Tesla (TSLA) has reduced the prices of its Model S sedan and Model X SUV by $5,000 and $10,000, respectively, in the U.S. The move follows recent price cuts of Tesla’s more popular Model 3 and Model Y cars f and CEO Elon Musk assured consumers he wants Tesla EVs to be affordable.
Tesla shares fell more than 2 percent today (March 6).
After the price drops, the Model S sedan now starts at just below $90,000, about a 5 percent savings. The Model X was discounted 10 percent and starts at just below $100,000, according to Tesla’s website. The high-end “Plaid” version of the Model S and the Model X now retail at the same price of $109,990, making Model X Plaid a particularly good deal. (Plaid is a reference to the movie Spaceballs).
Here are Tesla’s prices for its Model S and Model X:
- Model S AWD: $89,990 (from $94,990)
- Model S Plaid: $109,990 (from $114,990)
- Model X AWD: $99,990 (from $109,990)
- Model X Plaid: $109,990 (from $119,990)
Neither vehicle is eligible for the $7,500 electric vehicle federal tax credits under the Inflation Reduction Act because they exceed the retail price caps under the law.
In December, Tesla slashed prices for the Model Y SUV by 20 percent and the Model 3 sedan by 14 percent. Demand soared in response, causing the Model Y to run out of stock and have a months-long wait list. The company has since reversed some of the cuts.
During Tesla’s latest quarterly earnings call in January, Musk said Tesla’s goal is always to “make cars that are affordable to as many people as possible.” On the same call, Zach Kirkhorn, Tesla’s chief financial officer, suggested prices will stay low for at least this year with the average price of Tesla cars just above $47,000.
Model S and Model X are Tesla's most expensive electric cars but don't sell well. In 2022, the company sold only 66,705 Model S and Model X vehicles, accounting for 5 percent of its total delivery. The previous year, Model S and Model X cars were less than 3 percent of Tesla's total unit sales.
Tesla raised prices across its EV lineups multiple times during the pandemic to cope with rising manufacturing costs and parts shortage. The new discounts only bring Model S and Model X prices near to their early 2021 levels.