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The effects of Tesla slashing its Model S prices

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Tesla versus Tesla

Tesla’s (NASDAQ:TSLA) slashed the price for its Long Range Model S in three days. It now has a starting price of $71,990 after it experienced a $3,000 cut. Its toned-down version Model S sedan starts at $69,420, a price seemingly based on sex and pot humor. The higher-end Performance configuration is now listed with a starting price of $91,990. 

“The gauntlet has been thrown down! The prophecy will be fulfilled,” Musk tweeted, announcing the price change. 

Recently, Tesla relished in the advantage of federal tax incentives and a robust economy that contributed to their sales growth. Now that the said factors are out of the picture, the automotive company is resorting to price cuts to retain the demand for their electric vehicles and prevent it from sinking. 

The decline in sales caused the price cut.

Despite the coronavirus pandemic crushing the demand for automobiles worldwide, Tesla was among the few companies to enjoy an increase in sales and profit in the Q1 of 2020. In Q3 2020, Tesla hit a quarterly record of 139,300 overall deliveries out of 145,036 total productions, making an increase of more than 40% from Q3 2019. It shows that the pandemic’s economic recession did not put even little harm to the company’s popularity. However, deliveries for Model S and X only consist of 11% of the total, with 15,200 delivered out of 16,992 total productions during the quarter. Looking at the bigger picture, it constituted about a 7% year-over-year decline. Even so, Bloomberg New Energy Finance (BNEF) projected earlier this month that sales of electric automobiles would slump 18 percent worldwide in 2020. 

Tesla versus Tesla

While Tesla cars keep getting more affordable, it may be useful for the consumers. Still, it may cause harm to Elon Musk’s company. By presenting a lower-valued Sedan and crossover SUV, which straightforwardly rival its higher-end counterparts, Tesla might be its own greatest rival. Additionally, price cuts might not change the apparent situation. 

Meanwhile, Tesla is set to announce its Q3 2020 earnings on October 21. The Zacks Consensus Estimate for the quarter’s earnings and revenues is pegged at 54 cents per share and $8.2 billion, respectively.

An engineer by profession, a writer by calling.

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