Tesla Announces Third Price Cut for Electric Vehicle Models, Q1 Sales Up 36% but Fall Short of Analyst Expectations

Tesla, the electric vehicle manufacturer, has, for the third time this year, announced a reduction in prices for all of its electric vehicle models, possibly to garner more buyers, especially with interest rates on the rise. The announcement of the latest cuts was made on Friday, via Tesla’s website. A substantial price cut of $5,000 has been implemented on Tesla’s expensive models, namely the S saloon and the X large SUV. The more popular model, the Y small SUV, has seen a price reduction of $2,000, with the company introducing a novel dual-motor version that is currently priced at $49,990. Meanwhile, the 3 small sedan has received a $1,000 cut.

The Analysts’ Expectations and the Q1 Sales

Tesla has announced that its sales for the first quarter have increased by 36%, but despite this surge, they fell short of the expectations of industry analysts. Tesla revealed on Sunday that it had set a new record by delivering 422,875 vehicles across the world, between January and March, compared to just over 310,000 vehicles for the same period last year. However, according to FactSet, the growth fell below the anticipated figures of 432,000 for the quarter.

The Impact on Profit Margin

Tesla, which recently opened a colossal plant near Austin to add to its US factory line-up (which includes the original Fremont factory in California), needs to sell more vehicles to maintain full factory capacity. Underutilised plants may lead to the erosion of profit margins. Sam Abuelsamid, an e-mobility analyst at Guidehouse Research, claimed that selling more vehicles could be critical for Tesla’s financial well-being.

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