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Tesla cuts Model 3 prices once again as US government phases out tax credits

A basic Model 3 will now set you back US$42,900, but that is still well above the US$35,000 Elon Musk had originally promised
tesla model 3
Tesla is cutting costs and ramping up production so it can remain profitable while lowering prices

Tesla Inc (NASDAQ:TSLA) has cut the price of its Model 3 for the second time this year as it looks to prop up demand for its first mass-market electric car.

US authorities have been phasing out tax credit for Tesla cars since the beginning of January, effectively raising the purchase price of its cars by US$3,750.

READ: Tesla turns a profit for second quarter in a row

The electric carmaker initially responded by trimming its prices by US$2,000, but it said on Wednesday that it had shaved off another US$1,100.

Even with the latest cuts, the cheapest Model 3 will still set customers back US$42,900 and Tesla has been ramping up production and cutting costs as it looks to get the starting price below the US$35,000 target Elon Musk had originally promised.

It said it was able to fund the most recent price cuts by ending a costly referral programme which gave new buyers six months of free charging and prizes for existing owners.

Musk recently posted on Twitter, saying that his company, which is worth US$55bn, is “doing everything [it] can” to lower prices.

Last month, Tesla posted only its fourth-ever profitable quarter despite delivering slightly fewer Model 3s than Wall Street analysts had been expecting.

The California-based company’s stock was down 0.7% to US$321.35 in pre-market trading in New York on Wednesday.

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