Tesla cuts prices for Model 3, Model Y on eve of Q1 earnings

Tesla has cut the price of its Model 3 and Model Y electric vehicles for the second time this month. Now, Tesla’s most popular models will start under $40,000 before incentives.

The price slash come on the eve of Tesla’s first quarter earnings report, when investors will be watching out for the automaker’s margins after a series of price cuts this quarter.

This year alone, Tesla has issued discounts for the Model 3 and Model Y in the U.S. in January and February, and for the Model S and Model X in March in an attempt to lure buyers as competition increases and the economy weakens.

Over the past two quarters, the automaker has also slashed prices for its EVs in Mexico, Europe and China, where it has sparked a price war among competitors.

The discounts did indeed boost Tesla’s quarterly sales, with the automaker delivering a record 422,875 EVs in Q1. But analysts say the increase in sales might come at the cost of healthy margins, which are expected to hit a more than three-year low as a result. According to Visible Alpha, Tesla is expected to report auto gross margin of 23.2%, down from 32.9% last year.

Prices in the U.S. for the Model Y AWD, Long Range and Performance vehicles have been cut by $3,000 each. The Model Y AWD went from $49,990 to $46,990; the Long Range from $52,990 to $49,990; and Performance from $56,990 to $53,990.

The cost of the Model 3 Standard Range RWD went from $41,990 to $39,990, signifying the first time Tesla offered a vehicle for less than $40,000.

The Model 3 is the only model of Tesla’s to have its federal tax credit reduced from $7,500 to $3,750 on Tuesday following the U.S. Treasury’s updated battery sourcing guidance for the EV tax credit.

The price of the Model 3 Performance doesn’t appear to have changed yet.