Tesla is slashing prices on the Model X and Model S as EV competition mounts

Tesla Inc.

D.S.L.A -2.73%

The company has slashed prices of its two most expensive models in the US, the Model S and Model X, in its latest round of price cuts as the company tries to boost demand in a competitive market.

Tesla has dropped the base price of its Model S luxury sedan from $94,990 to $89,990, a reduction of about 5%, according to the company’s website. Tesla dropped the base price of its Model X sport-utility vehicle from $109,990 to $99,990, a roughly 9% decrease.

Tesla cut prices on its two best-selling vehicles in January, cutting the price of its base Model Y by 20% and its high-performance Model 3 sedan by 14%. Some investors and Wall Street analysts believed Tesla cut prices to pressure competitors, respond to declining demand and allow some buyers to receive a $7,500 federal tax credit.

Tesla did not immediately return a request for comment.

The company’s value has fluctuated in recent months due to investor concerns about Tesla’s growing potential and questions surrounding Chief Executive Elon Musk’s other initiatives. Mr. Musk took over Twitter Inc last year and implemented several dramatic changes at the company.

Tesla stock plunged 65% in 2022, losing more than $700 billion in market value in the worst year in the stock’s history. The company’s value has recovered somewhat as loyal individual investors bought nearly $14 billion in shares, The Wall Street Journal reported Friday.

The company started 2023 with an earlier round of price cuts that reverberated through the auto industry. The move has forced some automakers to cut their prices at a time when those companies are trying to woo investors and customers.

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Tesla has faced increasing competition in recent years from startups and traditional carmakers trying to break into Tesla’s perch in the electric-vehicle market. However, some startups like Rivian Automotive Inc.

and the Lucid Group Inc.,

Struggled to get their factory operations in order and maneuver around supply chain disruptions.

Tesla faced manufacturing challenges in the U.S. last year as it adjusted its manufacturing processes.

Just weeks after Tesla slashed prices on several of its models, Ford Motor Co. has slashed the price of its electric Mustang Mach-E. WSJ Auto reporter Nora Eckert compares the automakers’ strategic moves and explains what this means for the industry. Photo credit: Josephine Chu

Write to Alyssa Lukpat at alyssa.lukpat@wsj.com

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