(Bloomberg) — Tesla Inc. is on track after the U.S. carmaker cut prices for the second time this month. Shares plummeted, further demonstrating Elon Musk’s willingness to sacrifice profit for demand.
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The Austin, Texas-based company has slashed every version of its Model Y sport utility vehicle by up to $3,000. That slashed the price of the base Model 3 by 4.7%, below $40,000 for the first time in years.
Shares of Tesla fell 2.8% to $179.08 before the start of regular trading on Wednesday. Shares are up 50% this year.
Read more: Tesla’s price cuts put lofty valuation to the test
Tesla’s second price cut this month comes after several quarters of deliveries fell short of some analysts’ expectations. Ford Motor Co. and new companies Rivian Automotive Inc. And with companies including Lucid Group Inc struggling to make money on lower volumes, the company is in a rare position among EV makers to have profit margins to work with.
After several rounds of cuts, starting prices for Tesla’s two high-volume models are significantly lower than they were to start the year. The base Model Y is 29% cheaper, and the Model 3 can be had for 15% less.
Musk has pushed back against media coverage of the cuts. “We have not started a ‘price war,'” the CEO tweeted on April 15. “We’re lowering prices to be affordable.”
Related: Tesla prices continue to fall, giving buyers reason to wait
Following Tesla’s first series of price cuts in January, Musk said orders were running at nearly twice the production rate weeks later. But the automaker couldn’t sustain that momentum — first-quarter deliveries were up about 4% from the previous three months, and Tesla produced nearly 18,000 more cars than it delivered to customers.
Despite a second set of price cuts for the Model S and X in early March, Tesla delivered just 10,695 vehicles in the quarter, the lowest since the third quarter of 2021.
Tesla is set to report first-quarter earnings in the U.S. on Wednesday, where investors will focus on the number of earlier price cuts on profit margins. Another concern is the extent to which legacy manufacturers ramp up EV production and lure consumers away from Musk’s limited portfolio of models, Bloomberg Insights analysts wrote in their outlook note.
(The third column updates with early trading. An earlier version of this story corrected the price cut percentages.)
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