Tesla cuts Model Y price, cancels lower-cost standard version
Lower cost version's range would be 'unacceptably low' at less than 250 miles per charge, Musk says
Sources tell FOX Business’ Charlie Gasparino that Tesla shares could collapse after inclusion since estimates of earnings are lower than current prices.
Telsa has cut the price of its long-range Model Y electric vehicle by about $3,000 from $52,990 to $49,990.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| TSLA | TESLA INC. | 311.18 | -19.06 | -5.77% |
The automaker has also canceled its lower-cost, standard-range (SR) version that would have started at $39,990, according to a Sunday tweet from Tesla founder Elon Musk.
Musk said the SR Tesla Model Y would not still be made in response to an inquiry from another Twitter user, explaining that the car's "range would be unacceptably low" at less than 250 miles per charge, according to the Environmental Protection Agency. He added that the carmaker reduced Model Y pricing.
"We have reduced pricing on Model Y [long range] dual motor [and] will offer a LR single motor Y in a few months, which improves affordability, while still keeping the product excellent," Musk wrote.
With potential buyer incentives and gas savings, the Model Y could cost as little as $45,990, according to Tesla's website.
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Tesla produced 82,272 vehicles during the second quarter of 2020 and delivered 90,650, beating Wall Street expectations, despite the coronavirus pandemic and the massive toll lockdown restrictions have had on U.S. auto manufacturing.
The Palo Alto-based automaker, however, lumped its Model Y sales in with its Model 3 sales in the delivery report.
Investment research firm Bond Angle estimated that demand for the Model Y has yet to take off, despite Musk's assertions, according to CNBC.
Bond Angle CEO Vicki Bryan told the outlet that the combined sales reports and move to cut the Model Y's price indicate that the car is not profitable in the second quarter.
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"This seems to confirm my concerns that Model Y actually isn’t profitable, as Musk has claimed. Even after effectively narrowing its Model Y offering Tesla still needs to lower price to encourage demand," she said.
The Model Y Long Range can travel up to 316 miles on a single charge; Tesla has more than 17,000 charging stations and worldwide and is opening six new charging locations every week, according to its website.
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Telsa's stock surged past $1,700 on Monday, reaching an all-time high, though some Wall Street analysts warn that it's overvalued.
The automaker has also cut the prices of its Model 3, Model X and Model S vehicles in May.