Tesla lowers model Y price and cancels standard range version

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The new Tesla Model Y is introduced. Tesla has expanded its model line to include an SUV based on the current Model 3.Hannes Breustedt | alliance photo | Getty Images

Tesla cut the price of its latest offering, the Model Y, by $ 3,000, just four months after deliveries to customers began. CEO Elon Musk also said on Sunday that the company is canceling its plans to produce a cheaper standard range version of the crossover SUV, saying its expected range of less than 250 miles would be “too low”.Now, the cheapest model Y, the long-range four-wheel drive version, starts at $ 49,990, according to the Tesla website. The standard range version would have started at $ 39,000.

Movements from Model Y indicate that demand for Tesla’s electric vehicles is declining at the company’s corporate headquarters in the United States, said Vicki Bryan, CEO of investment research firm Bond Angle.

According to Bond Angle’s estimates, Tesla faced more than a 50% drop in demand for its Model 3 sedans in the United States in the second quarter, and has yet to experience strong demand for Model Y since its launch, despite positive reviews from car reviews. .

But selling models 3 for the first time in China, where Tesla operates a factory in Shanghai, helped its second-quarter figures. Tesla said it delivered around 90,650 vehicles in the second quarter, beating analysts’ estimates. But Tesla combined Model 3 and Model Y totals in its vehicle production and delivery reports at the end of each quarter, so there is no easy and accurate way for shareholders to measure success. of model Y.

In addition, Tesla has never disclosed the number of pre-orders received for the Y model. Musk and Tesla have in the past talked about pre-orders for other vehicles, including the Y model predecessor, the Model 3, and the successor. , Cybertruck.

Bond said Tesla’s Model Y moves this week: “This seems to confirm my fears that the Model Y is not really profitable, as Musk said. Even after effectively reducing its Model Y supply, Tesla still has to cut prices to encourage demand. ”

Tesla’s shares have rallied considerably in the past two weeks, assuming the company will declare a second quarter profitable – its fourth consecutive quarter in the dark and its first full year of reported profits. This achievement would meet one of the main requirements for inclusion in the S&P 500.

Tesla CEO Elon Musk sent several emails to tens of thousands of employees last month, some of whom fled and helped convince investors that profitability is near. But the emails also revealed Tesla’s challenges in making Model Y a success.

In an email sent on June 6, Musk wrote:

“It is extremely important for us to speed up the production of Model Y and minimize the need for grinding. I want you to know that it really makes a difference to Tesla right now.

The Y model, especially GA, is the top priority for production and manufacturing engineering. GA4 is also a top priority for improving facilities. For those who work in GA4, thank you for having endured difficult conditions. Will improve quickly. I will personally follow the line every week.

We’re doing pretty well with S, X and 3, but there are production ramp and supply chain challenges with the Y model, as is always the case with new products.

Please let me know if there is anything I can do to help you. ”

In another email sent on June 29, Musk wrote:

“The break-even point seems super tight. It really makes a difference for every car you build and deliver. Please do everything to ensure victory! “

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