Tesla (TSLA.O) has cut U.S. prices of its Model 3 compact sedan and the Model Y SUV, ratcheting up its price war just days after the third-quarter deliveries of the world’s most valuable automaker missed market expectations.
The latest cuts come as the company strives hard to deliver a record 476,000 vehicles in the last three months of 2023 to meet the annual target of handing over 1.8 million vehicles.
The price cuts by Tesla – now by about 2.7% to 4.2% – started in January to support sales in an uncertain economy and fend off competition from U.S. automakers such as Ford and China’s BYD.
Tesla shares fell 1.2% in premarket trading on fears that the cuts will further dent the company’s industry-leading margins, which plumbed a near four-year low in the April-June quarter.
The standard Model 3 sedan is now $1,250 cheaper at $38,990, while the Model Y long-range variant costs $2,000 less at $48,490, the automaker’s website showed.
Tesla also cut prices for its higher-priced variants of the two models.
Overall, the standard Model 3’s prices have come down by about 17% since the start of the year, while the Model Y long-range variant has seen a drop of over 26%.
The price cuts will also add pressure on the “Detroit Three” as they deal with an unprecedented strike by autoworkers’ union.