Tesla cut the prices of some models in the United States on Thursday, lowering the price of Model 3 from $40,240 to $38,990, lowering the price of Model Y long-range version from $50,490 to $48,490 in the United States, and lowering the price of Model Y Performance to $52,490.
The company has also lowered the price of Model 3 Performance in the United States from $53,240 to $50,990, and the price of Model 3 Long Range Edition from $47,240 to $45,990 in the United States.
Now, factoring in the price reduction and the $7,500 electric vehicle tax credit, consumers can own a Tesla Model 3 for just $31,490.
Tesla investor and FutureFund managing partner Gary Black believes this will have a negative impact on Tesla's earnings per share. "There's no way to sugarcoat this," he said.
Black predicts that if the price cuts of Model 3 and Model Y only affect the North American market, Wall Street analysts may lower Tesla's 2024 earnings per share forecast by another 30 to 50 cents.
He also pointed out that the price reductions for Model 3 and Model Y implemented before the current price reduction did not bring the expected results. "So far, the elasticity of Model 3 and Model Y has proven to be non-existent."
He added: "The annual cost is $1.2 billion, and we still believe that price cuts are a short-term idea, and in the long term, Tesla can attract non-EV buyers to buy electric vehicles through a $100 million advertising investment, which is in Tesla's best interest."
Black also expressed concern that if these price cuts also prove to be ineffective, investors may assume that Tesla will make more price cuts, especially since Musk has previously hinted at making up for lost profits by selling more FSD packages.