Tesla cuts prices on electric vehicles for U.S. market

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Tesla has slashed prices on its top-selling electric vehicles for the U.S. market, the automaker’s website showed, after it recently cut prices in China and missed Wall Street estimates for fourth quarter deliveries.

The price cuts, announced late Thursday in U.S. time on the Model 3 and Model Y, ranged between 6% and 20% compared with the prices that held before the discount, according to a Reuters calculation.

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That is before accounting for a $7,500 federal tax credit that took effect for many electric vehicle models as of the start of January.

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Taken together with price cuts announced last week in China, the move marked a reversal in Tesla’s largest markets from the strategy it had pursued through much of 2022 when demand was strong and average sale prices for its electric vehicles had been trending higher.

The shift is the first major move by Tesla since appointing its lead executive for China and Asia, Tom Zhu, to oversee global output and sales after falling short of its 2022 delivery target.

Tesla cut prices in China and other Asian markets last week. Along with a previous price cuts announced in October and recent incentives, the China price for a Model 3 or Model Y was down 13% to 24% from September after the recent move, Reuters calculations showed.

Tesla has also cut prices in South Korea, Japan, Australia and Singapore.

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Analysts had said the China price cuts would boost demand and deepen the pressure for its rivals there, including BYD to follow suit in what could become a price war in the largest single market for electric vehicles.

Tesla’s main market is the United States, and its second largest market is China.

Tesla missed Wall Street estimates for fourth quarter deliveries.

Last month, Tesla CEO Elon Musk said “radical interest rate changes” had changed the industry-wide outlook and that Tesla could lower pricing to sustain volume growth, which would result in lower profit. (Reporting by Zhang Yan in Shanghai, Hyunjoo Jin in Seoul and Kevin Krolicki in Singapore; Editing by Christian Schmollinger, Neil Fullick and Lincoln Feast.)