TESLA has cut prices of its Model 3 compact sedan and Model Y SUV in the U.S. by about 2.7% to 4.2% to stoke demand for its electric vehicles, days after the automaker fell short of third-quarter deliveries estimates.
The Elon Musk-led company's shares, which have more than doubled so far this year, fell 1.5% in trading before the bell as investors worried that the price cuts could further hit margins, already hovering near four-year lows.
Data firm Visible Alpha expects Tesla to post automotive gross margins of 19.1% in the third quarter when the company reports results on Oct. 18.
Tesla posted a record high margin of 32.9% in the first quarter of 2022, but those have steadily fallen since.
The Model 3 sedan is cheaper by $1,250 to $38,990, while prices of the Model Y long-range variant were cut by $2,000 to $48,490, the car company's website showed on Thursday.
Prices for the standard Model 3 have come down by about 17% since the beginning of the year while the Model Y long-range variant has seen a drop of over 26%.
The price drops for the Model 3 also come as deliveries of its refreshed and higher-priced standard version is expected to start in the fourth quarter.
The carmaker missed market estimates for third-quarter deliveries earlier this week after planned upgrades at its factories to roll out the newer version of the Model 3 mass-market sedan forced production halts.
Tesla on Thursday also cut prices for its higher-priced variants of Model Y and Model 3.
The price for the base Model Y rear-wheel drive, which Tesla reintroduced earlier this week, remained the same at $43,990.
Prices for the premium Model S and Model X did not change on Thursday. -- Tesla