Tesla Price Cuts Have Model 3 Close to That Elusive $35,000 Sticker
The S and X also get discounts, but not the Y.
Electric automaker Tesla is most likely feeling the squeeze put on the automotive industry by the COVID-19 crisis, so it comes at no surprise that it's lowering pricing across the board to remedy whatever it's suffering from. Tesla announced on Wednesday morning that it would deeply discount its vehicles in North America and China by as much as six percent off MSRP, but it did not offer a specific reason.
Tesla's flagship Model S sedan and Model X SUV have both been reduced by $5,000 and now respectively start at $75,990 and $79,990. Its affordable Model 3 sedan has also dropped in price by $2,000, bringing the Standard Range Plus down to $37,990—almost hitting the $35,000 base price promised many years ago.
One vehicle in Tesla's lineup is exempt from discounts is the all-new Model Y crossover. Deliveries of the CUV began in late February, just before many states ordered non-essential businesses to temporarily close, including Tesla's production facility in Fremont, California. Tesla then shifted its deliveries to being contactless to continue deliveries of existing stock to customers, indicating that initial demand for the recently released model may still be peaking, rendering additional discounts unnecessary.
Tesla is in a unique place compared to other automakers. For starters, it can't offer financing incentives because it doesn't actually offer vehicle financing. Instead, it relies on third-party lenders to provide potential owners with financing opportunities. So while other automakers are utilizing their in-house credit departments to offer zero-percent financing for 84 months, Tesla simply can't compete with lending incentives in the same way, which leaves the only discount opportunity aimed directly at the vehicle's price.
It's also worth noting that Tesla has only recently reopened its production facility in Fremont after a two-month-long battle with local officials over COVID-19 related closure. This means that on top of already weak industry-wide sales for the calendar year, Tesla also experienced a significant pause in manufacturing.
The virus crisis may have thrown a wrench into the economic cogs of the auto industry, but automakers are doing everything they can to get back on track. Tesla's approach is just a bit more clear cut: buy a car, get a discount. For many, this welcomed price drop may even be enough to finance Tesla's Full Self-Driving subscription slated to be available later this year.
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