Tesla is Cutting its Vehicle Prices in North America & China, Model 3 Now Starts at $37,990 in the U.S.
As the auto industry slowly recovers from the coronavirus pandemic, automakers are hoping to sell a large amount of cars once people are able to venture into dealer showrooms. For online retailer Tesla, customers will now get a better deal as well.
The California electric automaker Tesla Inc said on Wednesday it will cut prices of its electric vehicles in North America as the company ramps up production at its Fremont, California, factory after the easing of coronavirus lockdowns.
The price cut comes after nearly two months of collapsing auto sales as the coronavirus shuttered dealerships throughout North America. It was not immediately clear when the price cuts would take effect, but it brings the price of Tesla's Model 3 sedan to below that some popular gas-powered models from rival automakers.
The company's Model S sedan starts at $74,990, and its Model X sport utility vehicles from $79,990, which is a $5,000 price cut on each, according to Tesla's website. The cheapest Standard Range Plus Model 3 sedan is now priced at $37,990.
Tesla said it will also cut prices in China, where deliveries of the first China-made Model 3 built at the automaker's new Shanghai factory began in late December. Tesla said in a post on Chinese social media platform Weibo that it will cut prices by 4% for the Model S and Model X cars it imports from the U.S., but keep prices of locally-made Model 3 cars unchanged.
China is the world's biggest auto market and an important one for Tesla. Strong sales in China would keep Tesla profitable in the upcoming quarters. Tesla shares closed at $818.17 after the closing bell on Wednesday. The stock is up from $361.22 at the beginning of the coronavirus pandemic on March 18.
Tesla did not announce any price changes for the Tesla Model Y crossover, its newest electric vehicle. The starting price of the Model Y is still listed as $52,990 on Tesla's U.S. website for the dual-motor, all-wheel-drive Long Range version.
Like most automakers, Tesla was hit hard by the coronavirus. The first Model Y deliveries began in the U.S. in early March, but further deliveries and production was stalled when the coronavirus pandemic led to widespread shelter-in-place orders just over a week later.
Tesla was forced to close its factory in Fremont, California due to a mandatory shelter-in-place order, which is the automaker's only U.S. vehicle manufacturing plant.
Although the factory is up and running again as of last week, it remained closed since March 23.
Now Tesla is concentrating on the Model Y and it appears Tesla might be positioning the Model Y crossover to be its biggest seller. It seems as though Tesla might be ok with taking a little less profit from its other vehicles to ramp up model Y production.
Musk said previously that the Model Y has the potential to outsell all of Tesla's other models combined. The Model Y is entering the widely popular crossover and small SUV vehicle category in the U.S. and has garnered interest from buyers that have never owned an electric or plug-in-hybrid car.
Tesla is currently the most valuable U.S. automaker after just a decade of being a public company. Tesla's market cap now tops $151.8 billion, more than rivals General Motors and Ford Motor Co. combined.
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