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Tesla's price cuts are catching the eye of potential Tesla buyers


Imagine you buy the car of your dreams, and then somebody else buys it for 20% less. How would you feel? Well, you might feel like many Tesla buyers right now. Though, as NPR's Camila Domonoske reports, what Tesla loses from frustrated owners is outweighed by what it stands to gain from lowered prices.

CAMILA DOMONOSKE, BYLINE: When Brian Levine, a physician in Tucson, ordered a Tesla Model Y in August, he knew it was going to cost him 70 grand. That's expensive. But the price was the price, right? What can you do?

BRIAN LEVINE: A carton of eggs is $7, and - I don't know - yeah, that feels pretty expensive. But what are you going to do? - still got to make an omelet.

DOMONOSKE: It turns out there was something Levine could have done to get a much cheaper Model Y. He could have waited. Unlike most automakers, Tesla sets prices directly on its website, and it changes them whenever it wants. Earlier this month, the price of a new Model Y dropped by $13,000.

LEVINE: The, you know, reptilian brain part of wow, that stinks - this just would have been a much better purchase, you know, had I waited a couple months.

DOMONOSKE: He's trying to be philosophical about it and doing better than I would.

LEVINE: You know, that's fine. Not everyone's going to get every amazing deal or whatever.

DOMONOSKE: Still, he's peeved that his car lost so much value overnight. But someone in the family was happy. After his dad heard about the price cuts, he ordered a Model 3. And, of course, that's the point of cutting prices. It drives up sales. Tesla CEO Elon Musk talked to investors about the price cuts this week.


ELON MUSK: Just a vast number of people that want to buy a Tesla car but can't afford it. And so at these price changes really make a difference for the average consumer.

DOMONOSKE: It's true that whether buyers are looking to slow climate change or save on gas money, sky-high prices can give them pause. But there's another reason for Tesla to cut prices - actually, more like half a dozen reasons - one from Volkswagen, one from Ford, one from Kia, one from Hyundai, one from Chevy.

FRANK SMART: I love this place. That is really nice.

DOMONOSKE: At the D.C. Auto Show last week, Xavion Butler and Frank Smart agreed electric vehicles are the future and that prices need to come down.

SMART: They takin' over.

XAVION BUTLER: They takin' over.

SMART: That's for sure.

BUTLER: Get on board, or get left behind.

SMART: But everybody's got to be able to afford them, too. So...

BUTLER: That's the problem.

SMART: ...They got to make them more affordable.

DOMONOSKE: But it wasn't a Tesla they were looking at. It was the upcoming Chevy Blazer electric vehicle. And when I mentioned Tesla's price cuts, Butler pointed to that shiny red SUV in front of us.

Tesla did just cut its prices.

BUTLER: Yeah, because everybody else came out. They ain't have no choice. If you the only person in the game, you make the price. And Tesla was the only one, pretty much, in the game.

DOMONOSKE: Not anymore. Tesla is still at the top of the EV game by a long shot, but it knows it has to work harder to maintain its advantage. And one big question now is whether all these other companies will cut their prices, too. After all, that's how this normally goes. Now, Tesla has never been much for normal - all-electric startup with no dealerships, no ads. None of that is typical for the auto industry. But starting a price war - that's actually very normal.

JESSICA CALDWELL: It's sort of a - you know, a tale as old as time. You want market share, you're just going to increase your production, drop the prices.

DOMONOSKE: That's Jessica Caldwell from the auto site Edmunds. As soon as Tesla announced the price cut, the percentage of shoppers who researched Tesla instead of other brands on Edmunds more than doubled. Price cuts work. That's why discounts happen.

CALDWELL: It's just another step on the road for Tesla becoming a mainstream automaker and dealing with mainstream automaker problems.

DOMONOSKE: Tesla has transformed the auto industry, but in the process, maybe it's starting to look a little more like a normal automaker. Camila Domonoske, NPR News.

(SOUNDBITE OF MOONSTARR'S "DETRIOT") Transcript provided by NPR, Copyright NPR.

Camila Flamiano Domonoske covers cars, energy and the future of mobility for NPR's Business Desk.