Tesla Aggressively Cuts Prices Ahead Of Q1 Report: EV Maker Lowers Model 3, Y Prices In China By Up To 6%, Cuts US FSD Price By $4K

Zinger Key Points
  • Following a $2,000 price reduction for each trim of the Model Y, S, and X in the U.S., Tesla has also lowered prices in China.
  • These new cuts are expected to cost Tesla $900 million per year or 20 cents per share in earnings.

Tesla, Inc. TSLA announced over the weekend a reduction in all trim levels of electric vehicles it sells in China. The move follows a round of price cuts in its U.S. market. The company also reduced the price of its full self-driving software in the U.S.

What Happened: The most recent price cuts in China range between 4% and 6%, according to CnEVPost. The price cuts for the China-made Model 3 and Y are as follows:

TrimsNew PricingOld Pricing% reduction
Rear-wheel drive Model 3231,900 Yuan ($32,030)245,900 yuan5.69%
Dual-motor, all-wheel drive Model 3 Long Range271,900 yuan285,900 yuan4.89%
RWD Model Model Y249,000 yuan263,900 yuan5.31%
Dual-motor, AWD Model Y Long Range290,900 yuan304,900 yuan4.59%
Dual-motor, AWD Model Y Performance354,900 yuan368,900 yuan3.80%

The company also tinkered with the prices of the high-end Model S and X EVs, which are imported from the U.S.

TrimsNew PricingOld Pricing% reduction
Dual-motor, all-wheel drive Model S684,900 yuan808,900 yuan15.33%
Dual-motor AWD Model S Plaid814,900 yuan1,028,900 yuan20.81%
Dual-motor, all-wheel drive Model X724,900 yuan898,900 yuan19.36%
Dual-motor, all-wheel drive Model X Plaid824,900 yuan1,058,900 yuan22.1%

FSD Pricing Reduced: Tesla additionally announced a $4,000 price cut for its full self-driving software, reducing it from $12,000 to $8,000, according to Tesla influencer Sawyer Merritt. The software recently moved from beta to a “Supervised” version. Merritt noted that the company removed the “Enhanced Autopilot,” which Tesla previously made available for $6,000.

The price reduction for FSD Supervised follows an earlier cut in the monthly subscription fee from $199 to $99 earlier this month. Future Fund's Gary Black said then that the reduction would likely double the FSD take rate.

Indications from the company now suggest it is moving ahead with the “razor/razorblade approach” strategy, focusing on a high-margin recurring revenue stream even if it means taking a hit on profits from the EV business.

Why It’s Important: Late Friday, Tesla cut the prices of all trim levels of the Model Y, S and X in the U.S. by $2,000 but did not alter the price of the refreshed Model 3. Production of the revamped low-end sedan is currently ramping up.

Check out more of Benzinga’s Future Of Mobility coverage by following this link.

Black said these new cuts are expected to cost Tesla $900 million per year or 20 cents per share in earnings. If the price cuts were to be implemented in the company’s remaining markets, they would cost Tesla $2.7 billion per year or 60 cents per share in earnings, he said.

“As in 2023, we expect TSLA to get little or no volume growth as a result of these price cuts,” he added.

Tesla ended Friday’s session down 1.92% at $147.05, marking the lowest level since late-January 2023, according to Benzinga Pro data.

Read Next: Tesla’s Horror Week Ends With Another Price Cut, Rivian’s Second Round Of Layoffs, Lucid Touts Longest-Range Domestic EV And More: Biggest EV Stories Of The Week

Photo: Shutterstock

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