April 18 (Reuters) – Tesla Inc ( TSLA.O ) cut prices for some of its Model Y and Model 3 vehicles in the United States for the sixth time this year to boost demand as competition among electric car makers heats up around the world.
The cuts came ahead of Tesla̵[ads1]7;s first-quarter earnings, after markets closed Wednesday, which will show how previous cuts have affected Tesla’s industry-leading profit margins.
Tesla has cut prices in a number of markets around the world to stay ahead of older U.S. rivals such as Ford Motor ( FN ) as it strives to catch up with Chinese automakers such as BYD Co Ltd ( 002594.SZ ) in its second-biggest market .
Tesla shares fell 2.3% in morning trading. The stock is up just under 50% this year, after posting its biggest annual drop in 2022.
The company’s website showed late Tuesday that it cut prices on the Model Y “long-range” and “performance” vehicles by $3,000 each and on the Model 3 “rear-wheel drive” by $2,000 to $39,990.
Tesla cut U.S. prices on its base Model 3 by 11% so far this year and prices on its base Model Y by 20%, moves that come as the U.S., its biggest market, prepares to introduce tougher standards that would limit tax credits for electric cars .
It has also recently cut prices in Europe, Israel and Singapore, as well as in Japan, Australia and South Korea, extending a discount campaign it started in China in January.
Tesla has been able to stay ahead of major U.S. and Japanese automakers making inroads into electric cars by slashing sticker prices, but Chinese automakers are starting to take the lead in that market and others with even cheaper offerings.
However, Tesla’s quarter-over-quarter increase of 4% for deliveries in the first quarter was much smaller than the 17.8% sequential increase in the previous quarter.
For the first quarter, Wall Street expects the company’s auto gross margin to fall to a more than three-year low of 23.2%, according to 17 analysts polled by Visible Alpha.
Revenue is expected to rise 24% year-over-year to $23.3 billion, but analysts’ average earnings estimates have fallen about 2.4% over the past three months, according to Refinitiv data.
Reporting by Abinaya Vijayaraghavan in Bengaluru; Editing by Rashmi Aich
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