Tesla Inc has increased prices of its Model S and Model X vehicles in the US, after the company’s shares slumped as steep markdowns earlier this year took a significant toll on profitability.
The starting price of variants of the premium Model S sedans and Model X sports utility vehicles were raised by US$2,500, or about 2 percent to 3 percent, according to the automaker’s US Web site. The latest staring prices of both models are US$87,490 and US$97,490 respectively.
The move claws back some of the cuts that squeezed profit margins, and come just two days after Tesla lowered the price of its Model Y SUV and Model 3 sedan for the second time this month.
Photo: AFP
Tesla shares slid nearly 10 percent, the most since Jan. 3, to US$162.99 in New York on Thursday after CEO Elon Musk indicated his company would keep cutting prices to stoke demand. The shares had gained 47 percent this year through Wednesday.
“We’ve taken a view that pushing for higher volumes and a larger fleet is the right choice here versus a lower volume and higher margin,” Musk told analysts late on Wednesday.
Tesla’s automotive gross margin excluding sales of regulatory credits dipped to 19 percent for the quarter, below the 20 percent threshold that chief financial officer Zachary Kirkhorn said three months ago the company expected to stay above this year.
Tesla remains ahead of other automakers in return on sales: Last year, General Motors Co reported an operating margin of 6.6 percent, while Ford Motor Co’s was 4 percent.
Just hours before the price hikes were posted, Ford CEO Jim Farley said Tesla could start a price war and turn certain electric vehicle (EV) models into commodities.
Tesla’s moves to bolster growth are “completely rational and should surprise no one,” Farley said at a charity event in Detroit, Michigan. “Price wars are breaking out everywhere. Who’s going to blink for growth”
Tesla’s unique position among EV makers has drawn comparisons to the early days of Ford. Its early 1900s innovation — the moving assembly line — put other automakers out of business by lowering costs to levels other companies could not match.
Musk on Wednesday said that Tesla was not looking to put competitors out of business, but to make its cars more accessible amid rising interest rates and stubborn inflation.
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