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Price Cuts Before First Quarter Earnings
Tesla’s website displayed a reduction in prices for select electric vehicles in the United States, including the Model Y and Model 3, on Tuesday evening. This marks the sixth time the company has decreased prices in the U.S. in 2022, likely due to concerns about how it may impact profit margins. The “long range” and “performance” variants of the Model Y saw a $3,000 price drop, while the “rear-wheel drive” Model 3’s price was lowered by $2,000 to $39,990. Tesla is scheduled to release its Q1 results on Wednesday.
The company headed by Elon Musk has decreased the base price of its Model 3 by 11% and the base price of its Model Y by 20% in the United States this year. This is in response to stricter standards that will restrict EV tax credits in its largest market. Additionally, Tesla has extended its discount campaign, which began in China in January, to Europe, Israel, Singapore, Japan, Australia, and South Korea to encourage sales.
Earlier this month, Tesla announced a 4% increase in deliveries during the first quarter, which is considerably lower than the 17.8% increase seen in the fourth quarter. Furthermore, the substantial price cuts have sparked concerns about the company’s profitability, despite being based in Austin, Texas.
While Tesla’s Q1 revenue is expected to rise by 24.2% YoY to $23.29 billion, analysts’ average profit forecast has dropped by approximately 2.4% over the last three months, according to Refinitiv data. As of Tuesday, Tesla’s stock price has increased by nearly 50% this year.
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