Tesla is cutting prices again to boost demand in an increasingly crowded electric vehicle (EV) market.
The EV maker on Thursday cut prices on all of its models, including a $5,000 price drop for its luxury Model S and Model X vehicles. Tesla also began taking orders on a new, cheaper Model Y that starts at under $50,000.
Tesla CEO Elon Musk has said he’s willing to sacrifice profit margins to cement Tesla as the dominant EV manufacturer.
Tesla is the best-selling EV company in the U.S. but has gradually ceded market share as major auto companies rush to catch up. Still, Tesla can stay profitable on lower prices, while competitors such as Ford have yet to turn a profit on EVs.
Tesla lowered prices in January in part to make some of its vehicles eligible for the new $7,500 EV tax credits approved under the Inflation Reduction Act, which are attached to strict price caps.
The Treasury Department recently unveiled guidelines for the tax credit, which requires companies to source a portion of battery components from the U.S. or its allies to receive the full credit. Tesla has said that its popular entry-level Model 3 will not qualify for the full credit under the new rules, which are set to go into effect April 18.
Tesla has seen its sales figures rise since slashing prices. Tesla delivered 422,000 vehicles in the first quarter of 2023, a record for the company.
The aggressive price drops have huge implications for the broader EV market, which saw persistent price increases throughout the pandemic, making EVs unaffordable for most Americans.
The average EV sold for around $58,000 in February, down from the peak of $66,000 last year, according to Kelley Blue Book.