tesla is the top electric vehicle seller in the country, but that status hasn’t protected it from falling short of the lofty production and sales expectations heaped on it by Wall Street. The automaker has to sell 476,000 vehicles in the fourth quarter of this year to hit its 1.8 million-unit sales target, and to get there, it’s pulling out more price cuts on popular models.

The latest price cuts add up to $1,250 for the base Model 3, bringing the MSRP down to $38,990. The Model Y Long Range got a $2,000 cut to a starting price of $49,490. More expensive models also got cuts.

As Reuters pointed out, MSRPs have fallen by around 17 percent for the Model 3 and 26 percent for the Model Y since the beginning of 2023.

Though they’ll likely boost demand, the price cuts will weaken Tesla’s profit margins. The automaker was pushing 32 percent margins at the beginning of 2022, but that number is expected to fall to under 20 percent in the third quarter. Tesla will announce earnings on Oct. 18, so we’ll learn the impacts of the cuts then.

This move comes after Tesla reintroduced the entry-level Model Y RWD just a few days ago. It comes with a $43,990 starting price, almost $5,000 cheaper than the Model Y Long Range and nearly $9,000 cheaper than the Model Y Performance. It offers a shorter range of 260 miles and a slightly slower 0-60 mph time of 6.6 seconds, but the lower price makes it a far more compelling buy.

It’s worth noting that all Model 3 and Model Y variants are eligible for federal tax credits of $7,500, giving them an advantage over models from Hyundai, Kia, Genesis, and European automakers that don’t meet the government’s requirements on final assembly and battery raw material sourcing locations.