Tesla has reduced the prices of its three most popular models in what seems to be an attempt to revive demand and sales. Riding on the back of a fairly successful quarter, Tesla is looking to repeat the feat at a time when many automakers are even struggling to break even.

The electric automaker has lowered the price of the Model 3 by $2,000, the Model S and Model X by $5,000. The Model Y doesn’t get a price cut, which makes sense considering it’s a newly-launched product.

How Much Do They Cost Now?

The Tesla Model 3 got a price cut of $2,000, bringing the price to under $40,000.

The price now starts at $37,990 for the Standard Range Plus, $46,990 for the Long Range, and $54,990 for the Performance. As for the Model S and Model X, Tesla has reduced the prices by $5,000. The Model S Long Range Plus is now priced at $74,990, whereas the Model S Performance starts at $94,990. The Model X Long Range Plus is priced at $79,990 and the Performance at $99,990.

What Could Be The Possible Reason Behind The Price Cut?

It could also be to create hype before the company rolls out its next-gen batteries. Tesla was supposed to hold the Battery Day event this month, but it couldn’t due to the pandemic.

The company is working on a ‘million-mile’ battery pack for quite some time now.

This new battery will make use of the lithium-ion battery cell along with a next-gen, single-crystal NMC cathode and an advanced electrolyte.

It seems like this has led Tesla to reduce the prices of its vehicles significantly. It’s been speculated for long that if electric carmakers can bring the battery cost to $100/kWh, electric cars can be priced on par with the fuel-powered cars. According to a report from Reuters, individuals familiar with this knowledge have noted that the cost of Tesla’s batteries could fall lower than $100/kWh. This battery will be cobalt-free and will pave the way for the million-mile batteries. Tesla is jointly developing the battery with China’s Contemporary Amperex Technology Ltd.

If this is true, it could be a big loss to other EV automakers. BMW has almost ruled out the use of solid-state batteries in cars, and Mercedes-Benz’s organic battery technology is still two decades away. Tesla is still testing its new battery and trying to optimize the cells’ energy density and storage capacity over time, and if successful, you can expect prices to fall even further.

North America And China Models Have Their Prices Lowered

Even the Model S and Model X sold in China get the price cut. Both these vehicles receive a reduction of RMB29,000, which is approximately $4,000. But, they no longer come with Free Unlimited Supercharging. The Model 3’s price is unchanged. It must be noted that during Tesla’s first-quarter earnings call, the company CFO, Zachary Kirkhorn, mentioned that the China-built Model 3 has the potential for a price reduction. Perhaps the Model 3 produced in China will be equipped with the new battery pack.

Final Thoughts

Until Tesla mentions the reason for the price reduction, we have a lot of speculations and theories to believe. Other than the lower battery costs and a strategy to increase the demand, the price cut could be because Tesla has managed to optimize the production and operation costs. What do you think is the reason behind the price cut? Share your thoughts with us in the comments section below.