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Tesla cuts Model 3, Model Y prices in push to deliver more cars by year-end.

Even though Tesla leads the nation in sales of electric vehicles, Wall Street’s high expectations for its manufacturing and sales haven’t been met by the company. To reach its 1.8 million-unit sales goal, the carmaker has to sell 476,000 vehicles in the next three months of this year. To do so, it is implementing additional price reductions on popular models.

For the base Model 3, the most recent price reductions total $1,250, lowering the MSRP to $38,990. The starting price of the Model Y Long Range was reduced by $2,000 to $49,490. Expensive models also saw reductions.

According to Reuters, since the start of 2023, MSRPs for the Model 3 and Model Y have decreased by about 17 and 26%, respectively.

Prices will be reduced, which will likely increase demand but reduce Tesla’s profit margins. At the start of 2022, the automaker was pushing margins of 32%; however, the third quarter is predicted to see a decline to under 20%. We’ll find out the effects of the reduction when Tesla releases its earnings report on October 18.

This action follows Tesla’s recent reintroduction of the base Model Y RWD. Its starting price of $43,990 is over $5,000 less than that of the Model Y Long Range and almost $9,000 less than that of the Model Y Performance. Although it only has a 260-mile range and a 6.6-second 0–60 mph pace, the cheaper price makes it a far more appealing purchase.

It’s important to note that all Model 3 and Model Y variations are qualified for $7,500 in federal tax credits, giving them an advantage over vehicles from Hyundai, Kia, Genesis, and European automakers who don’t adhere to the rules regarding final assembly and where to source battery raw materials.

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