Tesla Slashes Prices On Model 3, Model Y Ahead Of Q1 Results: What Investors Should Know

A day after the Internal Revenue Service released the list of vehicles eligible for the electric vehicle tax credit, Tesla, Inc. TSLA announced another price cut across its Model Y variants and the rear-wheel drive version of its Model 3 vehicle in the U.S.

What Happened: Updated pricing available on Tesla's website showed reductions ranging from  6% to 9.1% for its Model Y line-ups.

Here is a compilation of price changes:

Model 3

• Model 3 Rear-wheel drive: $39,990, down 4.8% from $41,990.

This variant is eligible for only half of the $7,500 tax credit. Excluding the tax credit, this trim costs $36,240. The Model 3 Performance variant's pricing was left unchanged at $52,990.

Model Y

The previous cuts of a smaller magnitude of around 3.5% were announced on April 7. It was at that time, the company listed a new cheaper, sub-$50,000 variant to be made available in the U.S.

All three Model Y vehicles qualify for the $7,500 EV tax credit under the new IRS guidelines.

See Also: Everything You Need To Know About Tesla Stock

Why It's Important: The latest price cuts apparently were not related to the EV tax credit since the action has not altered the subsidy available for the models.

Musk has been harping on the affordability of EVs as the economy navigates through uncertainties. Tesla has built up a sufficient scale and achieved production efficiency to be able to afford the price cuts.

These aggressive price moves could pose a threat to upstarts, such as Rivian Automotive, Inc. RIVN, which are facing production issues.

As Tesla prepares to announce its financial results for the first quarter, which saw multiple rounds of price cuts, investors are jittery about the impact these actions have on margins and in turn profitability.

Tesla closed Tuesday's session at $184.31, down 1.46%, according to Benzinga Pro data.

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