It was a big weekend for Tesla, with the company announcing price drops on a number of its vehicles as well as its full self-driving software. That news has raised concerns with investors leading to a more than 5% drop in the company’s stock price Monday, ahead of its Tuesday earnings call.
On Saturday, Tesla announced a $2,000 price cut on its Model Y, Model S, and Model X vehicles. The price drop brings the Model Y to its lowest price yet after taking into account the federal EV tax credits that are currently available at the point of sale. The base price for the vehicle is $42,990, which after those incentives goes down to around $35,000. The price drop also brings the Model X to $70,490 with the tax incentive, its lowest price ever.
The company also dropped prices for the vehicles in China and Europe.
On Sunday, Tesla continued its price cuts by dropping the cost of its controversial full self-driving software by $4,000, taking the price from $12,000 to $8,000 in the United States. Customers can also subscribe to the service for $99 a month.
All that is good news for buyers who are battling high interest rates, but bad news for investors who see the lower prices equating to lower profits for the company. Overall, Tesla’s stock is down 40% so far this year, due in large part to concerns over the company’s slumping sales as well as increased competition from Chinese EV makers.
In a post on X Sunday, Tesla CEO Elon Musk said “Tesla prices must change frequently in order to match production with demand.” The car manufacturer had a disappointing first quarter in terms of deliveries, delivering fewer cars than the same quarter last year for the first time in four years.
That reduction in sales led to a 10% global reduction of staff last week, equating to roughly 14,000 jobs lost, as well as the departure of two key executives from the company.
Declining sales aren’t the only issue the company is facing. On Friday, Tesla recalled 4,000 Cybertruck vehicles over concerns that a defect in the vehicle’s accelerator pedal could make it dangerous to operate.
Musk also canceled a scheduled trip to India this weekend over “very heavy Tesla obligations.” He had been expected to announce a Tesla factory in the country during the visit.
News also recently circulated that Tesla is planning to ditch a long-awaited affordable Tesla Model 2 in favor of the company focusing on the creation of a robotaxi. While Musk has spoken about the taxi, he has remained silent on the future of the Model 2, which was thought by many to be a key step in Tesla’s future.
During its earnings call on Tuesday, Tesla is expected to post its first revenue drop and lowest gross margin in four years.
Tesla is currently the world’s most valuable automaker.