Yahoo Finance’s Pras Subramanian joins the Live show to discuss Tesla’s recent round of price cuts.

Video Transcript

- Welcome back. Tesla slashing prices in the US again. The EV maker posted a further price reduction on its website for its higher end Model X, and also, the Model S after previously lowering prices in January. Yahoo Finance's Pras Subramanian joins us now. So Pras, kind of a kick toward the competition here. They want to keep up their revenue targets, their growth targets, I would imagine, lower prices. What does this mean for Tesla?

PRAS SUBRAMANIAN: Yeah, you know, with these top end Model S and Model X vehicles, they've been sort of calibrating it, cutting it, raising prices a little bit, cutting again. You actually have pretty decent price cuts here for both those cars. So the Model S sedan, you're going to see that drop by as much as 5% for the base range model there, and then the Plaid goes down about 4% to $110,000.

So you can get that Model S regular for $90,000. You see the Model X SUVs there. That base version now at $99,900 and that Plaid at $110,000, so that's a 9% to 8% drop there. So that's a pretty significant drop there for those cars. Now, they don't really qualify for that IRA tax credit, because they're above the price range for that.

So that's a little kind of nice, little thing there for owners who are buyers of those high end cars. And it helps to compete against the Porsche Taycan's of the world, the Mercedes EQS' of the world, and the upcoming BMW i7's. So I think it's a nice way to kind of gin up demand. Musk said himself that there are enough people there to buy Tesla's. There's just not enough money to buy them, so to speak, he said, in some sense.

- I'm so curious, though, because it makes sense if they're cutting the prices of the lower tier vehicles. At this price point, like how price sensitive is somebody who's buying a $100,000 car? Like does it matter? An 8% difference, is that, that big of a swing? I don't know.

PRAS SUBRAMANIAN: I mean, I think 10%, that's your sales tax, right? That's, in my opinion, a pretty big cut in terms of, look, the competition is heating up at that high end, right? Like I said, the Mercedes EQS and the Lucid Air is at that level too.

So those are some actual cars that will compete nicely with the Model S and Model X, so I think that's why they want to-- they're seeing that those demand drivers working at the lower end, you know? Risk people aren't immune to price cuts, right? They're going to want to-- they don't want to pay money if they don't have to.

- Economics happens at the margins, at the edges. That's what they say.

- Yes, I guess so.