Tesla slashes prices of Model S, Model X in U.S.

Tesla Inc. slashed prices of its Model S sedan and Model X crossover in the US late Sunday night by $5,000 and $10,000 respectively as the company seeks to goose demand in the final month of the quarter.

The Model S all-wheel drive is now $89,990, down 5.2 percent from $94,990, according to the company's website. The Model S Plaid is now $109,990, down 4.3 percent from $114,990. Te Model X all-wheel drive is now $99,990, down 9.1 percent from $109,990. The Model X Plaid is now $109,990, down 8.3 percent from $119,990.Tesla sells its cars direct to consumers and often tweaks its pricing. The latest moves come even though Tesla drastically cut prices in January in a broad bid to boost sales.

At the company's March 1 investor day, held at Tesla's factory in Austin, Texas, Chief Executive Officer Elon Musk and other leaders emphasized manufacturing efficiency and cost cutting.

"The desire for people to own a Tesla is extremely high," said Musk. "The limiting factor is their ability to pay for a Tesla."

At $109,990, Plaid iterations of the S and X now cost $26,000 and $29,000 less than they did in early January.

Musk said last week that desire to own Teslas was “indistinguishable from infinite,” and that demand will “go crazy” as the company makes its cars more affordable. Reducing prices of S and the X models again suggests those vehicles might have gotten less of a boost from cuts the company made across its lineup seven weeks ago.

“We found that even small changes in the price have a big effect on demand, very big,” Musk said during Tesla’s March 1 investor day.

Tesla shares rose 0.5 percen as of 6 a.m. New York time Monday, before the start of regular trading.

The stock has climbed 61 percent this year after plunging 65 percent in 2022.

Tesla’s dynamic pricing is unique in the automotive world, where manufacturers typically only make changes to what they suggest their retailers charge from one model year to the next. Reductions to the Model 3 and Y in January made those vehicles cheaper relative to the average price of a new vehicle in the U.S. than ever before.

The changes to the 3 and Y were at least in part driven by Tesla wanting those models to qualify for tax credits made available by the Inflation Reduction Act.

After the Biden administration changed how it distinguished between passenger cars and sport utility vehicles in early February, thereby raising the price limit for Model Ys to be eligibile for credits, Tesla bumped prices back up.