Following the entry-level model, Tesla lowered the starting price of the high-priced Model S and Model X in the U.S. by USD 10,000. Tesla’s stock price is also on the decline amid the interpretation that price competition is in full swing as the supply of electric vehicles increases.
According to Tesla’s website on the 16th (local time), the standard range version of the Model S is being sold for $78,490. It is $10,000 lower than the existing starting model ‘Model S’ version (about $88,490).
The Model X Standard Range version, a sport utility vehicle (SUV), is also $88,49, down $10,000 from the previous starting model, Model Y.
The maximum mileage has been shortened. The Model S was originally the maximum mileage from 405 miles (about 652 kilometers), but the Model X was reduced from 348 miles to 269 miles.
It is reported that Tesla did not replace its battery or motor with other products. According to major foreign media, Tesla said, “The two models were equipped with the same batteries and motors as before, but limited mileage and performance through software.”
It also lowered the price of Model Y in China. Tesla announced on Weibo in China on the 13th (local time) that it will cut the price of the long-range and performance versions of the Model Y crossover by 14,000 yuan (about 2,000 dollars).
Analysts say Tesla’s price reduction policy was affected by the price policies of other carmakers in China. Chinese automaker Geely also announced a price cut policy days after it cut the price of the Ziker 001, a crossover model of electric car brand Ziker.
In China, the price of the three versions of Ziker 001 is reduced by an average of $5,000, but the current basic price is $40,000 to $52,000. Zicker sold about 50,500 battery-powered electric vehicles in the first seven months of this year. This represents only 2% of China’s total market, but it is a sharp increase of about 127% compared to a year ago.
Critics point out that Tesla’s continuous price reduction policy is a double-edged sword. This is because Tesla recorded its highest performance ever, selling about 466,000 units in the second quarter, but at the same time, its operating profit ratio fell to 9.6%. Compared to 14.6% in the second quarter of last year, the operating profit ratio fell by 5 percentage points.
