Are Tesla’s Price Cuts Working?

• The Model 3 and Model Y, collectively, have once again represented the lion's share with 421,371 produced and 412,180 delivered.

• Tesla's overall numbers represent a significant bump over the same period in 2022, with the automaker having brought two new gigafactories online over the past 12 months.

• The EV maker had instituted price cuts for a number of its popular models in the past few months, which Tesla CEO Elon Musk credited with improving demand.

Austin-based EV maker Tesla has revealed that it produced 440,808 battery-electric vehicles in the first three months of 2023, while delivering 422,875 vehicles. The latest results represent a significant bump over the first quarter of 2022, when the automaker produced 305,407 EVs and delivered 310,048, which at the time amounted to a record quarter after several months of now familiar supply chain issues. That's an increase of 36% compared to the same period last year.

The Model 3 and Model Y, collectively, have once again represented the lion's share with 421,371 produced and 412,180 delivered, while the Model S and the Model X remained in distant third and fourth places, with 19,437 produced and 10,695 delivered.

Are the recently instituted price cuts, which had already inspired some followers, to thank for these results?

The real winners in this quarter are perhaps the Berlin-Brandenburg, Germany, and Austin, Texas, gigafactories, both of which have made gains in output since opening in 2022. Launching the two plants effectively doubled the number of Tesla assembly facilities, both having been built in the difficult early years of the pandemic, as the automaker bet on production growth early on in this decade over significant updates to its model lineup.

The price cuts instituted late last year, on the other hand, were seen by most analysts as a success that was quickly imitated by a handful of other automakers, and arrived after a long series of price hikes by Tesla. But they did not produce the kind of results that would have been seen by analysts as blockbuster numbers—Wall Street hoped for higher delivery numbers in this quarter. And shortly after the price cuts were announced, Tesla promptly raised prices for some model variants, even though Tesla CEO Elon Musk touted the winter price cuts as sparking demand.

Tesla's January price cuts did point to one phenomenon that had rarely been a factor in the past: For the first time ever, Tesla was seen as responding to competition from other EV makers, as a number of automakers in China and Europe managed to gain market share over the past couple of years. Before 2020, Tesla did not have much reason to worry about direct competitors, discounting segments in which it was not a player.

Competition in the EV sphere is expected to be a much more important factor in the coming months and years, as Tesla now has competitors in more segments than it occupies, including multiple large sedans and electric trucks. More will arrive throughout 2023, as Tesla preps updates to the Model 3, which has been one of its two best-selling models.

More competition awaits. The Cybertruck is now expected to enter production in Austin by year's end in a best-case scenario, but will hardly be the lone electric pickup on sale. In the time between Tesla's somewhat infamous reveal of the electric pickup and its planned start of production, several automakers including Ford, Rivian, Ram, and General Motors have launched or are launching electric pickups, with the Ford F-150 Lightning in particular seeing significant interest among repeat truck buyers, rather than EV buyers.

Just what kind of audience awaits the Cybertruck once it arrives remains to be seen, as Tesla preps this model for production in Texas.

Have an automaker's price cuts ever motivated you to buy a vehicle you would not have otherwise considered, or are such events usually too negligible to affect buyer behavior? Let us know in the comments below.